With last week’s rapid-fire announcements, Airbnb has joined the ranks of ‘companies that freak the industry out,’ such as Google. Just observe reactions to Google’s latest move in travel.
Beyond the argument against Airbnb as a direct competitor to hotels, there’s one clear advantage: an additional distribution channel puts downward pressure on commissons. If Airbnb manages to maintain its low commission rate as it expands supply (it’s not cheap to put market managers around the world), then hotels could see a significant shift in the economics of distribution.
This is a good thing for hotel owners, and if these savings are passed along, then hotel guests could also be quite happy with their hotel partners. And a happy guest is the first step towards a loyal guest, reinforcing the hotel’s competitive position with the traveler.
Right now, the company doesn’t need to spend as much on marketing as the OTAs, which means that it can get away with the lower commissions it’s promised. Between lower commissions and less money spent on advertising, Airbnb is poised to shake things up fast.
If Airbnb sticks to its promise of lower commissions – often as low as three percent – there’s also the potential for hotels to pass along the savings to travelers. While there’s no guarantee to this, a lower commission structure could reasonably create some competitive pricing among hotels. It would also lead to economic pressures across the travel value chain – ultimately, this could mean a much better experience for travelers.
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