Everybody loves to travel and since the its founding in 2008, AirBnB has made it possible for people to vacation and experience different cities more economically. But what has that done to big hotel businesses bottom dollar? It was believed that AirBnB would hurt the hotel industry and since its establishment, the house sharing company has grown from 47,000 guests in the summer of 2010 to a whopping 17 million in the summer of 2015. But even when considering this large expansion, it has not had a huge impact on hotel chains.
In a study between 2014 and 2015, it was found that the RevPAR—revenue per available room—for U.S. hotels was actually up by 6.2%. “The last two years have been banner years in terms of top-line growth,” said VP of research at Phocuswright (a travel research firm) Douglas Quinby. “AirBnB is a media darling, and they’ve innovated in a lot of ways, but honestly, the incidents of AirBnB usage among U.S. travelers isn’t so high that it’s imperiling the hotel business in the near-to-medium term.”
The executives at AirBnB believe there’s enough room for AirBnB and hotel chains to thrive in the hospitality market. “We’ve always believed that for us to win, no one has to lose,” said the director of public affairs PR at AirBnB Nick Papas. “Hospitality is a large, growing market, and we think there’s a place in this market for everyone.”
Even though AirBnB’s growth hasn’t had that much of an impact, hotel chains are making efforts to market to millennials to attract more customers. According a survey done by Mintel, 82% of millennials took a vacation versus 75% of all consumers in the U.S. in the past 12 months. That considerable number is what’s making hotels think more about their brand identity.
“This is the biggest generation of travelers. They’re larger than boomers or Gen X, and they travel much more, and they’re more passionate about it,” Quinby said. “They want different things from their travel experience.”
Part of the new marketing strategy for hotels is to launch millennial-focused brands, develop a localized identity, and focus on offering unique services.
Many hotels have created completely new brands to specifically appeal to millennials, such as Moxy Hotels, a chain launched by Marriott in 2015 with young travelers in mind with hotels in locations such as Milan, New Orleans, Munich, and Frankfurt. “We did tons of research to find out what millennials wanted, and the ideas of authenticity and communal spaces was very important. The idea is to create a living room where you can hang out with people and also always be plugged in,” said global brand director of Moxy Hotels Vicki Poulos. “It’s like a boutique hotel that has the social heart of a hotel. That’s why people stay at an AirBnB, so we built a band that has the same communal spirit.”
Radisson Red, a millennial-focused hotel by Radisson, allows guests to check in and order drinks from the bar via an app. “The brand has a DIY component to it. The millennial generation has grown up with their entire lives online, so we’re infusing the hotel brand with more social connectivity,” said VP of branding Rich Flores.
Fiona O’Donnell, the director of travel and leisure research at Mintel, said this about millennial-focused hotels:
“Millennial-targeted hotel chains are value-branded hotels, but what they’re doing differently than old-school budget brands is, they’re focusing on the design aspect, which is huge for millennials. The branding, the color schemes, the layout of the hotel—it’s all been turned on its head. It’s a lower-cost option, but they’re doing it with some flair. You look forward to staying at these places because they’re fun, and they’re hip and cool and new.”
The idea of “living like a local,” AirBnB’s well-known motto, is another concept that hotels are embracing as well. “Millennials don’t want to walk into a chain and say, ‘Oh, this looks like the one I stayed in last week on the other side of the country,’” O’Donnell said. “They want to feel like it’s homey, comfortable and interesting to look at.”
Perhaps the benefit of being a big hotel chain is the ability for these brands to establish new and unique marketing programs that will attract millennial travelers. A great example of this is the Westin. They rebuilt their identity around health and wellness, offering guests workout gear, a health-focused menu, and a concierge service that will let guests know about all the best local running routes.
“75% of millennials say that travel is one of the most important things to them, and more than 65% say health and well-being is the most important thing,” said SVP and global brand leader for Westin Hotels & Resorts Brian Povinelli. “We have a compelling proposition that could only come to life, realistically, with the resources we have as a full-service hotel. We have that infrastructure to deliver that, whereas AirBnB doesn’t.”
Since the passion for travel does not show any signs of slowing down in young travelers, the hotel industry will have to keep on evolving to attract future generations of travelers, Toni Stoeckl, VP of lifestyle brands at Marriott, said. “Our business is not just heads in beds.It’s not just a functional stay anymore. It’s not just a clean shower and a comfortable bed. It’s more about providing an experience.”