Traditionally when new competition moves into a hotel’s territory there is enough time to prepare and adjust marketing and pricing strategies. New constructions can take several months to years depending on the size of the property, so this traditional type of competition is easy to see coming. However, with the recent popularity of home/room sharing services like AirBnB and HomeAway, the competition is seemingly unknown and can change over nights. Travelers looking for a unique and local experience are already going to shy away from large brands already, but traditionally they would look for a smaller property with more character than the cookie cutter designs of the brands. Hoteliers who used to fill this niche now have hundreds of potentially new competitors in their markets and this number can fluctuate constantly depending on the current housing market. So how can hoteliers stay competitive?
The first step in any ongoing competitive analysis is to be up to date. This will require the most amount of work on the hoteliers part, but it data that this will produce will be extremely useful. Monitor these rental sites and prices on as you would your traditional competitor’s. Check the rates against your own on a daily or weekly basis. When rate forecasting for specific events or holiday weekends, factor in these listings as well. Trying to match 1 to 1 is going to be difficult as hotel and home amenities won’t always be on par, but comparing room types to apartment or room layouts is a good base point. This isn’t to say that rate parity is necessary here, but with the rise of Metasearch sites, these “shared” listings are beginning to be displayed along side hotel rates. So its important to be aware of what travelers will see when they are searching and use that information to develop a rate strategy.
Some hoteliers have yet to accept the potential threat that these services pose on the hotel industry. A recent study from Boston University showed that in Austin, TX, the areas with the largest growth in AirBnB listings, saw for every 10% increase in new room and home share listings, that hotel room revenue drops .35%. With their rapid growth in this market since 2008, Austin hotel’s have seen a decrease in revenue by 13%. While Austin’s rate of growth may not translate directly to other areas right now, the potential is there. As cities are gentrifying, more condominiums and high end apartment complexes are being built and many of which will wind up on a room sharing site.