Hotels and Furnished Accommodation, How to Get Along

Commonplace : In many cities around the world, one-time housing platforms are all the rage. AIRBNB type actors are shaking up the codes of accommodation, questioning and transforming them. But if there is a war between Furnished Accommodation and Hotel Establishment, it is because there is a misunderstanding. The objective of this article is to take concrete actions to identify the share of cake of each party.

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Following several serious studies, angelism is no longer in order.

Decrease of the Average Hotel Price

Furnished accommodations undoubtedly lower the average price of hotels.

The 2018 report « Airbnb in Paris: what impact on the hotel industry?  « proposes a new methodology to measure the competitive pressure exerted on the hotel industry.

The results indicate that an increase in the number of Airbnb suppliers in the vicinity of a hotel leads the hotel to lower its price (between 0.75% and 1.6% in 2018).

The effect is amplified on weekend evenings.

The summary report explains two main points:

– Tourists prefer furnished accommodation, and business tourists prefer hotels.

So many ways to enrich a local offer without touching the fundamentals that have made it successful: shared accommodation.

Airbnb essentially targets budget and economic tourism.

Airbnb’s Corporate offer concerns 10 to 15% of its turnover.

While tourists may consider the Airbnb option for an experience, business customers probably don’t have that objective.

There is more substitutability between Airbnb shared accommodations with hotel rooms than between entire Airbnb accommodations and hotel rooms.

The fact that the supply of whole accommodations does not have a negative effect on the price of hotels seems to be consistent with the fact that hotels are more aimed at a business clientele.

– Unranked hotels are the ones that suffer the most from Airbnb’s competition for whole accommodations.

3* and 4* hotels are more impacted than 2* and 5* hotels for shared accommodations.

The 2* is not impacted: it can be assumed that in terms of offers and rates the 2* is equivalent to Airbnb accommodation.

The 5* remains little impacted: it can be assumed that its level of services, personalization and services positions it above the competition with furnished accommodation.

Note: 3, 4, 5 stars are negatively impacted by shared accommodation.

In addition to an overvalued average price, which implies a lower occupancy rate, regulatory disparities exist between the Furnished and Hotels.

Disparate Regulation

Hotel regulations are heavy: every 5 years, a safety and classification visit is mandatory, along with frequent hygiene checks.

The disparity leads to qualify the competition of the furnished apartments as unfair.

In the long run, this lack of regulation of furnished accommodation weighs like a chronicle of announced misfortune, like that of Orinda’s killing in a Villa rented on Airbnb.

The terrible child is as much for hotelkeepers as it is for institutions: the city of Paris intended to force the platform to withdraw more than a thousand ads deemed illegal.

The Court of First Instance dismissed the City in March 2019. To date, Airbnb is required to comply with the ELAN Law, concerning whole houses only.

Platforms are required to communicate to municipalities that have a « registration » procedure in place.

What Actions

When there is competition, two strategies arise:

– The Red Ocean Strategy

In Red Ocean, I fight head-on with my Competitors, until death follows (Red being an allusion to the blood that flows between the competing sectors or companies).

An example of the Red Ocean hotel business is the hybridization of establishments.

Eventually, market shares are shared, uncertain and positioning is blurred.

– The Blue Ocean Strategy

In Blue Ocean, I breathe and I distance myself from my Competitors: I leave them some ground to conquer others.

Once I’ve approached my fields, I anchor and develop them.

An example of Océan Bleu’s hotel business is the eco-lodges or the new human-scale Luxury Homes such as La Réserve.

Act in existing markets

Create new market

Win over rivals

Eliminate competition

Exploit existing demand

Create and capture new demand

Reach the best price/quality ratio

Break de Price/Quality cycle

Pursue differential prices or low cost

Create differential price and High prices

If a destination remains in the Red Ocean, it becomes phagocytic.

The prohibitions, penalties, regulations will not erase the new opportunities and facilities of the Furnished ones.

The power of incitement and mutual finding of common ground is often more perennial.

I am a Hotelier

Business Tourism Spotlight

On the scale of my Establishment

If the corporate clientele represents €5 billion annually, there is necessarily a lion’s share to be cut.

I make available to my Corporate Clients all the amenities they are fond of:

– Fast and easy access: downtown, highway and suburban areas to be favored.

