Peer-to-Peer Booking Sites No Threat to Demand

The booking site, which allows consumers to book residential spaces or units from willing private owners, netted Singh a penthouse with city views for only $200 a night.

The CEO of online sales and marketing consultancy Envision has since used the service to book everything from vacation getaways to upcoming conferences—and he’s not alone.

Platforms such as Airbnb, Onefinestay and 9flats are springing up with increased regularity, putting would-be bookers directly in touch with the intrepid property owners—and leaving hoteliers watching from the sidelines.

But does the new peer-to-peer landscape truly impact or count as a threat against hotel demand? Sources said no.

“Does that show up on the hotel guy’s radar at all? I don’t think so,” said Mark Eble, VP of  PKF Consulting’s Midwest practice.

Companies such as Airbnb might find their way into headlines for their innovative booking platforms or questions of legality, but they still occupy only a fraction of total hotel supply, he said.

Airbnb finished 2012 with more than 300,000 individual listings across the globe, for instance. There are nearly four times as many hotel rooms in the South Atlantic region of the United States alone.

“There may be some incremental leakages, but we don’t see it as being anything really substantial,” said Douglas Quinby, who analyzes such peer-to-peer networks as principal analyst of PhoCusWright.

Even Singh downplayed the overall impact on demand. “One on one, it’s not completely ripping away market share,” he said.

An executive from Airbnb was not made available for comment.

Backpackers to businesspeople
Peer-to-peer booking sites attract a certain type of traveler—typically those who are a bit more adventurous and don’t demand certain standards and amenities, Eble said.

“A business traveler would never consider that,” he said. “You just don’t know what you’re going to get. There’s probably not going to be a nice little tube of shampoo in the bathroom. Housekeeping can be dicey …

“The level of service that you find at a hotel, even a modest hotel, doesn’t exist in those things, and businesspeople will avoid that like the plague,” Eble said.

However, residential listings can offer certain amenities a traveler won’t find at all hotels, Quinby said.

“You’re looking for a place to stay and you’re interested in more of a local experience or staying in a home type of experience. You may want amenities like multiple bedrooms, you may want kitchen facilities and furnishings or maybe a washer and dryer and things like that,” he said.

The variance between product can be massive, sources agreed. While the lower-end units might attract cost-conscious college students, others might be better suited for a businessperson setting up a makeshift office in a major metropolitan market.

“It’s not just a low-number, backpacker game. It’s also higher end,” Singh said.

What it’s not is a play to the brand loyalists, sources said.

“To a certain extent it definitely creates another option where you have travelers that may be a bit less brand loyal or a bit less concerned about some of the amenities and services that hotels offer. There may be some incremental competition,” Quinby said.

“Point-seekers won’t stay there,” Singh said. Peer-to-peer bookings sites tap into a growing customer segment that is less brand loyal and more experiential, he said.

Dangers of dismissal
To simply ignore peer-to-peer bookings sites would be a mistake, however, sources agreed.

Sites such as Airbnb do a number of things incredibly well that hoteliers would be wise to emulate, Singh said, pointing to the ease of booking in particular.

These platforms also have seamlessly built in review systems, he added. A potential booker can easily find ratings for a particular unit or owner, whose profile is made public to foster more transparency and, with it, a degree of comfort.

The platforms also offer guarantees and insurance for travelers and owners as an extra safety net.

Such innovations have caught the eyes of the investor community. Various peer-to-peer networks continue to receive investments in the hundreds of millions of dollars, Quinby said.

“It’s clearly an indicationtheir model is working, and it’s growing,” he said of that level of commitment.

So while the competition at present might not register on a major hotel chain’s radar, proactive companies such as NH Hoteles are actively monitoring peer-to-peer networks with an eye toward the future.

“The hotel market has to be expectant,” said Rufino Pérez, COO of the Spanish chain.

“We have to continue building unique solutions and providing a level of guest service that transforms what is 'sleeping' today into 'an experience worth sharing,’”