Impacts of Airbnb on the Hotel Sector

Ideas that deal with the process of sharing economy have assisted in creating more doors to operations of various businesses within the sector of hospitality. However, these economies have resulted in disruption on standard operation ns of most hotels globally. Airbnb has stayed to be one of the current organizations that work by sharing economy that has aimed at developing the relevant market for various individuals to be able to improve on activities of advertisement and book the exceptional services along with exclusive bookings for accommodations in the international society. Advancements in operations of Airbnb have made it become the even more significant threat to effective action of hotels that need essential strategies to be undertaken by different managers and CEOs’ of hotels. The growing competitions by Airbnb in production and supply of food and beverages spaces have to lead to disruptive forces that are striking the hotel industry from all angles. McGowan and Mahon (2018, p. 37) believed that such effects remain to be the driving innovation across the hospitality industry as hotel brands along with operators implement advanced concepts that aim at improving their offering as well as keeping their guests returning for more quality services and products. Besides, hotel and Airbnb have been able to improve their operations in recent market by the use of advanced technology that is essential in provision of the easy access to different services and products that they offer in markets. With the ever-increasing amount of operation transactions in hospitality industry, present business activities within sector of hotels have shown growing concerns over how Airbnb impacts the market (Shwartz 2012, p. 69). Therefore, primary objective of this investigative paper targets at examining different impacts that Airbnb have had on the hotel sectors in several parts of the international society while recommending different strategies that hotel management and CEO can utilize to control such impacts.

The effects of services of Airbnb on the operations of hospitality sector may not be as acute as initially feared by different business operators globally. The so-called economy has been able to explode in present days and has resulted in significant distractions to established sectors in hospitality industry. The operations of hotel sectors have not been left untouched by this advanced economy (Dusheiko and Gravelle 2017, p. 361). Ever since the establishment of Airbnb, the platforms of home sharing, hoteliers have been trying assessing the effects of the sharing economy in hospitality sector.  Therefore, some of the impacts that Airbnb has had on the hotel sector in different regions around the global society include loss in revenue, decline in the power of distribution in markets, and lower charges on rooms among other factors.

Loss in Revenue

Business operations of Airbnb have increasingly become the vital danger to enterprises of hotel bookings as guests are able to book rooms online. Hotel management has been using more resources to compete with competition pose to them by Airbnb by ensuring that they provide improved services. The resources used make the hotel to lose more revenues that they might have used to construct or develop more services and facilities than research on how to deal with Airbnb (Gyodi 2017, p. 159). Besides, operations of Airbnb leads to losses in financial elements as hotel losses hue sum of indirect money revenues yearly to Airbnb. Activities of Airbnb have lead to loss of employment sector as the number of guests that prefer services and products of hotel reduces. These reductions in number of clients have resulted in declining in profit that the hotel sector makes in every financial year. Besides, the establishment of improved operations of Airbnb internationally ad lead to adverse effects on activities of hotels as most hotels losses their guests that always prefer to book rooms from different places to have the new experience on quality of services offered (Jaremen and Nawrocka 2017, p. 291). The process of booking rooms in Airbnb make different hotels that deals with rooms to lose more money during such moments and this results to reduction in their operations.

Operations of Airbnb has remained to be the significant driver of different rates of booking rooms in hotels with reduction in amount of profits as other supply impacts of distribution power of various services of booking In international markets. Instances of oversupply of booking services that Airbnb offer had adverse impact on different values of hotel operations. As illustrated by Monet (2016, p. 21), operations of Airbnb has had immense effect on collection of revenue among hotels. The article reports that over thirty percent of cases of lost revenues for hotels result from decrease in hotel booking services while Airbnb has seen steady rise in booking services. Utilization of different multi-sided platforms of technology within operations of Airbnb that has enabled it to collectively develop the use of under-utilized inventory by hotel sector through the process of sharing charges that allow every targeted client to book different rooms in accordance to their ability.

