The erosion of trust in hospitality — a silver lining for hotels?
The hotel market is forecasted to sustain a 5-6% growth in 2018, reaching US$170B in gross bookings. Strong leisure and business travel demand is driving up Average Daily Rates (ADR) and Revenue Per Available Room (RevPAR) and helping to maintain an occupancy rate of ~66%. Life is good!
Or is it?
Although hotels seem to be holding their own, the growth in alternative accommodation rentals is threatening to escalate an oversupply problem that already plagues many segments of the market. And the lack of regulation and oversight with these vacation rentals and home-sharing businesses is allowing the likes of Airbnb and [Expedia’s] HomeAway to offer significantly lower prices to costconscious consumers.
The situation looks pretty grim for the future of traditional travel brands if current trends continue. But one cannot forget the trump cards hotel brands still hold in a trustdeficient world. It’s time for them to double-down on their strengths when competing with these digital disruptors.
Mistrust in the sharing economy
The global alternative accommodation market is large, growing and expected to reach US$106B in 2018 — mostly through the efforts of the honchos of home sharing, Airbnb and Expedia.
Home sharing services are also ripe with trust issues from both users and hosts alike. A quick perusal of verified reviews on ConsumerAffairs.com shows that their expectations are not being met by the major players in the space, particularly when it comes to quality, available amenities, booking and overall experience, property management, and customer/host support.
Expedia’s acquisition of VRBO/HomeAway in 2015 was so poorly managed (and continues to be based on feedback I hear from both guests and hosts) that class-action suits were filed.
In an attempt to reduce the number of unwelcome surprises experienced by guests, Airbnb introduced a new category of “verified accommodations” — Airbnb
Meanwhile, Online Travel Agencies (OTA) continue to capture the attention of more and more travelers and their wallets every year.
Because as much as Airbnb and Expedia offer a more authentic local experience and lower prices, they fall short in many other, critical areas.
There are many reasons people have been gravitating towards these Sharing Economy services over the past few years, not the least of which is price. So why are there fewer US travelers using these services in 2018 than in 2017, choosing instead to book directly with hotels?