As the share-economy gives the hospitality industry a run for its money, short-term rentals and hotels are in neck to neck competition. Here are top lessons both taken to adapt in the changing market, or ways they soon should.
When headlines callout Airbnb, they really mean all of them: HomeAway, VRBO, Flipkey, and OneFineStay, among many. But Airbnb is getting the brunt because they’re the poster-child in the share-economy industry and lead the fight against legislative bills the short-term rentals could soon potentially face.
Don’t assume you can apply for rentership, snap a few photos, and wait for the renters to book. You have to invest, and if you don’t have what it takes, some rentals won’t survive the rigmarole and red tape suspected to come. It could leave rental owners without extra passive income.
Under the assumption these laws will become stricter for short-term rental owners, and because they’re young enough that they don’t face traditional operating methods, I’ll only focus on strategies for the following section.
Ask Yourself: Are You a People Person?
I ask this because you are entering the world of hospitality, as in being hospitable. Decide if you are and, in doing so, decide the level of involvement you want with guests. And be honest with yourself—it’s okay either way! Some hosts politely describe in their listing they “stay out of your hair” and “respect your privacy.” Some hosts are known for “showing you around town” and “bringing by breakfast.” But whatever you decide, make it known to potential renters.
Like any business, you have to spend money to make money.
- Hire a Copywriter — It’s not just about making a list of rooms and provisions and getting everything across the renter needs to know about your property. For a listing description, a copywriter can convey the voice and mood for the type of guests you wish to attract and entice.
- Hire a Decorator or Stylist — When a rental plans to charge a nightly fee the same as a hotel or bed and breakfast, the room better meet the standards of one. If arranging furniture and picking colors isn’t your thing, hire a designer, decorator, or stager who can help. Even an hour’s worth of consultation could transform your rental into a tasteful retreat for the senses. I know this seems biased coming from a designer, but consider it from this angle: Before placing a home on the market, realtors commonly suggest hiring a stager to prepare it for a show. Since a rental is, in a sense being shown (albeit, to 60 million Airbnb users), would you not want it to show it as inviting?
- Take Quality Photos — Whether you hire someone or ask your newbie-photographer friend, take photos of your rental. Take shots of every room (preferably after you’ve hired a stager). Try not to be too artsy about it—please, save the filters for Instagram and instead, pay attention to lighting and the mood you want to set. Photos should be clean and (I can’t believe I have to say this) right side up and without a date stamp. And unless you’re demonstrating you permit pets, leave that closeup of your companion outta there.
Research your Competition
Do your research and don’t get greedy! It goes against Airbnb’s entire original mission! Do you want to charge the same as that Hilton down the street? Step up your game and make your pad extra special or unique (see tips above). But when any Joe Schmoe thinks they can rent a crappy guest room scattered with boxes and smelly sheets to rake in big bucks, it gives Airbnb and similar home-share economy models a bad rap, leaving us wondering if it’s too bloated and trendy for its own good. Even backpacker hostels have standards, and it’s a myth that Airbnb is cheaper than a hotel as it’s not always the case.
Cater to Business Travelers
Most Airbnb rentals lack the service to host corporate travelers when hotels offer ballrooms, banquet rooms, and meeting rooms for conferences. Though Airbnb introduced a Business Travel Program in 2015, there’s no way to accommodate a whopping 200 bodies like a hotel banquet or conference room. Breather, another share-economy model, has tossed in its hat. But even today, the most a board room can hold is 40 in New York City. Though still new, it has the potential for growth to offer conference room space Airbnb rentals simply can’t.
In the past, the hospitality industry has seen competition from timeshares, cruise lines, and, during the recession, the emergence of the OTA (Online Travel Agency). Eventually, hoteliers learned to use OTA’s as an advantage to sell unbooked rooms to maintain profits. Today, the emergence of the sharing economy and short-term rentals has hoteliers scrambling once again to make sense of what the new tourist desires out of travel.
Well, in an interview with Fast Company, Airbnb’s CEO Brian Chesky stated this: “Our business isn’t the house. Our business is the entire trip.”
Translation: Sell the experience.
As it adapts, here are lessons the industry should take into consideration:
Balance Nostalgia and the Digital Age
Ralph Fiennes & Revolori in Wes Anderson’s “The Grand Budapest Hotel”. Fox Searchlight Pictures
Lobby boys, elevator hops, and a newspaper outside your door: Once top-shelf amenities of the grandest hotel, some consumers see them as an unnecessary and obsolete service, romanticized only in films. But to find a balance between providing guests luxury and, yet, not presenting the establishment as stuff, hoteliers need to learn how to step aside and allow guests certain freedom.
