Analysis Shows Hotels Are Not Losing Share to AirBNB

AirBNB has been regarded as the great disrupter in the hospitality sector, but a new study shows that – for all the hype – AirBNB is not taking marketshare away from hotels.

The study, compiled by Smith Travel Research using AirBNB source data, offers critical insights into the true market penetration for the room-sharing service.

Among the key findings:

  • AirBNB has 2.3 million listings, far more than the world's largest hotel company, Marriott (1.1 million). However, much of AirBNB's inventory is available only in peak-season, not year-round.

 

  • Airbnb has higher peak-season occupancy because its users skew more heavily to leisure. Hotels have much higher year-round occupancy due to the diverse nature of their business (leisure, business, and group).

 

  • The markets with the highest hotel occupancy also have AirBNB's top occupancies. A deeper analysis shows that AirBNB is capturing excess demand, not shifting share.

 

  • Even on highest compression nights (hotel occupancy >95%) hotels are growing compression ADR faster than ever – at 35% in 2015 – with ADRs far exceeding those of AirBNB.

 

Jan Freitag, senior VP of lodging insights for STR, said that hoteliers are not at significant risk to lose share to AirBNB.

“I think the overall message is that the U.S. hotels industry continues to break demand records,” said Freitag. “We are selling more rooms than ever before on an annualized basis. In 2014, we had a demand record. We had another demand record in 2015. We expect in 2016 we will also top the number of rooms sold. Room demand has been higher than it has ever been.”

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Will Superhosts Kill AirBNB's Brand?

AirBNB has quietly launched a back-end page for hosts to turn over the management of their listing to superhosts. This new feature gives individual hosts the ability to outsource the management of their listing to a broker, of sorts, who handles guest transactions and pricing.

The Superhost market makes sense. I'm sure there are many AirBNB hosts (and potential hosts) who would prefer to have someone else handling the transactional minutiae of hosting. For AirBNB, superhosts could deliver a greater inventory and open access in large metro markets by lowering the barrier to entry for new hosts.

However, I can't help but think that superhosts may kill AirBNB's brand. After all, the "secret sauce" for AirBNB has been the direct relationship between guests and hosts. A superhosts isn't going to greet a guest and introduce them to an unknown taqueria, after all. If AirBNB removes that connectivity and endorses greater separation between host and guest, the next step is likely to be commoditization.

It will be interesting to watch this trend over the next few quarters for any hint of guest backlash, especially in gateway cities.

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The Travel Agency of Tomorrow

This week I spent time with the industry's top luxury travel agencies at Virtuoso TravelWeek in Las Vegas. Based on these interactions and the increased demand for travel agents, I've been giving some thought to what the travel agency of tomorrow may look like.

Years ago, the local travel agency was a brick-and-mortar office on Main Street with sunny and exotic destination posters adorning the walls.

As the age of online travel grew and travelers adopted a D-I-Y approach, travel agencies disappeared from Main Street in search of lower costs in high-rise buildings or work-from-home arrangements. What will the travel agency of tomorrow look like?

Instead of being simply a transactional office, retail travel agencies will return to Main Street as experiential spaces for luxury consumers.

Given the growing demand for curated travel experiences, I believe the travel agency of tomorrow will look much like the agency of yesteryear. Instead of being simply a transactional office, retail travel agencies will return to Main Street as experiential spaces for luxury consumers. Gone are the destination posters of yesteryear in favor of a refined, relaxed environment to enjoy coffee or wine with friends. Curated presentations – some travel related, some not – hosted at the agency become "nights out" for like-minded neighbors who view the agency as expert not just in travel, but in luxury experiences. The travel agency becomes a familiar hang-out for locals to learn, share stories, and laugh together.  In short, the travel agency of tomorrow is an experiential hybrid: part wine bar, part concierge lounge, and part expert showcase.

For travel agency owners, the upside to this new agency format may include new revenue streams such as wine sales and event space rental… not to mention increased foot traffic and travel sales. Besides, what goes better with travel stories than a great glass of wine?

