Airbnb targets Business Travel Customers
As Airbnb targets Corporate Travellers what Affect will it have for TMC’s and On-Line Travel Agencies?
The ‘sharing economy’ phenomenon is not new. In just eight years from its inception, Airbnb – the online platform that allows holidaymakers, to rent homes at reasonable prices – has made a huge impact. It is currently valued at a whopping $25.5 Billion and is all set to increase its market share and global reach. If this wasn’t enough, they are now targeting the business travel market, with the roll out of enhanced functionality for business travellers last week, allowing co-workers to book Airbnb stays for each other.
This new functionality, however, won’t be available to travel agents, external travel managers, or Travel Management Companies (TMC's).
So what is the impact for Online Travel Agencies and TMC’s? 7Park Data, a mobile app data miner, recently published a report that discussed Airbnb’s impact on the Online Travel Agencies (OTAs). The data was gathered by examining mobile phone usage across 2 million mobile devices in almost 75 countries of the world. It then looked specifically at 200,000 frequent travellers to the United States. These travellers were divided into 3 categories: Users of Airbnb, OTA users and travellers who use both.
The report illustrated that to date, although Airbnb is growing at an incredible pace, it is not having much of an impact on OTAs or TMCs. However, as Airbnb saves leisure travellers’ huge costs, these travellers are inclined to use the service again. It was found that in 2015, Airbnb users spent only 2% less on OTAs as opposed to other frequent travellers. However, this figure increased to 4% in the first quarter of 2016.
Another report by PiperJaffray predicted that Airbnb’s negative affect on hotel bookings made via the Online Travel Agencies will be quite minimal – about 5.3% from 2016 to 2020.
In summary, if people are using Airbnb this year, they are more likely to use it next year. But this doesn’t mean that people will stop using OTAs or TMCs.
Impact on Hotel Bookings
A survey was conducted by Goldman Sachs to measure consumer preferences for hotels and Airbnb. It was conducted on people who had used Airbnb in the past 5 years. The results showed that 36% preferred peer-to-peer lodgings, 40% would like to stay in hotels and 24% did not have any preference between the two. These results revealed that just because someone has used Airbnb for once, it does not mean that they will stop preferring hotels.
Another report by CBRE Hotels suggests that the impact of Airbnb varies from city to city. It also showed that Airbnb can be quite adaptive when the demand rises. For example, in events and holidays, it can increase its supplies.
However overall, Airbnb does not seem to have a great impact on the hotel sector. There are only 15 markets in which Airbnb generates more than 2% or more of the total hotel revenue.
The Bottom Line
While these statistics on Airbnb’s impact on the travel industry make interesting reading, as a TMC we would still recommend staying in a hotel or serviced apartment. We have a responsibility to ensure that our clients stay in regulated accommodation that must comply with fire and safety regulations, rather than be self-regulated.
If Airbnb wants to increase its share in the business travel market, traveller safety must take priority rather than costs savings.
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