The company is disrupting the travel industry and winning over consumers.
Airbnb (ABNB -0.93%) was increasing customers and growing revenue rapidly before the onset of the pandemic. The inherent advantages built into its business model were fueling the growth, making it an attractive choice for travelers.
As widespread COVID-19 vaccinations make a return to travel more likely, here are three use cases where travelers may choose Airbnb over hotels.
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1. Group travel
Traveling in a group makes it more likely you will choose Airbnb. The company's platform offers entire homes to book for short-term stays. Unlike a hotel, where you may need to reserve several rooms for your group, on Airbnb, you can book one home for your whole party. In many cases, the experience on Airbnb will be better as well. If you book a home with a swimming pool, for example, you won't have to share it with anyone outside of the group, unlike in a hotel.
Importantly, group and family travelers spend more on their trips than individuals. With the need for more space to accommodate more people, Airbnb has a lucrative edge over hotels in this category. Airbnb has already observed an increase in group travel as the company bounces back from the pandemic.
2. Out-of-the-way locations
Hotels usually focus their offerings on locations where tourist count is high. Think Los Angeles, Paris, London, and Miami. These are cities hundreds of thousands of people want to visit every year. Hotels need large markets to justify the costs of building expensive buildings. They typically shy away from rural locations that don't attract large swarms of visitors.
This is another area where Airbnb wins. With far fewer hotels in non-urban locations, Airbnb offers listings of rooms, and even entire homes, in non-urban areas. Indeed, from the first quarter of 2019 to Q1 2021, active listing in non-urban areas has grown by 30% on Airbnb. The company now has 4 million hosts with listings across 100,000 cities worldwide.
3. Long-term stays
Folks looking for a place to stay for an extended period of time are more likely to choose Airbnb. A hotel is not very comfortable when staying for more than a week. Few have kitchens, laundry rooms, or other accommodations that become more important during long-term stays. On Airbnb, the host will often make available such accommodations to guests renting a room. And they are certainly available to guests renting an entire home, condo, guest house, or apartment.
The coronavirus pandemic is making remote work a real possibility for many professionals worldwide. That means you don't need to be stuck to being within close proximity to your workplace. You can live someplace for two months and another for three weeks. Airbnb is watching this trend develop. In its fiscal first quarter, 24% of stays were for more than 28 days, a substantial increase from 14% in 2019.
Airbnb was already gaining favor with travelers before the pandemic. Major changes in lifestyle caused by the pandemic are likely to reignite that trend. Investors looking for a stock that will benefit from reopening economies can put Airbnb on their lists.
Parkev Tatevosian has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Airbnb, Inc. The Motley Fool has a disclosure policy.
FAQs
Alternatively, Airbnb is able to compete with hotels by offering guests the option to live like a local during their trip. Anything a hotelier can do to make guests feel special, both on-site and out on the town, will help to build a hotel's reputation and encourage repeat business.
What is the competitive advantage of Airbnb over hotels? ›
Alternatively, Airbnb is able to compete with hotels by offering guests the option to live like a local during their trip. Anything a hotelier can do to make guests feel special, both on-site and out on the town, will help to build a hotel's reputation and encourage repeat business.
How Airbnb was able to gain a competitive advantage? ›
User-Generated Content: Airbnb's success is largely due to its strategy of posting videos of customer experiences on its website and social media. Potential visitors can have a glimpse of actual travel experiences through these films.
Why do people prefer Airbnb over hotels? ›
Why would you choose Airbnb over a hotel? You might choose Airbnb over a hotel because the nightly rate has the potential to be cheaper and less interactive than a conventional hotel stay. With self check-in, for example, guests do not have to physically interact with their hosts.
What is a competitive advantage for BNB? ›
Airbnb's competitive advantage lies in its innovative combination of technology and user-friendly services. Their platform connects hosts and guests from around the world, allowing them to rent out their homes or rent space in other people's homes for competitive prices.
What makes Airbnb different from hotel? ›
Hotels are a far more traditional concept, with guest rooms and occasional suites. Airbnbs, on the other hand, typically offer residential-style amenities like living rooms, kitchens, dining rooms, laundry facilities and, in some locations, a private place to park your car.
What factors made Airbnb so successful? ›
The biggest factors that ultimately led to Airbnb's success were its innovative business model, its focus on customer experience, and the power of word-of-mouth marketing. Airbnb created a unique platform that allowed people to rent out their homes or spare rooms for short periods of time.
What is the key success factor of Airbnb? ›
The idea caught on quickly, and within a year, they had bookings in 89 countries. One of the keys to Airbnb's success was its ability to create a sense of community among its users. By allowing people to rent out their homes to travelers, they were able to create a more authentic travel experience.
What makes Airbnb unique? ›
The inventory Airbnb offered was also famously whimsical: anyone could upload any space, and Airbnb listings were soon populated with treehouses, castles, teepees, shipping containers, and more. One of the biggest ways in which Airbnb was different from the companies that came before it was simply that it was urban.
Do people prefer Airbnb to hotels? ›
In a recent survey, 83% of travelers said they like staying in hotels, and 64% said they like home rentals. Hotels generally have more consistent quality, more amenities, and better locations. Home rentals are often more affordable and more spacious, so they work well for large groups.
Beyond revenue, hotels are also experiencing a drop in ancillary income, such as food and beverage sales, due to guests choosing Airbnb accommodations. The presence of Airbnb is also challenging hotel loyalty programs, leading to a 2-3% decrease in hotel revenue for every 10% increase in Airbnb market share.
What is the major effect of Airbnb on the hotel industry? ›
Airbnb has increased room availability, resulting in reduced prices for consumers, especially during high peak times. These effects are more prominent in larger cities. High demand during peak times coupled with limited capacity results in higher prices for the consumer.
How competitive is Airbnb? ›
“The Airbnb market is competitive now and becoming more so every day,” explains Isabeau Miller, the CEO of Beckon Homes, a company focused on helping real estate investors find, furnish, market and manage their Airbnbs. “Travelers now expect hotel-like amenities and services, with a personal and individualized touch.”
What is the strength of BNB? ›
Beyond the exchange's performance, BNB itself is demonstrating technical strength. The Relative Strength Index (RSI) has remained close to 60, indicating neither overbought nor oversold conditions. Additionally, the Moving Average Convergence Divergence (MACD) analysis suggests a moderately strong upward trend for BNB.
Why is Airbnb preferred? ›
One of the biggest advantages of using Airbnb is that it provides a personalized experience to travelers. Unlike traditional hotels, Airbnb offers a variety of unique and authentic accommodations that cater to individual tastes and preferences. Airbnb offers affordable prices compared to traditional hotels.
What is the competition of Airbnb? ›
Vrbo. Vrbo, otherwise known as Vacation Rentals By Owner, is often heralded as Airbnb's closest competitor. This platform stands out with its wide range of listings and powerful “total price” search option, letting travelers see the full cost upfront.
How hotels can beat Airbnb? ›
Showcase food and beverage menus that highlight local dishes and give guests a hometown feel. Pools, steam rooms, gyms, parking garages, complimentary valet — some hotels have been putting the amenities that traditional Airbnbs lack at the forefront of their marketing strategies.
