When Brian Chesky decided to rent out his couch to travelers visiting his hometown of San Francisco, it was just a creative way to make a few extra dollars and meet some interesting people.
He went on to found Airbnb - the world’s largest online temporary residence listing service - in 2008 after realizing that there were a lot of unused bedrooms across the country, and it could be a beneficial service for travelers and homeowners alike.
No one, least of all Brian Chesky, could have guessed that just 8 years later, Airbnb would be valued at over $30 billion - more than some large and well-known luxury hotel chains - and would be at the center of an ongoing controversy fueled by dramatic revenue losses in the mainstream travel and accommodation sector.
The financial and legal issues around Airbnb and similar sites
Late in 2015, the Hotel Association of New York City issued a report indicating that Airbnb (and similar sites) had cost the city’s economy $2.1 billion in lost revenue via hotel stays, ancillary services like hotel restaurants and bar tabs, and the hospitality taxes officially-licensed hotels are required to pay.
This is just one in a host of calls for legal or governmental involvement in what many in the hospitality industry see as a multi-billion dollar loophole: Since Airbnb technically only connects hosts with travelers and the hosts are responsible for essentially everything else, the transaction never officially crosses over into territory that can be regulated by the Federal Housing Authority or the rules of the Americans with Disabilities Act, both of which have had a direct impact on innkeeper’s laws. (Airbnb’s website even explicitly notes this fact.)
But, in fact, “hosts” are doing far more with Airbnb these days than Chesky originally envisioned when he thought about all those spare bedrooms. These days, there are “super hosts” - professional landlords who own multiple properties for the express purpose of making them available on the site.
In some cases, entire neighborhoods have been affected as one or more homeowner has begun buying up vacant homes and turning them into full-time Airbnb destinations that attract a different crowd of travelers every few days.
In reality, what these people are doing is running a chain of hotels without needing to pay hospitality taxes or follow any of the other applicable laws and regulations official hotel owners must.
The reality for hotel owners
While the large luxury hotel chains are leading the political and legal fights surrounding this issue, it’s actually the owners of small, independent lodging places that are really feeling the squeeze.
If you own a quaint bed-and-breakfast or a small roadside motel with ten rooms, you don’t have the deep pockets needed to go after a multi-billion-dollar corporation. But that doesn’t prevent you from feeling the effects of this huge disruption in the hospitality industry.
Maybe you’ve seen reservations fading off as more available rooms have popped up all around you. Or, maybe you’ve been forced to lower your rates to compete with Airbnb hosts who have far lower overheads.
So what can you do, as the owner of a small, independent hotel or motel, to fight against this ongoing risk to your livelihood?
We’d met with a veteran of the hospitality industry David McMillan, President of Axis Hospitality International, to find out how you can compete.
The surprising key to success
While it’s easy to focus on the fact that competition has exploded and prices are unfairly compared, the key to the small hotel owner’s survival is really the same as it’s always been:
Focus on creating the best possible experience for your guests.
True, you may lose some guests to cheaper accommodations down the road because they found a spare room online. But, you would probably have lost them anyway. The travelers who swear by Airbnb are often, but not always, the same people who will always begin and end their travel plans based on price.
Smart travelers know that where they rest their head at night plays a huge role in how their experience unfolds. Beyond price, they appreciate the essentials that only a hotel can provide, like:
24 Hour Check-In
Travel doesn’t always land people at a location at the time anticipated. Getting in late to a new city, working with a car service to find a random home address and walking up to a strange, dark door hoping to figure out a lock box can be unsettling. Hotels offer safe, secure, familiar settings that put travelers at ease.
While most hosts of Airbnbs have a “guest manual” listing rules and neighborhood hot spots, these don’t replace the benefits of speaking to a person who can help make restaurant reservations, whistle for a cab, or coordinate luggage assistance. Remember, not all Aribnb homes are on the first floor and many don’t have elevators. Hotels have a great advantage of offering a bit of luxury for weary travelers.
Airbnb hosts may or may not offer any sort of option for refreshments (and most do not), but a hotel guest can almost always count on the ease and convenience of ordering food that will arrive at their door. This is especially appreciated when their destination is out-of-the-way and finding a bite to eat requires a long drive.
In some cases, the hotel itself can be a kind of tourist destination. Many hotels and some B&Bs are registered as historic buildings and capitalize on that status by maintaining a historic look and feel. For travelers who wish to immerse themselves in the past and culture of their destination, these buildings represent a “first stop” that they can enjoy throughout their stay. If you're just getting round to buying a hotel, do keep this in mind when you're looking around.
Hotel guests know the beds will be made, fresh toiletries will be available, and there will be access to a hair dryer, hangers, iron and ironing board. These items are not standard with lodging sites since every owner has their personal set of rules and add-ons.
Will guests pay for these luxuries?
For guests who actually care about where they stay and how their experience unfolds, paying a few extra dollars a night for a wonderful, memorable stay is more than worth it. And these will be the guests who come back year after year, and who tell all their family and friends about the great time they had. These are the guests who will take the time to write glowing reviews about your hotel and will rave about you on social media.
Don’t ever underestimate the power of positive online reviews and social media accolades. The same mobile/digital-first pattern that has brought sites like Airbnb so much success guarantees that those positive comments from thrilled guests will be viewed over and over again by future guests, and they have a tremendous impact on the decision to stay with you.
As a hotel owner, you’re in a better position than most Airbnb hosts to create and control that experience for your guests. Everything from the smile on your face to the shine on the floor is within your control, and you do this full time.
You’re not just renting out a corner of the family home, or a house across town that will have 85 different tenants by the end of the year.
This is your business. Your passion. Your reputation. And when they step through your door, those are your guests.