jesse

Make way for the Big Boys Airbnb

The hotels, legitimate Bed and Breakfast, and Inns are all perplexed by Airbnb but I it will not be long before the industry leaders start learning from their experiences to finally clear the Air. Airbnb is nothing more than a troublesome 3rd party agent. 3rd party agents are not new to the industry. We used to call them travel agents, and believe it or not there are still some agents of travel that have desks and store fronts. But unlike respectful travel agents that journey around visiting places to refer people to, the new 3rd party agents are computer programs that feed off space that people are willing to exchange for money online. The Global Distribution System (GDS) was designed to connect agents with commissionable properties all around the world. Airbnb is just another distribution agent looking for a commission and fees. The hospitality industry has evolved around commissioned based sales and has grown because of it. The Airbnb business, in its young stage, will ride high on its brand but I believe that as it gets bigger, the desire for more room nights and more commissions will change the dynamic of the company. This is where I think things will level off for the legitimate lodging businesses.

It is not practical for a hotel, as of right now, to list their rooms on Airbnb. Airbnb does not have a system that can give real time availability and link to sophisticated reservation systems. Once Airbnb implements this feature, the game will be changed forever. Let’s look at Booking.com. Booking.com recently made the GDS a feature of their system. Booking.com was supposed to be the smart, economic alternative to small lodgings that could not get on the GDS. The messiness of no real time booking, quickly confused the business plan for the new 3rd party agent.  Further, I even hope to see Expedia merge with Airbnb. Perhaps call it AirRoom, or AirBed. The micro, 1 room lodgings, will have to pay to be connected to the GDS and figure out a way to keep up with the travel agent commission reports. I like to think these administrative tasks compounded by cleaning up after strangers will damage the hobbyist Innkeeper.

As a small lodging, whom has had to try compete with the big boys in the industry, I am convinced that the big, money making world of selling space will squash the share economy. I encourage Expedia to buy Airbnb. Expedia already owns:  Hotels.com, Hotwire.com, trivago, Egencia, Venere, Expedia Local Expert, Classic Vacations, Expedia CruiseShipCenters and eLong. It is unfortunate that these 3rd party agents are shaping the travel industry, but it is a reality that we have to keep our eyes on.  I encourage lodging leaders in worldwide lodging associations to work with these 3rd party agents to try to contract lower commission rates for everyone. Yes of course government regulation is important but as we have seen in the past, rules and laws change locally all the time to benefit the majority. In small towns, the majority are the independent homeowners, there are more of them than those in lodgings. It is important to make the entry to the game high so it doesn’t make sense for the hobbyist to get involved. Yes, I know there are demons in the GDS system and they should not have so much power, but that’s another opinion post I can write.  This is just my 2 cents, what do you think?