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Is Airbnb really disrupting the local hotel industry?

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Airbnb

By Joseph L. Garcia, Reporter

IT IS MAN’S DESTINY to move, and in between each movement, there is a need for shelter.

For centuries, people who travelled from one place to another depended on hotels — and its various variations (e.g. lodgings, inns and hostels) — for their needs for shelter, and maybe a hot meal.

The hotel evolved through time not just to provide shelter, but to provide experiences that become part of the journey, as in five-star suites where travelers find a fine home in a foreign land.

In 2008, however, some air beds twisted the plot.

During a design conference in the city, two San Francisco residents, Brian Chesky and Joe Gebbia, responded to the demand for hotel rooms in the area by renting out air mattresses.




But more than just the extra buck, the more important takeaway is that they unawarely gave birth to a new service: offering the security of shelter stripped off the lavish accoutrements of a hotel. The two then teamed up with Nathan Blecharczyk to launch a site in time for another conference, the Democratic National Convention in 2008.

From its humble beginnings renting a bunch of air beds, the company called Airbnb (a nod to the air mattresses plus “bnb” for bed and breakfast) recorded 80 bookings — a number that is minuscule now, considering that Airbnb already boasts of five million Airbnb listings worldwide, and over 300 million guest arrivals.

A report by the Financial Times states that the aggregation platform, which sells through a website and mobile app, earned $100 million last year, and bookings grew about 150%, while revenues amounted to $3.5 billion, according to the same report.

More importantly, Airbnb has been valued at $31 billion according to The Atlantic, making it the second biggest start-up in America after Uber, with annual revenues doubling by the year.

Airbnb has earned the reputation of being the disruptor of the hotel industry. But is the hotel business really suffering?

OCCUPANCY

​In the Philippines, hotel occupancy in Metro Manila increased in 2017 by two percent, according to a report by Colliers International Philippines. While occupancy rates are projected to hover only between 65 and 75 percent for the next 12 months, more than 4,000 rooms are expected to be added to Metro Manila’s hotel room stock.

Last year, it was quite the opposite — at least in the United States — where hotel occupancy enjoyed its best year ever. Stock prices for Marriot and Hilton, both major hoteliers, were up by 40% in the last 12 months, according to the same report by The Atlantic.

Meanwhile in the Philippines, hotel occupancy in Metro Manila increased in 2017 by 2%, according to a report by Colliers International Philippines. While occupancy rates are projected to hover only between 65 and 75% for the next 12 months, more than 4,000 rooms are expected to be added to Metro Manila’s hotel room stock.

Asked if Airbnb made a dent in their revenues, Sofitel Philippine Plaza Manila’s revenue analyst, Renz Gacutan said, “being a resort hotel, we are not affected.”

Part of the Paris-headquartered AccorHotels Group, Sofitel sits loftily in its position with a reputation as one of Manila’s best hotels.

Its structure was built during the Marcos regime to accommodate delegates from the International Monetary Fund and the World Bank. The hotel was first held under the Westin brand, after which it changed hands to the AccorHotels group.

The facility offers a luxurious experience from its food and beverage outlets and its well-kept grounds, which offer pools, spas, and a stunning view of Manila Bay. Former US President Barrack Obama has stayed in its most expensive suite, and the hotel remains a top choice for visiting dignitaries and celebrities.

“Most of our guests book leisure staycations,” he added. “The properties that will be mostly affected [by Airbnb] are those in the city centers which are often catering to both business and leisure guests.”

BusinessWorld then contacted Discovery Suites Manila, a hotel located near the Asian Development Bank in one of the country’s financial districts in Ortigas.

The hotel has several other properties in Makati (another business district), Tagaytay (a mountain resort town), and in islands in Boracay and Palawan. Its hotel in Ortigas itself has been recognized several times in the industry, with its food and beverage outlets gaining listings in the Miele Guide, and achieving multiple Certificates of Excellence from Trip Advisor.

Its general manager, Leeds Trompeta, admits himself that he is a user of the Airbnb platform. “I myself am a hotel guest, and at the same time an Airbnb user,” he said.

“It all depends on the objective or purpose of travel as well as the destination,” he added. “If I’m a business man, for example, going on a three-day business trip paid for by the office, my company will put me up in a hotel because they already have a contract with them, or have an established relationship with them. When traveling on my own, it depends where I’m going, after all the research and touchpoints, I may opt to book an Airbnb.”

Mr. Gacutan of Sofitel agreed, saying, “Airbnbs normally offer accommodation and the experience of living in a specific area but do not necessarily offer luxurious amenities that are part of a luxury hotel such as restaurants, or a gym with physical trainers.”

DELIVERING CULTURE
Both agree, however, that the sanitized environments of hotels might prevent a traveler from seeing the real destination and really feeling the emotions of a journey.

“Airbnb is great at delivering culture to its users,”said Mr. Trompeta. Airbnb hosts, after all, are usually locals who have lived in the environment for a long time, and possess insight about what makes their own communities tick. “Airbnb is somehow limited to backpackers or light travelers who are more interested in experiencing the city or the area rather than the accommodation itself,” said Mr. Gacutan.

“Travelers visit, on average, about 38 websites in their ‘research phase’ before deciding where they want to stay, and Airbnb is just one of those touchpoints. What Airbnb did was introduce and elevate the ‘micro-moments.’ It spoke to the cultural purist that isn’t looking for a cookie cutter accommodation but looking to immerse themselves in a new city — understand the neighborhood, understand how people live, and engage with the culture,” added Mr. Trompeta.

Hotels, closed off by an insulating wall from unpleasantness, may not always provide the high that travelers want to experience. This may tie up with how millennials, a large chunk of the travel market, do not always seek material bliss and comfort, but both the charm and harm of real experience.

Both see, however, that the wall built between the fantasy world of hotels and the reality of certain locales are actually one of the advantages of staying in a hotel.

“Hotels are held to a high degree of standards and regulations for the protection of its guests. From customer service, government and sanitary regulations, data privacy and confidentiality, these are all standards that give travelers security and assurance that their stay will live up to a certain expectation,” said Mr. Trompeta.

“Airbnb the platform may have a strong data-privacy assurances or safe guards,” he added. “However, you’re not just dealing with Airbnb. You’re dealing with a unit owner who has your details. How are they handling that particular data? Are they subjected to the data privacy laws? And of course regulations — do they all have sanitary permits? Do they have proper sewage? Do they follow environmental laws?”

PLAYER
Either way, both acknowledge the reality of Airbnb as a player to be recognized in the hospitality industry, even if so far, Airbnb and hotels manage to thrive together.

“In this digital age, Airbnb really pioneered accessibility, ease and flexibility — promoting not just accommodation but experiences. It was offering something different from the safe choice of the chain hotels,” Mr. Trompeta said.

“This actually pushed us to understand how our guests were evolving,” he added. “We took steps to engage our long staying guests with activities outside the hotel — exposing them to different city experiences, i.e, [shopping in] Greenhills, Salcedo Market, etc. In fact, today we try to veer away from just talking about the hotel and our food — but rather focus on what you can do in the city.”

The story of Airbnb is not just a story of the change in the track of hospitality, but the change of traveling as an exercise. Traveling, in its most basic sense, is moving from point A to point B. Now, there is an urge to soak up every experience possible, to live life in another person’s shoes, in a limited time frame.