There is little doubt that residential rental sites such as Airbnb, VRBO and HomeAway are disrupting the multi-billion dollar hotel business.

There is still significant debate about the long-term impact of that disruption but if a new study conducted by Hitwise, a division of Connexity, is any indication, these sites are complicating hotels' online efforts.

According to the study, monthly visits to sites like Airbnb, VRBO and HomeAway has surged by 70% over the past three years while direct traffic to hotel sites has decreased by 3.6%.

While the latter might seem like a modest decline, consider this: Hitwise estimates that within the next 12 months, visits to residential rental sites will surpass direct visits to hotel sites. 

What's more, the Airbnbs of the world would appear to have potentially more favorable traffic profiles than their hotel site competitor.

They are slightly less dependent on search engine traffic than hotel sites and they generate more than double and triple the traffic from social channels and email, respectively.

Hitwise speculates that this "may be due to the fact that travelers seeking rentals may be emailing property links to friends" at a much higher clip, a behavior that is beneficial for rental sites for obvious reasons.

Not surprisingly, the rise of residential rental sites has not been kind to hotel aggregators like Booking.com and Hotels.com either.

According to Hitwise, their traffic has declined by nearly 8% over the past three years.

They are most dependent on search engine traffic, which when paid for can be very costly, and while they do receive more traffic from social channels and email than hotel sites, they don't outperform them by much in these two categories.

What should hotels and aggregators do?

While the continued rise of rental sites seems all but inevitable, hotels and aggregators can't sit on their hands.

In an effort to ensure that they don't unnecessarily cede gains to rental sites, they should look at consumer behavior, which might explain in part why rental sites have been so successful.

According to Hitwise, "females tend to dominate the booking of vacations" and they have very different preferences than males.

For example, female vacationeers are far more interested in booking vacation experiences that differentiate them from their friends, visit a different location every time they travel, and book through a company they have never heard of. 

Rental sites arguably have greater appeal in these areas, but that doesn't mean hotels and aggregators can't compete.

Here are a few actions they can take...

1. Segment and personalise better

The differences between the preferences of female and male vacationeers highlight the importance of segmentation and personalistion for hotels and hotel aggregators.

While these companies do use segmentation and personalisation, this author hasn't seen much evidence of gender-based segmentation in email marketing campaigns from hotels and hotel aggregators despite the fact that their preferences are so divergent in key areas.

2. Focus on customer experience

Given the fact that overall vacation experience is so important today, particularly for women, hotels and hotel aggregators need to think beyond offering a place to stay.

While they may not be able to offer the variety and some of the novelty of the rental sites, which have a unique portfolio of properties to offer due to the nature of their businesses, hotels still have opportunities to create unique, personalised experiences for their customers.

3. Revisit UX

The user experience of sites like Airbnb has been a big part of their success.

While hotel and hotel aggregator sites will necessarily have some differences, there are a number of UX lessons they can learn from sites like Airbnb.

4. Take advantage of their strengths

Hotels and hotel aggregators still have the ability to appeal to vacationeers in ways that their rental site competitors don't currently.

For example, many vacationeers are interested in vacation packages in which activites are included.

Hotels and hotel aggregators are still far better positioned to offer these and they should take advantage of that while they can because it won't remain forever.

Patricio Robles

Published 18 October, 2016 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

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Comments (5)

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Steven Tallman, Me at Blockchainzzz

I am the major booker for hotels and a male. Yes traffic has increased to air bnb I checked it out and realized I don't want to stay in a house I like being high in the sky with a birds eye view. Most people with any sense use expedia,Orbitz to book not the hotels website check their alexa w website traffic. UBER AND UBER EATS ARE GREAT IN DOWNTOWN SEATTLE. Thints are progressing but I don't see air bnb dominating hotels.

about 1 year ago

Marco Sansalone

Marco Sansalone, web designer at www.marcosansalone.com

Of course no doubt about the brilliant UX of Airbnb and the no competitive performance of hotels website but seriously the main reason is economic. There is no comparison between Airbnb and hotels, the first business (airbnb) is so competitive so the traffic is more focused in this case.

about 1 year ago

john kennedy

john kennedy, partner at Kennedy Andersson

I think you need to consider that the likes of AirBnB will shift some business away from the hotel brands, but they will also generate a new segment of the market that was never likely to choose a hotel to stay at, so the booking statistics need to be read with this in mind. But where I think the hotel brands are getting it wrong and driving customers to the residential segment is because what they offer is boring, cookie-cutter and not particularly customer focused. As consumers we are becoming better at choosing what we want rather than accepting a "middle of the road" offering, boutique hotel were pretty early to the game to understand the strategy of being a little different. But what I see now is this uniqueness turned into a formula to roll out amongst the many hotel brands that have multiple layers of brands hoping to offer something that appeals. The power today is with the consumer - great that we have the choice, even better that we can disrupt the market.

about 1 year ago

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Ian R Clayton, CEO at AXSES ALL CAST

I do totally agree with your suggestion that personalization is way off course. Our company has worked on this now for a good while and we are just launching a new travel planning tool called PersonaHolidays. This creates character profiles for all rental properties and matches travelers up based on personality. Its an AI solution that analysis behavior and creates a persona profile for each traveller on the fly. See http://www.slideshare.net/irclay/personaholidays

about 1 year ago

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Deri Jones, CEO at SciVisum Ltd

Hi Patricio: just yesterday, your colleague Ben praised the Hilton for improving customer experience, via functionality in it's app.
- https://econsultancy.com/blog/68326-three-brands-succeeding-in-connecting-online-and-offline-experiences

about 1 year ago

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