PhocusWire was the first industry publication breaking the news last week that Airbnb was acquiring online travel agency HotelTonight.
In my view, this is another step on Airbnb’s warpath to turning itself into a full-blown online travel agency.
But, we have to ask: Why does Airbnb want and need to become an OTA?
There are three main reasons:
1. First mover's advantage is over.
Fierce competition by the mega-OTAs in the alternative accommodations sector.
Booking.com has more private accommodations than Airbnb, and 100% of these are bookable in real time vs. Airbnb’s 50% bookability.
Booking.com and the other OTAs are quickly transforming the alternative accommodations sector from a very complicated, manual and expensive exercise (remember the breakage fees every vacation rental owner used to charge?) into a simple real-time booking process, not different from how travelers book hotels online.
2. Unchecked rental unit growth is over.
Continuing legal battles of local municipalities vs. Airbnb practically in every single metropolitan area around the globe, from New York City to Barcelona to Tokyo.
Airbnb feels squeezed from all fronts and realizes that their unit growth will be further curtailed by local regulators.
3. Guest fees are over.
Booking.com is setting the tone toward the elimination of guest fees.
Airbnb’s business model of charging both host fees (4% to 8%) and guest fees (6% to 10%) is over, due to Booking.com’s not charging any guest fees.
Hosts pay more to Booking, but typically Booking brings overseas clientele with longer stay, so this compensates for the higher commissions.
What does the HotelTonight acquisition bring to Airbnb?
The only benefit to Airbnb is the pre-IPO message it sends to Wall Street: “We are serious about becoming an OTA and taking the fight to the established OTAs like Booking Holdings and Expedia.”
This acquisition is not about some special kind of hotel CRS technology: HotelTonight still uses manual extranet to access hotel inventory for many of the hotels using this channel.
Nor is it for HotelTonight's mobile app or marketing prowess - Airbnb has all that. It is not about some steady access to hotel supply: HotelTonight has very tenuous relations with the industry at best.
Airbnb has a long way to go, indeed, before challenging Booking.com or Expedia in several crucial areas:
Booking.com offers real-time bookability to over 1.1 million hotels and Expedia to nearly one million hotels vs. Airbnb's 30,000-plus hotels.
Contracting, building relationships with and achieving real-time bookability with one million hotels is a super daunting task that would require huge investments in technology, personnel, know-how, B2B marketing and consumer advertising.
Read Original Article