– Presence on the Corporate Reservation Platforms: GDS, Egencia, HCorpo…

– Fast Reservation Tunnel: less than three ring tones phone, email response within the hour…

– Flexible and efficient Check in and Check out, ideally Pre-check in and Pre-check out.

– Customized company billing.

– Efficient and free WiFi.

– Provision of frequently forgotten and necessary items: razor, toothbrushes, shoe shine, 5G key universal adapters.

– Presence of Amenities and Services: Coffee, tea, bottled water…

– Late snack service, room service, reactive dry cleaning.

– In-room work surface, Lobby and work spaces in living areas.

– Affordable early morning breakfast.

– Loyalty program by service or rate.

On the scale of my Destination

The hotelier is above all a receptive. To be exemplary in its services Coporate is not enough.

He coordinates with his tourist collaborators for the structuring of the Business Offer of his destination.

Thanks to its regular surveys of its business clientele’s expectations, the hotelier establishes with its cluster/tourism office the annual action plan to be carried out.

An exemplary case study is that of Lille.

Based on its strategic infrastructure, including the Grand Palais, Lille has been one of the « Top 10 » French cities for hosting European and international congresses since 2014.

Spotlight on High-End Leisure

On the scale of my Establishment

The fundamental challenge is simple to understand: unlike Furnished Hotels, Hotels have 30 to 60% of Social Charges to manage.

And that the challenge is as clear and coveted by Airbnb: a traditional upscale and leisure clientele, familiar with 4 and 5* establishments.

The Hotelier employs young people, supports families and has a social responsibility in its establishment.

In order to achieve a Gross Operating Income of over 30%, which is essential for its re-investment, renovation and, let’s face it… for its own benefit.

The price is higher than and cannot compete with that of the Furnished apartments (between 50 € and 85 € depending on the city).

According to the attractiveness of each destination (agglo, city…), the Hotelier will be able to position his cursor. It will necessarily be higher than the rates resulting from the Furnished accommodation of equivalent category, according to its additional operating lines.

The increase in the price range assumes a human service trained, over-trained, a hotel product worked on in terms of equipment and services.

On the scale of my Destination

Here again, the representative body of the destination has a role to play at first hand.

The CTIG (Tourist Committee of the Islands of Guadeloupe) stands out in this context.

Example of measures characteristic of the virtuous will of the CTIG: aid is granted to accommodation only if it is upgraded.

[La TOUBANA Hotel & spa]

As a hotelkeeper, I avoid :

  • In the middle and low season, to plan my Average Price to win Tourists of Stay already captured by the Furnished ones. I keep my value-added positioning, a better condition of my accommodation, I grant my staff annual vacations, I privilege a local anchorage by pushing with my exemplary conference rooms, my co-working spaces and my catering offer for local Corporates.
  • To yielding too much on the length of stay beyond three nights that pushes away the business clientele.
  • To go downscale by omitting regular staff training, equipment renovations…

And why not, as a Hotelkeeper, tease the Furnished a little?

To appear on temporary hosting platforms. The furnished ones do it well on Booking . The positioning is not blurred as long as the accommodations are correctly referenced.

Propose apartments and not only rooms. Complementary alternative for families or trips with friends, additional income for the hotel and visibility with an exclusively « Furnished » clientele.

I am a Furnished

Standardization of the Offer

I classify myself according to my Furnished services, from 1 to 5*.

By structuring the offer of my destination and its transparency, I communicate commercially on my respect of reception standards.

Focal point on the Tourism of Stay

– Minimum capacity of 2, ideally 3 to 4 people per accommodation, with additional occupancy charged to enhance my Average Price.

– Friendly welcome and departure, full of feelings (fruit baskets).

– Local experience: targeted catering advice, personalized sightseeing tours, transportation rental.

– Provision of extra bed, baby and child accessories, tourist accessories (beach chairs and towels, snowshoes, skiing…).

As a Furnished, I avoid :

  • To go less than 5 nights minimum. It is not necessarily profitable, the margin is gained rather by the length of stay.

– Not to submit myself to hygiene, security and comfort regulations which degrades my e-reputation.

And why not, as a furnished, tease the hotelkeeper a little?

  • On the conviviality of the reception with quality welcome products, fruit baskets, an atypical presentation of the bed?

– Dusting off its services in order to stimulate the hotelier and help him to reinvent himself: an interactive welcome booklet, an atypical breakfast?

In a future article, we will discuss additional services in tourist accommodation.


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