Source: Airbnb-HotelTonight – a deal at the right time for both | PhocusWire

The possible acquisition of HotelTonight by Aribnb has the potential to disrupt the entire OTA marketplace. Airbnb has had a phenomenal success with its core business and OTAs are playing catch up. But they do not have the retention or the cost structure to compete. But will Arbnb Disrupt The OTA Marketplace? That remains to be seen. This article combines view points from Phocuswright and other sources like Revinate to consider the options.

As Revinate shows in its  2019 Hotel Loyalty Guide, “Airbnb has managed, without any points-based loyalty program, to corner the market on repeat bookings”.

Airbnb outperforms OTAs on retention

OTAS are way behind and if they have to compete with the 3% discount rate offered by Airbnb it will drastically change their business model which relies on 15 to 30 % discounts.

Airbnb has proposed to but HotelTonight for an undisclosed fee which is speculated to be over $400 million. It is seen as an major move to diversify its business and aim directly at the OTA marketplace. As the Phocuswright reports “The deal should be viewed primarily as part of Airbnb’s idea that it can now go up against the likes of Booking.com and Expedia – a direction that is both brave, complicated, perhaps expensive from a marketing perspective and will include more than buying the likes of HotelTonight (such as opening up the core platform for hotel distribution).

Still we Must Put it into Context

HotelTonight, is a mobile-first, last-minute trendsetter that will never catch up with Expedia and Booking, and always be considered a secondary OTA. So say Lorraine Sileo – senior vice president of research and business operations at Phocuswright.

According to  Michelle Wohl of Revinate “Globally, 48% of rooms are booked at the last minute. Since HotelTonight focuses on this market, an acquisition would certainly help Airbnb capitalize on the huge number of travelers, likely business travelers, that book rooms within a few days of travel. HotelTonight has proven itself to be the perfect solution for business travelers (70 of the business) who want to stay at the nicest place they can, at a discounted price that falls within company guidelines.”

In adition the Acquisition will give Airbnb mobile technology that is easy to use and streamlines the booking process that accounts for the decision paralysis common with OTAs.  All good reason for the OTAs to be concerned. 

Many hoteliers will be pleased to see a lower cost distributor with the smarts of Airbnb enter the market.

Related Links:  OTAs and Direct Bookings | Hotel Marketing in the Digital Age