- Don’t be a helicopter hotelier — Instead, have a digital concierge at the click of their finger. There have been apps created for hotels, and practically any amenity can be self-service, even check-in and check-out.
- WiFi is the new Newspaper — Free WiFi is no longer an offer to wave in their noses. But one common complaint about hotels is that internet service is costly, slow, and unreliable. Instead, hotels should be offering if for free, and more: Netflix, AppleTV, and similar service options.
- Bespoke is the new Nostalgia — A mint on the pillow at turn-down service is cute, but if it’s not locally made chocolate and organic sheets, a large percentage of millennials are not impressed. Locally made goods and an environmentally conscious effort is an important factor. Use handmade soaps from artisans and fill the mini-fridge with local brews.
Offer Limited Inventory
Airbnb’s double edge sword is limited inventory. FOMO, or Fear Of Missing Out, at its best. Grab it before it’s gone. That charming accommodation a guest had their hopes on was soon rented, but they don’t want to stay in a Rubix cube either.
Vary Room Designs — For hotels, room style variety offers a happy medium. This is trickier for budgetary purposes, but it can be done as we see in these vintage airstreams on the Notel rooftop in Melbourne, Australia.
Offer Unique Experiences — Set apart a few rooms or units and sell them like a unique, hot commodity. Again, the idea is to not sell the entire hotel this way but as a separate, upgraded experience. Further blurring the lines of partnership, some hoteliers use Airbnb as a marketing tool to reach specific clientele. And as of 2015, Hyatt began a collaboration with Onefinestay, a luxury home-share rental company where an average home value is over $2 million.
Airstream guest rooms of Notel, Melbourne Australia.
Public Spaces & Business Travelers
Some rentals have communal areas for guests to gather, but there’s nothing quite like the first impression of a hotel lobby. A space for real social gathering, guests have the convenience of both if they’re undecided between venturing out and staying in. They’re able to invite friends or family to a lounge or rooftop bar or take a spa day at their health studios.
The atmosphere of NYC’s Ace Hotel lobby is a neighborhood affair. A walk inside proves the social hang-out it has become. Local students with laptops and patrons downing a shot of espresso from the adjoining Stumptown Coffee Roasters. It’s not just a hotel lobby; it’s a constitution. Locals hang around, people-watching, and having conversations. The atmosphere is bustling but also quiet enough by well-planned lounge areas. Ace even touts this kind of melding hipster magic as “a central hub for New Yorkers and international travelers alike, and a hotbed of startups, freelancers and people who just want to kick it.”
On the flipside, the Notel has no staff, no dining facilities, no gym, and even no reception. Why? Well, for one, they sit on top of a car park. But, mainly, it’s to encourage guests to spend time in the city, outside their airstream guestrooms.
Guest Loyalty = Authenticity + Human Connection
Okay, this may seem to contradict the previous lesson. But there is an underlying trust factor at Airbnb’s advantage. Instead, it’s about engagement and personalization. Communication doesn’t begin when the guest enters the hotel; it should also be before, during, and after. And the point systems and memberships are not the currency guests expect. Offering discounts or perks for direct booking (as opposed to an OTA) is a good foot forward, but today’s millennial traveler doesn’t care much for point systems and loyalty club memberships.
Allow a guest to be in touch by integrating a mobile guest engagement platform, such as Benbria, Mobify, and Guest Driven. Airbnb hosts follow up on a guest’s stay and send thank you cards. Hoteliers should match this level of personalization.
Small human touches go a long way also. Airbnb is flexible in the arrangement of guest arrival. It’s inconvenient, after a long flight, to wait hours for a room. If the hotel requested a guest’s flight information, a room ready policy could easily be arranged.
Shift gears and embrace the share-economy age. Even though the evolution taking place is digital in nature, Leon C. Megginson’s quote* still applies:
“It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”
Both the share-economy and hospitality industry each face their own problems. The laws surrounding Airbnb and other short-term rental agencies are still quite vague. With their own challenges, they suffer growing pains. On the contrary, hotels need to think more like their younger counterpart, weighing, and possibly redirecting, traditional hotel methods.
*wrongly attributed to Charles Darwin. Coincidently, Megginson was a professor of business management at LSU.