Smart Travel Data Summit 2016

November 2016, Amsterdam

Expedia vs Airbnb vs NYC

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In these turbulent times for online travel is it goodbye hotel, hello 21st century lodging? Pamela Whitby has been finding out

When Airbnb launched with an air mattress on the floor of a San Francisco apartment back in June 2012, its target audience was the value-seeking customer. Some would argue that the so-called ‘sharing economy’ poster child had redefined budget travel. With ‘upscale, luxury’ apartments in New York now on offer for upwards of £3,000 a night, how quickly that has changed - and along with it customer behaviour - but a significant number of ‘value-seeking’ customers are still looking to Airbnb for their accommodation needs.

This, argues Bill Beckler, co-founder of, a search engine that combines hotel sites with Airbnb, Hotwire, Groupon, Couchsurfing and explains why a significant number of hostels, like this onein San Francisco and this Brighton one, are using Airbnb as a platform to promote their offering.

And, just for the record, this isn’t because Airbnb is doing a better job at promoting hostels than Hostelbookers or Hostelworld, two of the largest hostel booking engines. In fact, Airbnb has done little, if anything, to recruit hostels or tailor the platform to meet their needs. There is, for example, no facility for managing multiple flexible rooms for multi-party trips, which would be useful for the hostel model.

Yet, hostels are still coming onto the Airbnb platform in droves because quite simply they know – and fair play to them - that if this is where their customers are, then this is where they need to be.

Beckler, a former Director of Innovation at where he earned the nickname ‘The General’, sees this “presence of hostels on Airbnb as the harbinger of the future of distribution.”  

Is the presence of hostels on Airbnb the harbinger of distribution?

There can be little doubt that the future of distribution is indeed changing, the result of two colliding waves of shifting customer behaviour and regulatory intervention. It recently lost a battle with the New York legislature, which claims that the platform is illegal, and while Airbnb has sued to block enforcement of the law and many hosts remain using the platform, these are turbulent times.  

Says Beckler: “If you look at the constantly changing regulatory landscape, Airbnb is losing the battle and NYC, its biggest market by booking value, is under major attack. I believe that if Airbnb want to hedge their bets they could be more open to hotels in places like New York City.”

Whether Airbnb runs with the opportunity to become a fully-fledged recognised OTA, and bring hotels and other providers of accommodation legally into the fold (something it has consistently said it won’t do), remains to be seen. But Beckler believes the sooner that hoteliers recognise that one customer can buy into more than one concept, the more successful they will be.

The sooner hoteliers recognise that one customer can buy into more than one concept, the more successful they will be

“That is why hostels and Airbnb apartments are considered interchangeable by one customer. And if there is one customer in the market for a managed business apartment and the business hotel, then the business hotel might as well run all those apartments too, rather than seeing them as competition,” he says.  

This ‘if you can’t beat ‘em join’ attitude is the road that Expedia, which yesterday hosted a press conference to celebrate being in the business for 20 years. Although its PR line is broadly ‘we’re entirely focused on the traveller’ it is also pushing ahead strongly with its partnership strategy. It’s clear that this is in response to growing competition and regulatory pressure, which is forcing OTAs to rethink, among other things, hotel commissions – especially in the light of the big chains loyalty strategy.   

Cyril Ranque, President of Lodging Partner Services, Expedia Group, said there was a “shift in thinking” underway at one of the biggest players in online travel, “from being a pure distribution platform to a being partner and enabler for the travel consumer and the entire travel industry”. 

He even envisaged a future of data sharing with partners, where everybody is winning and commissions fall further than they already have.

In its most recent move, yesterday Ranque said that Expedia is going after the $400 billion MICE (meetings, incentives, conference, exhibitions) segment. A team in Germany has been working with 300 hotels and meeting planners in Germany to move this “highly inefficient process from online to offline”. He also announced the first white label partnership for Expedia’s meeting market technology with Best Western, which will test this in Germany on 200 hotels. (Watch out for a more in depth look at Expedia’s current and future partnership strategy in the coming days).

