crylic carpeting with a beige and brown zigzag design. A large bed with a fluffy white comforter. Two bedside tables with glued down lamps complete with twist buttons for on-and-off functionality. This is your home-away-from-home when you visit a new city. And, this cookie-cutter space could cost more than your monthly rent or mortgage payment, depending on your travel plans. But this is where you’ve stayed every time you travel. The classic hotel room. It’s what you know.
However, there’s a new economy in town — the sharing economy — which has made a splash within the travel industry thanks to the likes of Airbnb, HomeAway and others. We have now entered what’s known as collaborative consumption, where owners rent out an asset to a stranger using these “disruptive” peer-to-peer services driven by the most inventive minds in Silicon Valley.
The popularity of this economy has made a significant dent in the hospitality industry and the towering hotel chains are starting to sweat. Travelers now have endless options. Villas in Tuscany. A Victorian row house in San Francisco. Cottages in the French countryside. At similar price points, the single-roomed hotel reservation is now in competition with multi-roomed condos, unused timeshares, lakeside homes, and even castles. Yes, castles.
Recently, the RevPAR otherwise known as “revenue per available room” declined abruptly in New York City alone. At the same time, the home sharing economy is not just benefitting travelers, but anyone with extra space to rent out can become a virtual hotelier.
From a business perspective, the tech companies behind these sharing platforms enjoy little to no overhead. There are no associated inventory costs and Airbnb, which boasts 550,000 listings in 192 countries, will soon surpass the InterContinental Hotels Group and Hilton Worldwide as the world’s largest hotel chain, while not owning a single piece of property. In fact, during last summer’s World Cup, Airbnb was the single biggest hospitality provider in Brazil.
This is not to say the popularity of the sharing economy hasn’t had its growing pains, with zoning and usage issues coming into question. CBS Boston reported that after a rise of travelers paid for falsely advertised accommodations on Airbnb, hundreds of complaints were filed with the Better Business Bureau, some calling Airbnb a “scam with false prices and dangerous houses.” But, once the legal dust settles, the question needs to be begged: are we entering an entirely new economy within the travel industry, driven less by hotel chains and more by, well… the people? Can the timeshare industry can take advantage of this shift? With the industry’s delinquent and unsold inventory, not to mention the time not used by owners, there is a huge amount of inventory at great resorts without the zoning issues Airbnb is struggling with. The technology to do it is right at our fingertips.
Travelers will always love their hotel lobby bars, daily maid service and in-room dining. The market for hotels will still exist. But, now hotels suddenly have to share this market with some pretty threatening competition. Millennials are paving a new landscape. And those born into this generation will piggyback on it, make it better and more effective — and the cycle will continue. With the only option to price competitively, can hotels burdened with tremendous operational costs survive? Is this the first bullet fired into the gut of the hotel industry? Only time will tell.
About the Author:
Jay Yadon is the CEO and co-founder of ResortShare, an award-winning company that connects the millions of prepaid unused nights found at select timeshare resorts with people searching the leading travel websites.
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