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Bill Marriott's Twelve Rules of Success

I mentioned on Twitter that I keep a copy of Mr. Bill Marriott's TWELVE RULES OF SUCCESS in my office. I think it is outstanding advice from one of our industry's most successful leaders.

 

1. Continually challenge your team to do better.

2. Take good care of your employees, and they'll take good care of your customers, and the customers will come back.

3. Celebrate your people's success, not your own.

4. Know what your're good at and mine those competencies for all your're worth.

5. Do it and do it now. Err on the side of taking action.

6. Communicate. Listen to your customers, associates, and competitors.

7. See and be seen. Get out of you office, walk around, make yourself visible and accessible.

8. Success is in the details.

9. It's more important to hire people with the right qualities than with specific experience.

10. Customer needs may vary, but their bias for quality never does.

11. Eliminate the cause of a mistake. Don't just clean it up.

12. View every problem as an opportunity to grow.

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The Five Profiles of Chinese International Travelers

Hotels.com has completed its fifth annual survey of Chinese travelers and – among other insights – developed the five profiles of Chinese who plan to travel internationally in the coming year. While the resutls show that 92% of Chinese travelers plan to increase or maintain their travel spending in the coming year, the survey also five profiles of Chinese international travelers:

Five Profiles of Chinese International Travelers Revealed

To help the industry cope with these more independent and diverse travelers, the Chinese International Travel Monitor 2016 reveals five travel personas that Chinese travelers fall into.

1. Detailed explorers (25%): Born in the 60s and 70s, they are innovative and optimistic, like to learn and explore and to plan their trips down to the last detail.

2. Cautious connectors (25%): Also born in the 60s and 70s. They come from lower-tier cities and responsible family people and travel to bond with loved ones. They prefer safe, family-friendly hotels.

3. Experience seekers (17%): Tend to be born in the 80s and 90s and be from top-tier cities. They like stylish hotels and professional advice on local cultural activities. They travel to enrich their experience, being independent and ambitious.

4. Indulgers (12%): Most likely born in the 80s, they travel to indulge themselves and to demonstrate their power. They tend to stay at higher-star hotels and go on adventurous local tours.

5. Basic pleasure seekers (21%): Millennials born in the 90s. Unlike other groups, more of them are women than men. They are aesthetically minded and travel for non-material enjoyment, seeking value-for-money accommodation.

 

Chinese millennials spent 27 percent of their income on travel, according to survey data – the highest proportion among all Chinese travellers. The hoteliers’ survey showed that the number of Chinese millennial guests (aged under 35) increased 12 percent, slightly more than the median increase of total Chinese guests (11 percent). This trend reflects the growing demand – and opportunity – for hospitality internationally.

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Google Destinations: The Future of Mobile Travel

Google has just launched what may be the future of mobile travel search tools: Google Destinations. Brilliantly, Google has integrated the power of their hotel, airline, and destination search into a single, mobile-friendly travel planning platform.

The completely immersive experience is simple for travelers to navigate and – ironically for a search company – intended to eliminate the need for multiple searches. As the user navigates, the search results auto-update.  One simply scrolls and Google Destinations handles all the heavy lifting.

 

It's difficult to imagine Google designing the "search" out of search, but one look at Google Destinations makes it easy to see how this could easily become the future of travel search. To test Google Destinations, enter a destination and add the word "vacation" (e.g. "Florida Vacation")… and Google Destinations does the rest.

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“Leadership Qualities” vs. Competence: Which Matters More?

Stanford’s Lindred Greer has published an interesting new study which seeks to answer one of the great leadership selection queries: Will an organization achieve peak performance with a highly competent leader or one with the strongest leadership qualities?

From the Harvard Business Review, the short answer is that the leader's competency – perhaps above other factors – has the greater impact on the success of the team.

