How to motivate customers to prioritise your holiday destination

Eden Arc Hospitality, modular lodging

Eden Arc Hospitality

Even before Covid-19, consumers wanted more excitement from their accommodation experience. Industry expert, Julian Houchin, explains how to tap into the meteoric trend in modular lodging.

Creating a new benchmark

Let’s be clear: Airbnb is in the business of distribution and not hospitality, yet Airbnb is constantly compared with the major hotel brands in terms of its size, number of listings and even Market Cap rate based on its recent 120 per cent IPO increase. It has become synonymous with alternative lodging experiences and has created a marketplace for homestays and vacation rentals, competing directly with traditional hotel brands for market share. The business and economic models are, however, fundamentally different and yet I often hear friends say “I’ve booked an Airbnb” as if it was a Hilton or a Marriott. As Kleenex has become standard vocabulary for tissue, Airbnb has become the recognised brand for alternative lodging.

A disruptive influence

There’s no question Airbnb has disrupted the hospitality industry, impacting occupancy for branded and independent hotels. But should we be surprised?  It’s growth in popularity signifies a shift in traveller behaviour and has been fuelled by the growing appeal of alternative lodging for business and leisure travellers. Consumers are telling us they want more excitement from their accommodation experience and this will become more relevant as we emerge from cabin fever caused by travel restrictions. A recent PhocusWire post highlights the shift to alternative lodging prior to the pandemic and that the market share is consistently rising. Another explanation could be that the hotel industry has become rather pedestrian and bland.

Hard reset

The pandemic has created a natural circuit break for the hospitality industry, affording hotel brands and independents to stand back and evaluate this shift in consumer evolution. What will consumers want and what does a hotel look like in a post-pandemic world? How do we re-purpose traditional hotels to meet the paradigm shift in consumer behaviour?

Of course, health and safety will be at the core, but how can hotels compete for the growing demand for short-term rentals, particularly when traditional hotel stays will seemingly remain less popular in the near term? Hotel models will have to adapt by incorporating alternative accommodation options into their business models. The industry has already seen evidence of this shift with Marriott International’s launch of Homes & Villas as they attempt to compete in this space and gain some share of the sizable market, estimated to be roughly $87 Billion in 2020. Rowan Clifford at smartbnb and statista both have some interesting insights and compelling stats into this modular lodging shift.

Tastes have changed

The arrival of Airbnb and other short-term rental-by-owner services has highlighted the demand for alternative accommodation by merging hospitality-like amenities, flexibility and unique experiences. In a post-pandemic world, family values will drive demand for flexible lodging to accommodate mixed generational groups and as guests crave simplicity, ‘glamping concepts’ are emerging and generating premium rates for a ‘back to nature’ experience. Gone are the days of the traditional hotel buffet, at least for now, as guests may prefer the option to continue to self-isolate and self-cater. According to Glenn Fogel, president and CEO for Bookings Holdings, the pandemic has sped up consumer interest in alternative accommodations and according to Skift, alternative accommodations are growing nearly twice as fast as hotels in Europe.

It’s not all grey skies

We know our industry is resilient, and it will bounce back stronger than ever before thanks to the global pent-up demand for travel. The big question is when? Many industry experts believe occupancy should be mostly recovered by 2023 with full ADR (Average Daily Rate) recovery following in 2024.

As the industry emerges from this setback, there will be a natural demand for staycations and multi-generational “get-togethers” as families reconnect. Accommodation that can cater for this, alongside the continued emphasis on social distancing, will be streets ahead of the competition. A desire for people to reconnect with nature and the great outdoors and wide open spaces, after months of lockdown, will become the new luxury. More space and seclusion, continued social distancing and standout experiences will be the key criteria when choosing accommodation.

Flexibility is key

One thing is for sure. The industry needs to remain agile and adapt to new guest expectations and if Airbnb has taught us anything, it’s a growing desire for unique experiential lodging in diverse locations. I for one look forward to seeing how the hospitality industry adapts to this seismic shift in traveller behaviour.

For more information on how to add modular accommodation to your existing key count, click here.

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