Tech Giants

June 17, 2019 •

6 min reading

4 Lessons the Hotel Industry Can Learn from The Digital Giants


2017 marked the 10thanniversary ofAirbnb's creation and the digital giant celebrated its rapid expansion by releasing its strategy roadmap aptly dubbed "Airbnb For Everyone" with a slew of new types of accommodation topping their original offer. Among the new products unveiled were:

  • New property typesVacation Home,Unique,B&B, andBoutiques:these come in addition to the existing Entire Home, Private Room, and Shared Space filter options.
  • New property tiersAirbnb Plus and Beyond by Airbnb: the Airbnb Plus badge showcasing houses with more than 100 reviews and at least a 4.8 points rating. Following the acquisition ofLuxury Retreats in 2017,Beyond by Airbnb accounts for the group's premium line, gathering the platform's highest-end homes.
  • Airbnb Collections– sets of homes suited for a specific type of trip or occasion – like work travel, family vacations, or honeymoons.
  • A revamped Superhost program and new Superguest program-Airbnb is now using SuperHost to certify hosts with amazing hospitality (at least 4.8 for ratings, reply to 90% of the guests within 24 hours, loan out their property more than 10 times per year etc.). The launch of a pilot Super guest program is also underway and making steps towards building loyalty for its consumers.

In addition to these new developments, the recent acquisition of last-minute bookings app, HotelTonight proves how the San Francisco-based disruptor is venturing even further into the realm of traditional hospitality.

Google has also clearly been placing bets on the travel and hospitality industry by consolidating its various offerings into its Google Trips interface - tapping into its gigantic trove of usage data and delivering highly relevant information to users across all various stages of their trip planning.

As regular OTAs continue to challenge the hotel industry, Expedia has been expanding its global presence and focusing on "brand-agnostic customers" through more relevant local offerings and content strategies.

So what lessons can traditional hospitality players learn from the digital giants?

#1: Meaningful brand architecture

Whether a brand should adopt a “branded house” or a “house of brands” approach is a question to debate. As a young company, Airbnb’s branded house approach is effective: all accommodation types or tiers are clearly articulated around the Airbnb brand name, only reinforcing the original brand value proposition of being the anti-hotel alternative. Even now that more hotels are being added into its mix, hotel brands are not featured and all live under the Airbnb umbrella.

What is more interesting is the brand extension approach. Given the number of properties available on the platform, Airbnb needs to delight travelers with its rich offerings without overwhelming them. Initially Airbnb organized its offerings into Entire Place, Private Room and Shared Room based on travelers’ demand for privacy and willingness to pay. With the new product tiers, Airbnb Plus and Beyond by Airbnb, it expands from a budget-conscious segment to a more quality-focused and higher-willingness-to-pay segments. The value propositions are clear to both travelers and Superhosts, and reduce the risk of cannibalization.

Most hotel corporations adopt a “house of brands” approach, and their brand expansion strategy tends to be adding new brands in order to attract new hotel investors. This approach however suggests substantial marketing investments to not only build awareness among travelers, but make the brand meaningful and resonate with consumers. In the wake of new generations of Millennial travelers increasingly reshaping the travel industry, the question is though: are modern travelers able to distinguish the differences between brands within a hospitality group’s portfolio? Do Millennials fundamentally have different travel preferences? Have these new brands provided better solutions to solve Millennial’s travel expectations? We wonder.

In any case, if new brands do not articulate their value propositions around better solutions than their competitors', marketing magic will not work. Taking notes from digital giants, hotels have a lot to gain from focusing a lot more on deeply understanding their target audiences - through market research and, of course, the ubiquitous data - rather than "inventing" a new brand from scratch.

#2: Focus on travelers

Airbnb Collections home sets is a different approach catering to either travelers' profiles or travel occasions. Through Airbnb for Family,Airbnb for Work, Social Stays, Honeymoons, Group Gateaways and Dinner parties, these collections definitely resonate with travelers who can project themselves to fit into either travel occasions or traveler profiles.

Alternatively, whether searching on OTAs or hotel websites, travelers have been conditioned to search for travel with a destination in mind. Yet, sometimes, travelers know they want to get away, or need a vacation, but do not have a specific destination in mind. The requirement to enter or choose a destination first is frustrating.

Expedia Collections has had a different approach, and provides a better solution to experience-focused travelers. Through its Beach, Relaxation, Family Fun, Culture & History, Shopping and Snow categories, travelers can select their preferred types of travel experience without deciding on a destination right off the bat. Google Flight and more recently Google Travel also offer the Explore feature to empower travelers to explore without first selecting a destination.

While more traditional hospitality players are rethinking their brand portfolio, brand architecture and individual brands' unique value propositions, we encourage these players to gain inspiration from both Airbnb, Google and Expedia and keep travelers’ travel intent, occasions and hobbies in mind. As for everything else these days, a business's ability to understand their consumers' intent and efficiently position themselves along the way can make or break the bank.

#3: Successful franchisees leads to successful hotel corporations

With relationships with hosts across 81,000 cities around the world, it is undeniable that hosts have been a critical component toAirbnb's success, and it seems that the group is clearly establishing that privileged relationship by ramping up its benefits to Superhosts - these include bonuses or discounts for purchasingAirbnb's products, marketing assistance (a specific URL, badge, better listing position) or training to develop their businesses. By assisting hosts who are generally not hospitality professionals, the digital giant is not only securing increased commissions, but building loyalty among its providers by keeping them on the platform and making it harder for them to take their own business elsewhere.

What Airbnb has rapidly been developing for its SuperHost is worth taking notes of by hotels. Although hotel chains are already providing trainings and incentivizing their hotels to maintain service standards, more could be done. Specifically, hotel chains could help franchisees to optimize their online presence on owned, paid and earned channels; understand the market intelligence available on direct and indirect channels; provide integrated technology solutions to improve operation efficiency, as well as the customer journey.

Similar to that of Airbnb, the total revenue earned by hospitality corporations is linked to the number of hotels and the revenue of each hotel. The determinant of the success of a hotel corporation counts on the success of their franchisees. Helping franchisees to improve their performance will create a win-win situation for both hotel brands and franchisees.

#4: A successful brand creates a market

With 2+ million average number of people staying at Airbnbs per night, Airbnb clearly understands that and has formed an influential brand market over the past decade. After creating a customer market from non-professional private listings,Airbnb reached out to hotels and B&Bs. Furthermore to these additional accommodations options across destinations, the company has responded to increased market demands by offering multi-days tour services Airbnb Experiences and Airbnb Adventures. Airbnb now caters to travelers along the entire customer journey and monetize this market.

Similarly, Google Travel also accompanies and monetizes travelers from inspiration to researching, booking, and experiencing.

Tapping into the power of their "owned markets" present huge opportunities for traditional hospitality players, who are more and more these days venturing beyond their traditional lines of business. One recent example? Accor partnering with WOJO to become Europe's biggest co-working brand in Europe in 2022, part of the hospitality group's to materialize its "Augmented Hospitality" model by doing more than just traditional hospitality services with F&B, co-working, wellness and concierge brand in its portfolio.

As Airbnb continues to grow and redefine the hospitality ecosystem, it sounds only right that traditional hospitality groups should embrace Airbnb's motto, with a twist: "Hospitality for Everyone, Everywhere and for Every Occasion".

Written by

Assistant Professor of Marketing at EHL