The sharing economy quickly gained popularity in the last couple of years across all kinds of industries, from automotive to retail and travel. The impact on some sectors has been greater than on others, but one thing is sure – no single industry has been left unaffected. And hospitality is no exception. In less than 10 years from its initial launch, Airbnb has managed to rise from a simple home-sharing platform to a serious market player, that is now worth over $31 billion, more than almost every major hospitality group.
The explosive success and extreme popularity of home-sharing platforms are understandable. In our modern age of tech, apps and startup hype, it has become much easier to raise and secure funding for an online booking platform and get a quite good return in a short amount of time, than investing in a service business or new hotel for example. On top of that, online vacation rental companies do not need to worry about the upkeep costs of their properties, nor they need to worry about developing new real estate. It is a no-brainer that leveraging already existing properties on the market requires less investment than building new ones up from a scratch. Instead, all this additional capital can go into other areas of business development, particularly into marketing. Last year, Airbnb spent a total of $1.1 billion on marketing and advertising for example.
Apart from the financial side of things, the mass appeal of home-sharing platforms among younger generations is also not surprising. The sharing economy managed to fill the existing gap in the hospitality sector by addressing a growing demand for a more immersive travel experience with local communities while combining it with the comfort and convenience of a hotel stay, all at a rather competitive price.
And now, Airbnb has launched its luxury homes and villas division to cater to affluent travelers as well.
The winds of change are blowing through the industry
Of course, Airbnb Luxe is not a pioneer in the high-end home-sharing space (ThirdHome and other smaller players have existed on the market for a long time), but it is the one that now has the most financial and branding power behind it. Naturally, this move by Airbnb is not something that can be easily ignored. With this additional pressure, major hospitality groups are starting to tap into the sharing economy sector themselves: Accor has acquired home-sharing platform onefinestay and Marriott has launched their Homes and Villas by Marriott International platform in early 2019.
However, not everyone is ready to jump on this trend just yet. Some hotel brands are hesitant about adding home-sharing as another part of their business and prefer to walk a different path. Ultra hospitality is a great opportunity to differentiate your brand in times when everybody else is rushing in the opposite direction. After all, some travelers do prefer the ultimate comfort, convenience and the welcoming style of hospitality that luxury hotels and resorts can provide compared to the more independent, a bit more authentic and local home stay experiences. Sure, it depends on the purpose of the trip among other things, but sometimes having a 24/7 concierge, custom breakfast-in-bed and nanny services available is much more preferable to affluent travelers than having the whole high-end apartment for themselves. And other times, it will be exactly another way around.
In my personal opinion, it is important for luxury hoteliers to make a well-thought-through decision on how they want to address these ongoing changes in hospitality industry and in which way they want their brand to evolve: to join the digital disruption movement by adding a home-sharing division, or by staying true to traditional luxury brand values and instead investing into developing the experiential component of a guest’s booking.
The Sharing Economy Is Here To Stay
No matter which way hoteliers decide to go, they need to accept that all these changes are here to stay. You can deny it, you can embrace it, but they’re not going to disappear. The lines between a high-end home-sharing and a traditional hotel stay experience will become even blurrier. Aside from Airbnb Luxe and other sharing platforms backed by large hospitality groups, there are already companies like BeMate, that combine premium apartments with concierge and other personalized services, and it is safe to assume this new emerging space of luxury home-sharing will also continue to grow.
It is also worth noting that the launch of Airbnb Luxe is putting pressure not only on luxury and boutique hotels but also on very local and specialized villa rental companies. Obviously, smaller independently-owned hotel chains, boutique hotels, and villa rental companies, unless their business has been around for decades or is a part of a bigger hospitality group, might not have the immense budgets at their disposal that Airbnb commands to burn it on all kinds of hotel marketing and advertising activities, from mainstream media buying, PPC and content marketing to sponsorship deals and OOH advertising. On the other hand, maintaining the status quo and relying solely on existing referrals, word-of-mouth and public relations in a time of ongoing digital disruption is definitely not the smartest thing to do as well if you truly want to build and grow a successful high-end hospitality brand that will survive the coming years. But luckily there are a lot of other creative and, more importantly, effective ways for luxury marketers to spend their marketing budgets, direct marketing being one of them.