July 27, 2018

5 Lessons for Airbnb from Getting Attacked by the Hotel Industry

Airbnb made $2.6 billion in revenue in 2017, of which $93 million was profit. With an internal war brewing over the decision to keep the company private or go public, their indecisiveness about the future of their operations left it vulnerable to competitors’ anti-Airbnb messaging. The bad publicity now poses a much bigger threat to its revenue and branding.

The New York Times discovered that the American Hotel and Lodging Association spearheaded a nationwide campaign against Airbnb on all levels of government by using the lack of regulation over short-term rentals as a key argument. The groups allied with neighborhood associations, labor groups, and affordable housing advocates to put pressure on politicians to support their cause.

Why is this important? Airbnb’s value is estimated at $30 billion. For comparison, Hilton is worth $19 billion and Marriott is worth $35 billion. Ask any major hotel company and they will downplay the Airbnb effect, but the numbers clearly show that Airbnb is causing them serious worry over market shares.

Here are 5 Lessons Airbnb Can Learn from These Attacks

1.     Do Not Allow Competitors To Write Your Company’s Narrative

 

In many US cities, it is common to see anti-Airbnb advertising blaming short-term rentals for rent hikes. Hotels systematically pitched these stories to reporters writing for both local and national newspapers. Airbnb avoided engaging them directly, choosing to write their stories and testimonials on the official Airbnb website instead. The company also failed to advertise effectively, instead of promoting information on regulation changes and branding. While Airbnb chose to speak directly to its corner of the market, the big hotel industry was speaking directly to consumers.

 

2.     Do Not Respond To Criticism Using Unclear Messaging

 

Scott Stringer, the Comptroller of New York City, released a report in May that blamed Airbnb for the $616 million overall increase in rent New York City tenants experienced in 2016. Airbnb responded by deflecting the criticism, attempting to poke methodological holes in Stringer’s analysis instead. While statistics can be important, the average reader doesn’t care if there isn’t a strong claim behind the math, and it certainly doesn’t speak to the renters affected by the local housing crisis.

 

3.     Investigate Official Ties to Industry Giants

 

Airbnb also failed to investigate Stringer’s association with the hotel industry. Instead of playing defensively, they could have gone on the attack and pointed out that the Hotel Association of New York, hotel entities, and affiliates contributed several hundred thousand dollars to several state representatives’ campaign efforts. Arguing that the state and city governments have a stake in protecting the hotel industry’s standing makes for a much more compelling statement than the one Airbnb actually issued.

4.     Fight Back Against Unfair Marketing Tactics

 

While the source of Stringer’s data, AirDNA, issued a counter-report demonstrating the substantial errors he made in his report and later served him with a cease and desist order for violating their Terms of Service and misusing their data, Airbnb did not capitalize by making an effort to widely publicize AirDNA’s findings. Presenting proof from the data source itself that Stringer’s analysis was flawed would have gone a long way in helping Airbnb protect their reputation.

 

5.     Write A Better Narrative

 

A business should never allow their competitors to write their narratives. The damage of legislation supported and promoted by hotel lobbyists is already affecting short-term rentals across the U.S., and it will take a long time for Airbnb to recover their public opinion. Airbnb should have taken a page from the books by the hotel industry and doubled down on strong narratives as each attack unfolded.

Now, Airbnb’s PR and reputation management teams will also have to work harder at defending their brand on top of all the legislative battles Airbnb is already fighting. Here’s hoping they learn the right lessons from their mistakes.

Chang Kim

My name is Chang and I manage operations at Voyajoy. I've been in the short-term rental space for the last four years and have an operations career dating back 20+ years. I've learned about vacation rental management the hard way and have seen how quickly this industry has changed in a very short time. My objective is to use this experience and knowledge to give our valued clients big competitive advantages.

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Airbnb

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