Hotels and Airbnb
There are many struggling hotels in the post covid-19 economy. While short-term rentals have flourished in recent months, hotels have been beaten badly and many hotels are lucky to achieve 20% occupancy in this new reality. Hotel revenue is a function of; average daily rate x number of rooms x occupancy percentage, excluding food and beverage revenue. The average daily rate is determined by market demand and operating costs which include fixed and variable costs. The occupancy percentage is typically determined by the average daily rate. Many larger hotels have high operating costs, there is a point where the average daily rate is too low to operate the hotel. A hotel can adjust variable costs to match business volume but fixed costs such as taxes or debt have to get paid or risk insolvency. There is a point when lowering price to drive occupancy makes no sense and the cost to operate is higher than the cost not to operate, hence closing the doors. There is an counter-intuitive solution to this post pandemic problem for hotels which is airbnb. In the past few years airbnb has become ubiquitous in the hospitality industry and it is a great solution for independent hotels to fill occupancy in lean times. In this post we will answer the following questions; Why airbnb for hotels? How to integrate airbnb as an online travel agent? Which type of hotels would qualify to use airbnb? What are the pros and cons of listing hotel rooms on airbnb?
Why airbnb for hotels?
The answer here is simple, to fill vacant rooms. Hotels have long looked at airbnb rentals as an annoying little competitor but in the post covid economy airbnb has proven to be resilient, as revenues have bounced back to unprecedented levels. There are many large and professional hospitality companies who operate on airbnb such as Sonder, Domio and others which shows there is capacity for major scalability as an operator on this booking platform. There is a major revenue boosting opportunity for independent hotels to market on airbnb.
How to integrate airbnb as an online travel agent?
A listing must be created for each room which is being marketed. For example, if you have a 100 room hotel which consistently has 25 vacant rooms you would make 25 listings on airbnb to market availability in order to achieve as close to 100% occupancy as possible. Some alterations to operations must be made such as 24/7 on platform guest communication and a proactive pricing strategy. It’s best to use a dynamic pricing tool to set rates for the airbnb listings because they have the flexibility to gauge demand and adjust prices based on pre-set parameters. Create the listing, get the guest communication and pricing strategy down to systematic controls.
Which type of hotels would qualify to use airbnb?
Independent hotels and motels can list on airbnb. This is a great opportunity for independent hotels and motels to get exposure on a platform to which their direct major brand competitors have no access.
What are the pros and cons of listing hotel rooms on airbnb?
Let’s start with cons; added operational cost to communicate with guests and need to create one listing for each room.
The pros are; added revenue through a proven market disrupting booking channel and more revenue, bottom line.
Hotels face an uphill battle in the post pandemic era with record low occupancy rates and risk of insolvency for some operators.
There is a major revenue generating opportunity with airbnb for independent hotels and motels.
Thanks for your time and attention.