AirBNB has become the largest “hotel chain” in the world and it’s having a huge impact on hotels in tourist destinations like the Caribbean. It’s hard to say what the exact conditions were that enabled AirBNB to succeed. Some argue the knowledge the internet brought into our homes gave travellers a stronger sense of security, while others believe that government legislation making all beaches in the Caribbean public opened up the market to AirBNB, while still others argue that the desire for more local experiences was crucial to their success. I tend to think it was a convergence of all of the above. The playing field for the hospitality industry was significantly changed, and hotels can either change with it, or fade away.
Change isn’t easy, especially to those who have spent there careers in the industry. As AirBNB expands people begin to demand more from their vacations, they learn that having a view of the ocean, is better than not having it, that having a kitchen to cook in is better than having to eat out every single night. If travellers can rent a home with a view of the ocean and access to a beach – they are more likely to rent it than a hotel room that doesn’t have a view of the ocean. I would argue with any hotel developer out there that having a property with an ocean view, kitchenettes, and beach access, is far more valuable than a hotel room located on a beach. And until the industry begins to take AirBNBs influence on travellers seriously, they’ll miss out on opportunities driven by the change.
The first victims of AirBNB are the “garden view” hotel room suites. Why would anyone choose to pay for a small garden view room, when they could rent a large room in a home with a view of the ocean for far less, and get free access to a number of beaches?
In Barbados a family can rent a 4 bedroom home through AirBNB with a pool, an awesome view of the ocean, and public beach access 5 minutes away, for just under $300/night. Compare this to one Superior room at the Marriot hotel in Barbados for $220/night and it is easy to see why the hospitality industry is in turmoil.
Add to this the rise of “Beach Clubs” like Nikki Beach and there is little reason to rent a room at a large corporate hotel.
So what is the answer? How can corporate hotel chains survive when AirBNB has so completely changed the playing field?
They have to start adapting to the change and offer more than just a room. They need to take a lesson from the small boutique hotels that are succeeding by attracting travellers with “experiential” opportunities. For starters, the land costs for a boutique hotel smart enough to know they don’t have to be right on the beach, are much lower. Boutique hotels offer travellers the chance to experience local culture and many of them set up partnerships with local businesses. Successful boutique hotels provide on site programming (yoga and cooking classes, nature hikes etc.) giving travellers more than just a room on the beach, but a memorable experience.
Corporate hotels have to change the way they do business. Sweeping policies that once guided their developments need to be strategically evaluated. For example here is a quote given by a development manager at the Marriott “We are currently interested only in a beach location for a luxury or an upper-upscale brand in Barbados.” That kind of thinking is why so few of the large hotel chains succeed on islands like Barbados, where boutique hotels owned by private families control the luxury market.
Corporate hotels have a choice – change now or slowly watch their profits wither.