Airbnb offers millennials control – to compete, hotels have to look for marginal gains in surprising places

The UK hotel industry remains buoyant and highly competitive, with 15,000 new rooms opening in 2018, according to Knight Frank. This is in spite of numerous challenges, none more so than from Airbnb.

Whilst research has suggested that the arrival of Airbnb has had a variable impact on the hotel sector (data shows that overall RevPar is not directly correlated to the volume of Airbnbs in a city but other factors, such as the quality of Airbnbs on offer, do impact local hotels) most hotel owners will admit that it has forced them to up their game. Having expertly tapped into the wants of millennial travellers, Airbnb has further catalysed the desires of these travellers for customisation, control and instant access to services from their palms.

Indeed, a recent survey from Deloitte found that millennial travellers are 20 times more likely to value ‘empowerment’ from their travelling experiences than people aged 55-70. Given that these consumers represent an estimated $200 billion market, hotels have been falling over themselves to add technology that adds control and choice to the guest experience, in the hope of attracting young travellers and securing them as return guests.

Dave Brailsford, the former performance director of British Cycling and the man credited with turning a laughing-stock team into world beaters, is famous for coining the phrase ‘marginal gains’. The team conducted extensive tests on which energy gels to use, which fabric to use in their cycling shorts, and even painted the inside of the team bus white so that dust, which would compromise performance, could easily be spotted and removed.

Astute hotel managers recognise that the ‘marginal gains’ of guest experience start long before customers arrive through the door. In the current climate of intense competition and AirBnB’s existential threat, even parking facilities are not a detail that hotels can afford to overlook. Given that 76% of travellers say their smartphone is their most important travel companion, enabling car drivers to reserve a parking space via an app is essential for competing for these customers.

Adding this service to a technology offering that already likely includes instant access to room service, local area guides, gym class booking and restaurant menus will enable hotels to compete with the control and instant access that services like AirBnB offer millennial travellers.

It’s important to note the impact that millennial travellers are also starting to have on the business travel market, worth £39bn in the UK alone. According to Egencia’s Business Travel and Technology Survey, in 2018, 25% of UK business travellers made use of a shared economy lodging service like AirBnB and a further 44% are now considering it. Hotels can fight against this by capitalising on what business travellers, particularly those driving long distances, value: Ease of access after a long journey, option for late arrival, and through technology, being able to guarantee a parking space.

Of course, all this investment in technology costs. If Airbnb has forced hoteliers to up their game, managers know this has been coupled with pressure on margins. According to Hotstats, non-room revenue has decreased by 0.4% already in 2019. Aside from providing great guest experiences, parking technology apps enable hotels to increase parking revenues by an average of 20%, even if a car park is already at capacity. Parking charges can then be integrated into the customer’s overall bill to ensure a seamless experience.

So whilst your car park may seem like a peripheral consideration, these are the kinds of marginal gains that hotel managers cannot afford to ignore.

Contributed by JustPark