Accommodation Providers Can Learn From Taxi Industry’s Mistakes

When word of Uber’s rapid rise first filtered across the pacific, the Australian taxi industry wasn’t worried. Taxi licenses were still commanding high prices. Also, local industry leaders claimed that state governments would never allow something so unregulated to disrupt the taxi modus operandi. The industry opted to keep the status quo, ignoring the “winter is coming” warning signs as Aussie tourists brought stories back home of this convenient new ride faring App.

Fast forward five years. Uber has landed on our shores and despite some initial resistance from some taxi-license owners (many state and federal politicians), it has lived up to its promise – that is, to disrupt the taxi industry and make getting to where you need to go easier and cheaper. The taxi companies have tried to respond with apps and online booking systems but it is a case of too little, too late.

Getting a taxi has been a loathsome process for far too long, with minimal efforts done to improve it. A build-up of brand damage didn’t matter to the taxi companies in such an noncompetitive market, until now.

Uber is now leveraging its network of drivers to disrupt the food delivery market. Further, it will probably one day enter the package delivery game, challenging the likes of Australia Post. Meanwhile, the accommodation industry is being challenged by the rise of Airbnb.

Airbnb, a short-term accommodation marketplace has become an e-commerce giant and is now valued at $US 25 billion. Like Uber, Airbnb’s marketplace relies on users to provide the service i.e. letting someone stay in their house for a fee. And like Uber, Airbnb operates in a grey-area, skirting regulations and enjoying far less overheads than the bricks and mortar accommodation providers.

Accommodation providers have always been innovative and adaptive. This is a direct result of operating in a highly-competitive space. Just look at how Accor Hotels Group and Generator Hostels have invested so heavily into their “flashpacker” hostel properties in recent times. Twenty years ago, there were hotels and there were backpackers hostels. The latter were purely a place get some much needed shut-eye. Nothing more, nothing less. It was a clear distinction. This new hybrid model is just one example of a dynamic industry responding to the millennial traveller.

Now more than ever, it is important for hostels and hotels to offer more than just a bed. Tourists crave personalised experiences. They want to brag/blog/tweet about what THEY saw and what THEY did. Comparatively, accommodation providers are in an advantageous position to Airbnb to provide this service. Experienced local staff can always give the best recommendations and existing business affiliations can be leveraged to offer guests special deals to help them find value as they explore a city. By hiring the right people and embracing technology to streamline communication with guests, hostels and hotels can strive to give their guests the “keys to the city”.

Airbnb realizes that for the company to continue to grow it must adopt some of the tried and tested methods used by hotels and hostels in their own innovative way. They have launched their local guide books application in conjunction with a major advertising campaign emboldened with the slogan “Don’t just go there, live there” . The company directly challenges travellers to experience cities in their own unique way. It is genius marketing for us millennials, whose worst nightmare is to appear “mainstream”. However, there’s no doubt that Airbnb’s strategists can see that the established accommodation providers already have the resources to help their guests far more than they ever can.

The recent partnership that Airbnb signed with Qantas (travellers can now receive Frequent Flyers while using Airbnb) shows that it is winning its war for “legitimization”.  However, the fact that a company which boasts 2.5 million accommodation listings in 191 countries is still striving to “legitimize” themselves in the market, highlights the opportunity for the established hostels and hotels to embrace the digital revolution and leverage their existing resources to provide their guests with a unique service offering.

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