In 1975, a Kodak employee named Steven Sasson showed his invention of the digital camera to his bosses. Fearing it would eat up their film sales, they dismissed the idea of manufacturing it for the masses. In 2012, Kodak filed bankruptcy, for they were too late to embrace a potentially advantageous change and leverage opportunities therefrom. They failed to learn from their competitors.

August 2008 marked the arrival of a similar threat to the hospitality and tourism industry with the arrival of Vacation Rentals, with their unique hospitality services of short-term lodging and home-stays. Several vacation rental startups like Airbnb, HomeAway, OneFineStay have entered the market since, bringing about a revolutionary change in the lodging market and giving hoteliers a tough time coping with the consequential reduction in their market share.

Change in a business environment can be daunting at the outset, especially so if it is as dramatic as the case above. Nevertheless, it comes with a set of hidden opportunities, and businesses must identify them to take things in their stride. The same applies to the hotel industry. But first, we need to study the challenge in detail.

How are vacation rentals affecting the hotel industry?

Let us look at some figures about the impact the lodging alternatives have had on an otherwise well-established hotel industry.

• According to the STR report published in 2017 analyzed data of the most successful vacation rental platform, Airbnb, from 13 countries over a span of three years and revealed that available units for the said vacation rental increased by up to 100% in some cases.

• According to the STR report, 2 out of the 13 countries studied witnessed a decrease in hotel demand corresponding to an increase in that of vacation rental services. In addition, hotel rates in NYC witnessed a drop of 1.7% in 2015.

• From 3000 listings in 2009, popular vacation rentals flaunt more than a whopping 2.3 million in 2017.

• The majority of vacation rental guests are leisure-inclined, which is betokened by the trend of higher bookings on weekends as opposed to weekdays when most business-related travel takes place. This raises concerns for hoteliers, as leisure-oriented travel has always been a high-performing area for hotels. And they now have someone to compete with in that aspect too!

• Another stark secret is that vacation rentals are not just about leisure-related travel! 10% of visits are reported to be business-oriented, a segment hotel industry had almost monopolized until now.

These figures effectively signal the dent vacation rentals continue to have on the hospitality industry.
We approached Mr. Petr Šalda, General Manager Grandhotel Zvon, for his take on this new industry dynamics. In his opinion, any industry with limited competition becomes self-satisfied and stunted. In my opinion, internet technology brought a fresh wind into a backwater and what we see is a lively new market emerging with very low entry barriers. Everyone can try, everyone can bring new ideas. Hotels mingling on the same market with vacation rentals and chic apartments are not necessarily a bad thing as they make for plenty of consumer choice and boundless inspiration for creative hoteliers.

This new development might have empowered small, nimble and technology-savvy properties at the costs of big traditional hotels, but for those with the fresh attitude, it only created yet another exciting opportunity. Who says the market should stay the same?

How can hotels cope with the challenge?

The challenge though distant is big enough to take hotel revenue generation for a ride.
Let us study ways to overcome the challenges brought about by vacation rentals’ phenomenal market presence.

• Data extraction and analysis: Why are cab giants like Uber so successful without spending millions on data extraction technology? Because they invest the right way—from start to end. Each and every stage of the guest’s journey is recorded, right from booking times to stay destinations. This helps them tremendously in market targeting and segmentation. Hotels can use the same technology to get more information about the demographics of their guests and target their guests better. This way, it will be easier to find and focus on the customers who are likely to prefer hotels to homestays.

• Provide an authentic experience: Yours is not a vacation rental. However, you can emulate the homestay experience in your hotel itself! Several surveys have revealed that guests these days seek an authentic experience, courtesy the popular ‘digital detox’ trend. This is probably partly why vacation rentals appeal to the masses. Hence, stressing over extreme automation of services may need a break, and a strategy to make the guests ‘feel at home’ needs a push. To exemplify, creating home-like ambiances like mini gardens and room-attached kitchens would be a plus. While the peril of loss of hotel restaurant revenue due to attached kitchens may concern you, understand that it is much more profitable than losing a guest to a vacation rental service!

• Rev up your feedback mechanism: The service rating system in terms of ‘star points’ employed by Airbnb after the completion of each stay helps them assess guest satisfaction with barely any investment. Hotels can learn from this and benefit in terms of feedback analysis and simplification of the review system.

• Market what you do best: Service! That is what hotels do. No domestic bedroom accommodation can match the level of service a hotel can deliver. Hotels also offer the advantage of often being situated in ideal city locations, which makes a great positive difference in the overall stay experience of the guests. Market your strengths in customer service more than you would market your room designs and swimming pools to achieve better prospects of occupancy, for quality service is appreciated everywhere. offers an online platform where hotels can offer families and groups the facility to book connected rooms and services, something most hotels have been unable to deliver independently. Hotels can proactively use platforms like these to generate more hotel revenue.

• Push for more business-oriented visits: As discussed earlier, hotels still dominate the business-oriented guests’ segment. With countries as small as Israel churning out the largest number of startups every year, business-related travel is bound to be on the rise. Through marketing targeted at business-oriented guests, customized to boost occupancy from the said segment, hotels can stay at the top of their game.

Stale environment corrupts minds on both the supply and demand side of the equation and discourages talent. On the other hand, you can go ahead, meet the challenge and take one more look at your traditional property.
Can it not be rebranded, part of it refurbished to modern apartments more to the taste of contemporary traveler and the full potential of your highly specialized team (that most of the small properties and vacation rentals don’t have) turned towards mining this exciting new market? Can you not upgrade the technology and let vacation rentals data pour into your revenue management analyses?

Everyone is trying to eat your lunch on the digital marketplace. I say let us face this interesting challenge and utilize its potential to grow your business in unexpected ways, concluded Peter.

No doubt, the rise of vacation rentals has made the hospitality more competitive than ever, signaling an impending hollow in hotel revenues. Technology solution providers are also wakening up to this new change and are offering solutions which are providing insight about vacation rental giants like Airbnb. Their solutions are offering Intelligence on overall Airbnb market supply & average market rate for your city.

Hence, hoteliers must overcome this threat by proactively finding and leveraging opportunities in the competition, learning from their competitors’ strategies and capitalizing on their strengths.
As long as hoteliers can do that while avoiding the mistakes Kodak continued to make for almost three decades, they can have their way. So gear up, hoteliers. Change is good!!!

Guest Contribution

client_Petr Salda

Mr. Petr Salda
Peter is General Manager at Grand Hotel Zvon. He is a seasoned professional with extensive experience in Hospitality Industry.