Hotel industry suffers to Airbnbs' advantage

8 January 2020

Hotel industry suffers to Airbnbs' advantage

It is quite interesting to hear that whilst there has been a rise in insolvencies for the hotel industry, it is to the benefit of Airbnb bookings.

The amount of hotel closures increased from 90, to 144 in the last year - but why is this? Accountancy firm UHY Hacker Young have given some suggestions, which are explored below:

Potential causes?

Slowed growth of the UK Economy

Slowed growth in the UK economy has caused businesses to cut back on conferences and ‘away days’. Such corporate events were a key source of revenue for hotels as they provided income from various areas, namely venue hire, room bookings and food and drink.

Rising costs

The rise in room prices has been steady, in London an increase by £30 over 10 years, to an average price today being £153, and for those outside of London, an increase of just £14 in the last 10 years – according to statistics from Finder.

The fact that hotel prices have risen, no matter how steadily, will have an affect on how many consumers use them, especially with low consumer confidence and lack of disposable income.

Competition from Airbnb

As Airbnb is increasing its market share, (and not just in the budget hotel/millennial markets), hotels have no other choice but to rapidly move to bring themselves up to speed- particularly from adopting the latest technologies.

Hotels are battling to be listed on booking.com, to reach as many customers as possible. Of course, this has a hefty fee attached which means the profit margins of such hotels are reducing considerably.

Airbnb’s growth is altering the outlook of consumers on the market; home comfort is expected at a low price.

A drop in the value of the GBP

The weakness of the sterling means the cost of importing food and drink, is hard to pass on.

Profit margins are also being squeezed by increases in import costs, the minimum wage and business rates.

So, what is the future for the Hotel industry, currently facing a period of turmoil?

If you are the director of a struggling hotel, please see our guide here

Categories: Hospitality

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