The hospitality industry is facing strenuous competition from short-term rental services provided through the Internet, such as those provided by Airbnb, so hoteliers should see how they can join in, says renowned Swiss hospitality management school Ecole hôteliere de Lausanne senior lecturer Remy Rein.
According to PwC research, revenue from peer-to-peer accommodation services is forecast to post compound annual growth of 31% between 2013 and 2025, and this potential growth is attractive.
Paris, in France, is one of the leading cities for technology firms looking to match up the owners of private apartments and rooms with tourists or business travellers. In November, there were 55 723 listings on Airbnb, 85.7% of which were entire houses or apartments.
According to insideairbnb.com, a site that tracks Airbnb data, the number of listings is 25.56% higher than last February, when there were 41 476 listings. Based on 616 403 guest reviews, the portal states that an occupancy of 92 nights a year per apartment translates into a 25.2% occupancy rate, with an average price per night of €102.
Further, even in a difficult year like 2016, the hotel occupancy rate in Paris ranged from 62.9% to 77%, depending on the hotel category, while the occupancy rate in Paris was running at 79.4% in 2015. These numbers reflect that hoteliers experienced full occupancy for at least 100 days during the year.
“However, the opportunities for hoteliers to expand in Paris are limited, owing to the high cost of real estate in the city. Based on the above data, however, there clearly are opportunities for hoteliers looking to tap the potential of the sharing economy.”
Hoteliers can offer homeowners variable or fixed-term leases for renting out their apartments on the short-term rental market or take a commission each time they introduce guests to homeowners looking to rent out their apartments.
“Further, hotels can manage short-term rentals for local homeowners. Most short-term rental sites do not offer homeowners either revenue management technology, which would adjust prices according to market demand, or sales staff who would market their apartments to local businesses. Hoteliers, conversely, have this local knowledge, as well as the computer and staffing capacity needed for revenue and sales management to offer such services,” highlights Rein.
Additionally, hotels can offer homeowners professional services. Short-term rental guests require check-in and check-out services and require the rented property to be clean on their arrival.
Further, the cost of acquiring new customers is high, says Rein.
For hoteliers, there is an opportunity to attract new customers at no extra cost. For example, offering breakfast, spa and concierge services to the customer, in addition to hotel rooms for the next stay – whether it be a family enjoying a vacation or one of the parents returning to the city on business – can net hoteliers more clients.
“Finally, hotels must bring services to their local communities. There is an opportunity for hoteliers to provide concierge services for the local community. Demand is already growing for such services, with concierge shops now emerging in Paris’s districts.”
For example, concierge shops have sprung up in Le Marais, providing a range of services for local residents, as well as for those looking to rent out their apartments. City officials allowed concierge service company Lulu Dans Ma Rue to set up a kiosk in front of the Metro so it could promote its “new concierge service for everyone”, emphasises Rein.
“Hotels offer all these services and more, but, by and large, local residents are not aware of them. The time is right for hoteliers to grab some of these opportunities,” he concludes.