The Impact of Alternative Accommodations: 2018 Revenue Management Best Practices, Part III

Author: Avanti Joglekar

Hospitality revenue management (RM) is constantly evolving, especially as new lodging options emerge. We’ve kept track of what consumers and industry insiders are talking about and have determined to be the top five trends in RM. In parts one and two of our series, we looked at loyalty-based pricing, advances in group revenue management, opportunities for ancillary spending, and personalization as a key to driving direct bookings. In our final of three posts, we’ll take a look at how alternative accommodation sites have impacted RM.

Alternative accommodation sites, most notably Airbnb, are putting pressure on hotels. The impact varies based on the market, hotel class, and even at micro-market levels, but the results are clear: hotels need to aggressively market themselves and make smart RM decisions to compete. Airbnb booking revenues are projected to grow from $7B in 2014 to $83B in 2020. The impact of this growth on hotels? According to a study done by HVS, the estimated annual loss created by alternative accomodations to the NYC hotel industry was $450M, which could grow to $805M in 2018.



The impact is clear. Here’s what you can do: first, obtain and analyze the right data to understand the impact on your hotels. There’s a 3rd party company called AirDNA that scrapes data from Airbnb’s website and tracks data on bookings and pricing at a granular level, allowing properties to better understand their alternative accommodation competition. It’s important to realize most listings on Airbnb and other sites are dormant and don’t necessarily rent on a regular basis, so when assessing supply, remember to differentiate active from dormant supply. Know that alternative accommodations vary significantly in terms of product offering and may or may not be comparable to what your hotel offers, so make sure to look at only those accomodations to which you are realistically being compared. You might only compete with a specific type of private accommodation, or by specific geography. Don’t forget to look at pricing for alternative accommodations to understand the dynamics around elasticity and how your customers are making decisions on where to stay. This can be especially important during special events, since alternative accommodations show particular strength in times of major market events.

Finally, remember that there are plenty of reasons why a guest would choose your property over an alternative accommodation. You’ll want to take the time to determine what those points of difference are and determine ways that they’ll help you grow. If you’re curious about how to be proactive instead of reactive when it comes to alternative accommodations, contact us today and find out how our RMS solutions will reveal ways to drive guests and profits to your property.

To conclude our 3 part series on RM best practices, we have aggregated the trends into an infographic summarizing the Top Revenue Management Trends for 2018. Click below to download! 

Rainmaker RM Trends Image1.png

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