Unlicensed lodgings represent a growing change to the hospitality industry. Hotels must now face a new competitor in the form of any person with a spare room and access to websites such as AirBnB. However, consumers must also understand how the two services now differ as far as expectations, regulations and more.
For those who are unaware, new websites allow properties owners-or sometimes simply those with lax lease agreements-to list their spare rooms for lodging. There are certain expectations, but these are largely negotiated between the owner and occupant, with the websites acting simply as an intermediary for money exchange and advertisement.
At first, these upstarts represented less than a fraction of a fraction of the lodging industry revenues, warranting little more than an idle eye from the hotel industry. In the last year, however, these services have exploded-AirBnB, for example, has now coordinated over 10 million stays since its founding.
It’s important for savvy consumers and worried executives alike to understand the inherent differences between traditional lodging and these new services.
First, hotels are a regulated industry. In addition to star ratings, laws at the city, state and federal level define a minimum guidelines for cleanliness and safety. This provides travelers with a degree of certainty when booking lodging. BnB websites claim to mitigate these concerns through a review and returns process; however, such a process is reactive, leaving jilted travelers stranded in the event of a bad rental. The onus is on the consumer to vet any new or uncertain rentals.
Cities across the world are moving to address the regulatory issues of these under-the-radar rentals. Many cities already have requirements for buildings acting as BnB to be licensed, but many avoid this requirement. As a result, tax revenue is lost and minimum standards, such as handicap access, are avoided. The use of profiles, lauded as a way to connect the community, differs from the traditional lodging community, which is required to offer lodging based solely on the ability to pay. The process by which an AirBnB renter can choose who stays bases on photos and personal information opens the door to discrimination.
The interest in legitimizing these alternative services, however, lies in the consumer demand for an alternative way to stay while traveling. While hotels serve a fantastic function for business and short-term travelers, they can be ill-suited for theme and longer-term stays. Alternative lodgings often include apartment-like amenities geared towards longer stays and lower prices-services that few companies can afford to maintain in high volume. Online BnB rentals can often have fascinating themes. One example includes a jungle “tree house” on the Caribbean side of Costa Rica. Though many resorts can be “themed,” these themes are often limited to common areas and in-room décor.
As the two industries play to their strengths, it’s the consumer who will win. Hotels will likely save costs by no longer needing to pander to the demands of boutique and long-term rentals, while online rental services will slowly develop the legitimacy needed to guarantee a minimum level of service.