How Has Airbnb Affected the Hotel Industry?
To better understand how Airbnb has impacted the hotel industry, we have to take a closer look at how the platform has disrupted the industry. The digital transformation of hotels has been dramatically impacted by Airbnb, as have host surpluses. So what does this mean for the industry? Read on to learn more. Here are a few facts about Airbnb. Despite the positive aspects of the platform, there are a few negative impacts.
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Impact of Airbnb on the hotel industry
The effects of Airbnb on the hotel industry are complex and entangled. They seem to be based on dynamic comparisons of price and value. The research indicates that guests evaluate both products when they make a booking decision. The users compare user reviews of both products to decide which is better. The study authors, two Harvard Business School assistant professors, are also working on an empirical model of Airbnb’s effect on the hotel industry.
The impact of Airbnb on the hotel industry is mostly positive for consumers and hosts. Despite the negative impact on hotel profits, it has also generated a surplus for both the host and the consumer. In 2014, Airbnb generated a welfare gain of $137 million, reducing hotel profits by up to 3.7 percent. The effects of Airbnb on the hotel industry are more visible in large cities. In addition, it is estimated that up to 65% of all hotel bookings in New York City were affected by Airbnb.
Impact of Airbnb on hotel digital transformation
In today’s fast-paced environment, the impact of Airbnb on the Hotel Industry is not only measured in the number of listings but price-to-value. The disruption has forced hotels to adapt to changing customer preferences, adopt innovative strategies, and integrate new technologies. Branded and independent hotels have responded to the Airbnb disruption by extending their limited-service hotel offerings. In addition to expanding their limited-service offerings, hotels have incorporated innovative hospitality services, efficient design strategies, micro-rooms, and other new technologies into their operations.
Airbnb is a great example of this new hospitality economy. Airbnb hosts, unlike hotel hosts, do not personally greet guests. Instead, the Airbnb manager communicates with guests. While the Airbnb host may not be physically present during a guest’s stay, the human factor creates a more positive customer experience and brand loyalty. Hence, the hotel industry should leverage this factor to increase its customer satisfaction scores and brand loyalty.
Impact of Airbnb on host surplus
The impacts of Airbnb on the hotel industry are numerous. Since its launch in 2008, Airbnb has listed more rooms for rent than any other accommodation in the world. In smaller cities, its supply share is less than one percent, while in major cities such as New York City, the figure reaches 15 percent. Because Airbnb hosts are allowed to rent out their properties anytime they want, their prices are flexible and respond to the fluctuating demand. However, this has negative consequences, as high demand can limit the availability of rooms and increase prices.
Regulations have been aimed at alleviating the negative externalities of Airbnb, while not attempting to level the playing field with hotels. Many have complained that enforcement of peer-to-peer laws has been difficult. New York City’s Multiple Dwelling Law prohibits short-term rentals, but Airbnb allows them to use their “entire home” as a vacation rental even if the host is not present.