Where Will Love Bloom? Airbnb Edges in on Hotels

With Valentine’s day coming up, Net Promoter scores for hotels have been of sudden interest from colleagues and practitioners wondering which hotels might be best for those romantic getaways. At a glance, the ranking may be pretty much as you expect (after all, who wouldn’t want to stay at the Ritz, and who gets excited about staying in a motel?). However, it’s not quite the case that the more you spend, the better the stay.
 

 

The Rise of Airbnb

“Disruption” has been a recurring theme in our blog posts and conference talks in recent years, and it’s certainly happening in the lodging market, where the technology industry has been trying to take a slice of the pie for some time. Last summer, the hotel industry lobbied unsuccessfully to prevent the merger of Expedia and Orbitz to maintain competitive costs. However, the industry’s biggest concern over the last few years has been the rise of Airbnb.
 

When asked about Airbnb’s impact, Jon Bortz, CEO of Pebblebrook Hotel Trust, explained on an earnings call last year that for big events like conferences or sporting events, while he used to have “an ability to price at maybe what the customer would describe as sort of gouging rates, I’d say we’ve lost a lot of that ability at this point within the major markets where these events take place.”

 

Varied Satisfaction Affects NPS

This trend comes through in our data. Airbnb hashave superb satisfaction with value for money compared to the hotel industry. But this isn’t always the most important aspect to customers, and Airbnb isare towards the bottom of the pack for measures such as ease of doing business, the buying experience, various customer service measures (such as getting help and making a change), as well the perception that they treat customers are treated fairly. All this adds up to a pretty middling Net Promoter Score when compared to major hotel brands

 

Airbnb customers are also different demographic altogether. In our study, their customers were younger by an average of a decade, less likely to be married, and much more likely to live in California or New York. How far beyond the young, mobile and adventurous the brand can extend remains to be seen.