In one group of teams, influence was aligned with competence: the person who knew the most about the task to be done led the team. These groups performed best.

A second group of teams shared power – they were relatively non-hierarchical. This group did not perform as well as the first, but they did outperform our third group of teams — hierarchical teams with a randomly chosen leader.

We replicated these findings in the field, by the way. We studied 49 teams at a publicly held Dutch company; the teams were auditing finances in search of tax evasion and fraud. If the team leader didn’t have a deep, technical understanding of tax fraud, he or she led the team badly astray.

This is simple to understand in more everyday examples. Would you prefer an airplane captain with vast experience or one who effortlessly rallies others to the cause? Of course we want someone who can fly the plane expertly. And that is Greer's greater point: depth of experience and expertise allows highly competent leaders to make difficult decisions and mentor others to success.

So… easy, right? Not so fast. Studies show organizations demonstrate a bias towards high leadership dynamic over high skill in selection, even when similar selection has led to failure.

In the end, executives must remember to hire for purpose. If we strive to build highly successful teams that achieve difficult goals, then the leadership for these teams must be exceptionally skilled.

Simply stated: competency matters.

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Shared: Thoughts on Servant Leaders and The Great Outdoors

I was greatly inspired by this article on servant leadership twelve years ago. Written by the National Vice Chief of the Order of the Arrow, I happened upon it again today and it resonated as deeply now as it did years ago. I'm sharing this inspirational article in full in hopes that others may find it as meaningful as I do.

TTHOUGHTS ON SERVANT LEADERS AND THE GREAT OUTDOORS
By David Dowty, 2004 National Vice Chief

The vast forests, fields, oceans, and mountains of the United States have become our most vital resources in the Boy Scouts of America and the Order of the Arrow; they are, for us the staging grounds to learn life's most precious lessons for every scout and scouter. As an Arrowman, one of our central obligations is to be mindful of our duty to the outdoors, to not only preserve them but also to interpret the deeper messages that nature leaves behind.

We are charged to be servant leaders and as such must strive toward leaving an everlasting legacy of cheerful service. In doing so, each of us defines what our own dreams are and with every breath drawn and every mile tread come closer to the ultimate pinnacle. The domain of our leadership though, is the future. It begins as a single spark within and becomes a roaring flame so intense that all around are enveloped by it. However, we must keep in mind that as we dream and look toward the future, a fire must be built in steps.

There is a natural progression of life around us, soaring through the air, rushing through the rivers and rising from the earth. Every great achievement by our natural surroundings has taken time to develop and grow from its own modest beginnings to an awe inspiring presence. The giant redwoods of Sequoia National Park, the deep gorges of the Grand Canyon, the breadth and power of the Mississippi River and the eloquent beauty of the Great Smoky Mountains took millions of years to become some of the most beloved natural treasurers within our nation's borders. Each built upon past successes and accomplishments because the natural world we live in knows that great undertakings take time. It is from this simple observation, that we can learn a valuable lesson.

Leaders are meant to be authors of great ideas and wild dreams, taking a simple problem and applying a unique form of creativity to imagine the possibilities. As the dream takes shape, a leader must also determine and define for themselves and for their group how success will be measured. If we only defined success as achieved after we had reached and perfected our dreams, no one would ever feel that deep sense of accomplishment. Never knowing the taste of victory can demoralize and dishearten those you serve. Within little goals and aspirations can a group find the will and energy to continue serving their ultimate purpose; it is through those "baby steps" that Mother Nature perfected the natural world and that we will come closer to reaching our own summits.

As a leader, celebrate victories often. Always seek out and learn to identify the building blocks that become the foundation of a truly great achievement and with every block placed, have a party. Observe the world around you and see that even the largest tree in a forest was once a sapling, the deepest canyon, a shallow hole, the widest river, a trickling stream and the oldest mountains, a modest hill. A servant leader can look beyond the horizon of tomorrow and believe that although what they do today may seem small and insignificant, they too will someday realize their ultimate dream.

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