The Airbnb factor

Of course, it’s not Airbnb alone that is driving players like Expedia to up their game, but there can be little doubt that its huge popularity with travellers has impacted the industry in numerous ways. Gary Morrison Senior SVP Global Retail admitted yesterday that its acquisition of HomeAway came from a growing recognition of the importance of vacation rentals and a priority now is to integrate that inventory across Expedia’s numerous brand sites.

Airbnb has certainly had an impact on the vacation rental space and Beckler argues that we can expect a growing mix of such inventory being integrated into resort developments. Although in resort communities, there has long been quasi hotel inventory that is partly residential, for ten to 15 years that was funded as timeshare, managed apartments or suites that acted as an overflow to the hotel – and not always that successfully.

“What Airbnb has done is to make the continuum between individual properties and the hotel far more viable, predictable and investable. It has created high demand for smaller type of properties and helped to connect these into a single ecosystem, thus raising the opportunity for innovative ways of financing new hotel construction,” says Beckler.  

So, with a new resort community today, there may be a hotel building with the advantage of all amenities that go with it at the centre of the development. But at the same time, units that are like vacation rentals could be sold to speculators – aka Airbnb super-hosts – or even to people who wish to live near a resort full time.

Says Beckler: “What this means is that you can create an entire construction project and finance it with a lot less risk because these vacation rental units can also be used as collateral for the whole complex.”

The rise of the urban host and managed services

It’s not just resort developments that are seeing a shift. Utpal Kaul, Head Global Tech Partnerships at tech firm BookingPal, argues that we can certainly expect to see professional hotel management companies and franchisors like Marriott, Hilton et al lend their expertise in managing day to day operations like on-demand or other services like housekeeping or distribution to any type of lodging establishment.

And why not, asks Beckler. Why wouldn’t Hilton, for example, want to control a network of vacation rentals that are an extension of their current inventory?

In this higher end space, we’ve seen this playing out with Accor’s acquisition of OneFineStay, an aggregator of luxury homes or short-term rental and more of this sort of consolidation is to be expected.

Meanwhile, on the other side of the fence, firms like Bemate, which manages serviced apartments in cities are also looking to offer value add in the form of a ‘city mate’ to meet-and-greet, organise cleaning services, transfers, restaurant takeaways and more.

On this score, Beckler wants to stress that there is a clear symbiosis between the hotel world and the world of vacation rentals. And though hotels could be better at distribution or marketing, they are well versed in the skills of hospitality, of managing teams of people, keeping them inspired and creating those necessary moments of joy. This is one of the big gaps as the rise of managed services recently has highlighted. 

The word hotel is increasingly going to be referred to as lodging

So in Kaul’s view“the word hotel is increasingly going to be referred to as lodging, as ‘alternative accommodations’ become more mainstream and the line separating the two becomes increasingly blurred.”

Predictive analytics and big data are likely to play a role in seamlessly pairing a traveller with the lodging establishment that best fits his or her needs, something else that Expedia takes seriously with the launch of Usability Lab in London – it already has one in Seattle and has plans for one in Singapore soon (again more on this later this week).  

Speaking yesterday Scott Crawford, Vice President, Product Managementsaid “travel is a technology problem and everything we do starts from a simple question – what customer problem are we trying to solve?” It a very complex problem to solve but the goal to give users a set of search results that is manageable and relevant based on any number of factors, including length of stay, days before arrival, party numbers, destination market and so on.

Returning to the hostel story, Beckler points out that Airbnb was able to absorb this segment without making any material changes to its platform. Call it genius, call it beginners luck, few will dispute this travel industry success story.

But times are changing and the winners in this competitive landscape will be those that are able to, first and foremost delight guests, but, perhaps, also their partners, at every turn.

Which possibly explains why going forward, as Morrison put it, Expedia will be “thinking a bit more about features that make travel easier” and a little bit less about point-of-sale expansion and acquisition growth.

Join us at the Smart Data Travel Summit, North America to hear more insights alongside other innovators from brands including Accor, Las Vegas Sands, General Electric, Hilton and more

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