As technology has allowed travel to become easier and more affordable, consumers have noticed an increased in accommodation options during vacations and business trips: peer-to-peer lodging. As an alternative to hotels, peer-to-peer lodging features an individual opening up their home for a small fee for travelers-anywhere from a couch in the living room to a private room to an entire residence. Undoubtedly, the leader in the peer-to-peer lodging field is AirBnB, a service that connects those hoping to rent space in their house or apartment with potential travelers. With over 50 million users in over 150 countries, AirBnB is challenging traditional hotel chains to appeal to millennial travelers.
Indeed, a recent Goldman Sachs report found that travelers" who have stayed in P2P lodging in the last five years, the likelihood that they prefer traditional hotels is halved (79 percent vs. 40 percent)." Researchers further outlined this phenomenon with the conclusion, "We find it interesting that people 'do a 180' in their preferences once they use P2P lodging." This data should be cause for concern for major hotel chains, but should not come as a surprise.
AirBnB was founded in 2008, but experienced a surge in 2015 as the service came to popularity with celebrities using the site to rent homes as they travel and an increase in publicity as cities attempted to regulate P2P lodging. In Summer 2015 alone, over 17 million AirBnB users booked a stay through the site. The popularity has led to a $25.5 billion valuation, which makes AirBnB worth more than even some of the most prominent publicly traded companies today.
The popularity of AirBnB with millennials is easy to surmise. First, it offers affordable alternatives to as well as more options than traditional hotel lodging. Travelers can rent a couch for around $10/night, while house rentals can run anywhere from several hundred to several thousand dollars per night. Younger consumers value choice, and AirBnB truly gives them a range of choice. Additionally, the service not only provides a place to sleep but connects travelers with local hosts who are often welcoming and knowledgable about navigating their cities. Compare this to traditional hotel chains-where consumers often pay for little distraction but also little warmth-and AirBnB's rise in today's market seems clear-cut.
But hotel groups are pushing back. Chains like Starwood
AirBnB's rise to prominence will certainly affect the hotel industry, but it is hard to say how exactly. Consumers today demand more personalization and choice, and chains like Starwood and Hyatt have already attempted to do this by building new properties with rooms that look more like small apartments rather than traditional hotel offerings. Analysts say that Extended Stay
The hotel industry is in the midst of a shake-up, with the disruptive AirBnB capturing more market share each year. With the recent Goldman Sachs report, combined with a recent push by hotel groups to limit AirBnB's growth, both traditional hotel chains and P2P lodging must continue to evolve to accommodate their competitors and stand apart in a crowded marketplace.