Unlike services offered by traditional hotel sectors that have remained to comply with current laws that comprise of safety codes, local fire outbreaks, and needs of ADA among other regulations, Airbnb stays to be firm on offering accommodation at lower rates. The decrease in rates offered by Airbnb has been possible due to the fact that it does not provide the collective security, as well as measures of safety to their visitors’ wile hotels, is able to contribute during their business activities (Aznar et al., 2017, p. 147). The reduction in charges of rooms for booking that Airbnb offer had made it possible for various hotels to reduce the charges per room as a way of dealing with the competition that Airbnb offer to them in booking services. Hotels had also resulted in lowering the costs of their rooms to allow their operations to maintain and attract more clients that can help to provide more profit as a way of supporting their wellbeing in the marketplaces. It is clear that in present business operations, Airbnb has succeeded in attracting customers, but most organizations are not yet concentrating on taking much revenue from hoteliers in markets (Gunter and Onder 2017, p. 287). Therefore, lower charges for booking rooms by Airbnb had resulted to adverse effects on business activities of hotels as they remain incapable of finding the correct middle foundation of improving their advantage of competing in the competitive markets for rooms offered by different hotels.

Decline in Distribution Power

Invest in data

Airbnb understands the incredible amount concerning its users and targeted markets. The corporation maps the complete journey of its clients from browsing listings, booking, and completing their stay, as well as leaving the review of their host once they have signed out from rooms or online portals. Being that this is all finished through the channel of Airbnb, it is able to utilize the data of its users to improve the experiences of different guests, tweak their products, along with finding opportunities for development. Therefore, CEO and management of different hotel sectors can concentrate on doing well by adopting the similar data minded technique. Management can then form a piecemeal approach to the usage of technology by utilizing several technologies together with platforms for various purposes (Phua 2018, p. 3). The idea will make it easy for different guest to know different services and vacant rooms that a given hotel offers at a specified moment. Hotel managers need to adopt single platforms to provide the operations of hotel the complete view of interactions of different guests with the hotel from booking to checkout. Besides, with the appropriate implementation of technology by management and CEO of hotels in place, hotels could utilize different data to make better decisions in business. Comprehensive data can be useful in reducing impact of Airbnb as it helps management of hotels to identify the new target marketplaces, present the problematic marketing angle, or open avenues for tailoring offerings for targeted clients in hospitality sector (Sklar and Edwards 2017, p. 17). Therefore, every decision has to be driven by data rather than instincts of CEOs or managers.

Strengthening the feedback loop

Approximately seventy to seventy-five percent of hosts and guests of Airbnb review one another within two weeks. In contrast to such ideas, only approximate of two to ten percent of hotel guests always leave behind their feedback on the services offered at any moment. Such processes remain to be the tremendous missed opportunity for hotels to better understand the needs as well as wants of their target and esteemed guests (Garikapati et al., 2016, p. 578). Therefore, for hotel staff how their work impacts different guests, the management and CEOs need to strengthen feedback loop. No feedback loop exists between guest along with team that makes it tough to create useful trust and delivers services that are personalized the way Airbnb always does in their operations. Besides, managers and CEOs of hotel sectors need to consider how they can effectively strengthen the feedback loop so as they can be capable of getting necessary input from their guests (Lalicic and Weismayer 2018, p. 87). The approach can help hotel managers and supervisors to understand how their workers do communicate back to their guests.

Increased Competition

Highlighting traditional hospitality strengths

The strength of hotel sectors comes from the conventional items of hospitality as well as service that Airbnb cannot offer. Hotel managers must focus on improving their forces to allow the operations hotels to remain competitive in markets. For instance, hotels are always reliable and flexible with arrival times, and different guest is still probable to be distrusted by different neighbors that are rowdy. Several guests enjoy going to hotels for the entire experience hotel, with amenities such as spas, concierge and room service. The management needs to improve such features that are currently unavailable through Airbnb (Helm and Guzzetta 2014, p. 76). Managers need to concentrate on the collection of appropriate data along with strengthening the feedback loop can assist to identify what their guests’ value more during their visits. The management needs to develop strategies for having the flexible arrival time that will appeal to most guests or having hotel staffs the phone call away, twenty-four hours daily. The best way that management and CEOs can concentrate on to understand their operations is by improving the techniques of collecting data as well as asking different guests to know quality of services that they need to be developed to meet their needs. Besides, management and CEOs need to concentrate on ideas of investing in more customer surveys as well as enhanced communication strategies as these processes will help hotel sectors to find their selective advantage and leverage them in competitive markets (Zale 2016, p.954).  With all these recommended strategies, Airbnb will be capable of continuing with its legal, regulatory, together with public view battles while smart hoteliers will not wait for the results to make different changes that set the operations of their hotels apart

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