Airbnb. DMO Friend or Foe?
When "market disrupter" Airbnb came onto the scene in 2007, their business model was viewed by the tourism industry with skepticism. Where does Airbnb stand today?
When "market disrupter" Airbnb came onto the rather stable tourism industry scene in 2007, their business model was (and still is) to connect visitors with hosts offering private residences and apartments as "alternative accommodation" options in both hot spots—and not-so-hot spots. While the public perception was generally to welcome Airbnb with open arms, the initial reaction within the tourism industry was that they would be a threat to what has been one of the main pillars of the industry for over a century—resorts, hotels, motels, and bed and breakfasts. Let's fast forward to consider where Airbnb is today related to three important factors:
- Money. One of the initial concerns with Airbnb was that they were going to divert guests (and potentially substantial revenue) from traditional accommodations providers (i.e. resorts, hotels, motels, and bed and breakfasts). And, with each of those diversions, accommodations taxes would not be collected. This would mean that DMOs were still being tasked to inspire potential visitors to come enjoy their destination, but current and future visitors utilizing Airbnb and other alternative accommodations providers would not be collecting the accommodations taxes that most DMOs rely on heavily to fund their operations (primarily to inspire future visitors to come enjoy our cities). Looking back at hotel occupancy rates since Airbnb's launch, it is hard to substantiate how these non-traditional accommodations have had a substantial negative impact on hotel occupancy rates—from a 2009 low of 54.6% in the wake of The Great Recession, national hotel occupancy rates have improved almost every year since to 66% in 2019. As for the collection of accommodations and other taxes, Airbnb has slowly but surely been compelled to require more and more properties to follow their local tax policies—you can check out Airbnb's list of occupancy tax collections here. With stabilized hotel occupancy and additional accommodations brokered by the likes of Airbnb and others, economically speaking more overall visitors staying in accommodations of all types generates even more economic activity than would be possible without these alternative accommodations—meaning more money spent in restaurants, attractions and retail businesses in numerous categories.
- Diversity. Having a variety of accommodations in your area should really be viewed as a positive attribute. Most visitors want to have authentic experiences and knowing that they have options on where they stay to best fit their needs will heighten their interest in visiting your destination. And keep in mind that alternative accommodations absolutely have limited availability and often require additional fees and expenses that traditional accommodations do not require. So, once someone is interested in visiting your area, they are likely to investigate all the available accommodations before they book their trip. And having a diversity of available accommodations including hotels, motels, Airbnbs, bed and breakfasts, campgrounds, etc. will make it far more likely that they will actually book that trip.
- Promotion. As a DMO, once alternative accommodations are collecting and remitting accommodations taxes appropriately, you now have one more accommodations engine to mention, promote and to have visitors book travel to your area. So not only does it make it easier for the potential visitor to find and book a trip to your area, it also means more eyes seeing your destination as a possibility for their next trip. As long as it’s positive promotion, any additional effort to promote visitation to your area should be welcomed.
You can choose to look at alternative properties as foes and simply ignore that they even exist. Or, as long as they are properly remitting taxes collected back into your community, you can look at them as friends working within your local hospitality ecosystem (just like the wide variety of traditional accommodations providers that are operating in your destination). If you choose the latter, alternative accommodations can be a constant reminder to celebrate and master what makes your destination different and appealing to the target audiences who best fit your destination. If the alternative accommodations in your area are not collecting and remitting the proper taxes (so you can consider them friends of your hospitality community), you might want to get making that happen on your to-do list.