Despite ending the year with a spate of bad press, Airbnb is still red-hot, and it remains clear that the alternative accommodations sector, which has hit critical mainstream mass, can no longer truly be considered “alternative.”
Kevin Kopelman, a managing director and research analyst covering hotels and online travel at Cowen, has estimated that Airbnb’s U.S. business will expand by $1.25 billion, year over year, for 2019, with that trajectory expected to extend into 2020. This expansion, which Kopelman has called “cannibalistic to hotel industry RevPAR,” is certainly a top threat to traditional hoteliers, particularly as RevPAR growth in many key markets is expected to cool in 2020.
Some hotel companies have fought back in years past by launching their own short-term vacation rental platform. Most notably, Accor has made a play with its high-end Onefinestay product, while Marriott International made headlines this spring with the launch of its Homes & Villas brand.
While it’s still relatively early days for both, neither has yet presented any significant challenge to Airbnb, and it’s clear there’s still room for further innovation on the hotel side.
In fact, some traditional hospitality players are taking a more novel approach, experimenting with the classic hotel room layout and getting more ambitious in their goal to offer a communal, home-like feel within a hotel context.
Marriott is among those pioneering one of these new accommodation concepts, announcing in October that its Element brand would be launching Studio Commons, a new room type featuring four private guestrooms that each connect to a sizable kitchen and living area.
Also looking to steal share from the short-term rental market is Motto by Hilton, a hostel-inspired flag that offers guests the ability to connect up to six or seven rooms.
Even the budget player Super 8 by Wyndham has gotten in on the action, announcing plans to pilot Room8, a shared-room layout that the company says is designed for “a new generation of road-trippers who thrive in communal spaces.” Room8 accommodations feature sleeping areas for up to four guests, a full-size fridge and microwave and a generously sized seating area.
With families and groups of friends increasingly preferring the more livable layouts of short-term vacation rentals, it’s likely the sector will see more hotels rethinking room functionality and looking at new ways to foster communal connection beyond their lobbies.
Of course, there are plenty of other changes afoot in the traditional hospitality sector, including continued pressure on hotels to eliminate resort fees and end deceptive drip-pricing practices.
Booking.com and Expedia have both unveiled policies designed to discourage resort fees, and when combined with two high-profile lawsuits a complaint by the District of Columbia attorney general against Marriott International and a suit filed by Nebraska’s attorney general against Hilton currently winding their way through the court system, it certainly seems that 2020 could be the year resort fee policies finally begin to be phased out.
Moreover, a hearing on the Hotel Advertising Transparency Act of 2019 is expected to be held next year. The proposed legislation, which was introduced in Congress in October and would require hotels and other short-term lodging providers to display a full, pretax price to consumers as they search and compare options, could end resort fees and drip pricing once and for all.
With more unique alternative and traditional accommodation options available than ever before and pesky hotel resort fees likely on their way out, it certainly seems like we might be entering a golden age of hospitality for guests.
For hotels, however, the coming year is expected to bring sluggish RevPAR gains and ever-tightening margins, and how they end up faring in today’s ever-competitive environment is anyone’s guess.
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