Why is Airbnb losing the war of STR dominance to Booking..com?
Last year, Booking.com delivered 400.4 million nights booked at short-term rentals (STRs), which was 80% of Airbnb's total nights. At the same time, Booking.com generates almost twice as many nights per listing on its platform as Airbnb. Growth rates for a number of STR listings on the Booking.com platform were 17% vs only 4% for Airbnb.
Is Booking.com overtaking the leadership of Airbnb in the STR sector?
As the short-term rental (STR) market is maturing, Airbnb's first-mover advantage is disappearing fast. Airbnb, with all of its pretenses for innovation, uniqueness and market leadership, is falling behind Booking..com and the the OTAs as a whole in adopting proven best practices in online travel and in its core business - the STRs.
One of these best practices in online travel is having a loyalty program. What do all major OTAs, local activities OTAs like Viator and GetYourGuide, all airlines, car rental companies, cruise lines, hotel chains, etc. have in common? All of them have loyalty programs.
A loyalty program reaffirms the perceived value proposition of your brand and nourishes the travel consumer's emotional attachment to your brand. Loyalty program means repeat business. Repeat business means cheap direct business.
The loyalty programs have become the main assets of all major travel and retail players. They provide not only huge benefits like repeat business and invaluable first-party data insights to these companies. In return their shower loyalty members with perks, benefits and discounts thus bringing them back again and again.
I think it's pure arrogance on behalf of Airbnb not to have a loyalty program.
Airbnb has to extract more revenue from its existing customer base, has to deliver more roomnights to its existing hosts, and can no longer rely on new inventory, post-pandemic revenge travel and established name in the marketplace. We have all heard the company's talking points: Airbnb is so mainstream that it's 'a noun and a verb.' Well, so were the claims of another company called Xerox.
I believe the lack of a loyalty program is Airbnb's Achilles heel. Instead of failed initiatives and meandering corporate strategies, like poorly-executed experiences, 'back to the basics' shared rooms, etc. Airbnb needs a Loyalty Program similar to Expedia One Key and Booking's Genius to have a fighting chance against these OTAs.
Both Expedia's Vrbo and Booking.com programs now boast 220 million members each and offer rewards, discounts, and perks for booking many of the same STR properties you can find on Airbnb or other STR platforms. Just imagine if you are an Airbnb customer: You are rewarded with points, discounts or perks when booking the same STR property on Booking..com or vrbo, but get nothing on Airbnb.
In the same time, travelers who stay at short-term rentals do not come from Mars. PhocusWright reported that 45% of STR users compare rentals with hotels. These same travelers would stay at a hotel for business travel or shorter leisure stays, and would rent an Airbnb for a family reunion or extended stay. There is a real 'booking war' going on between hotels and Airbnb.
So, Airbnb's main competitors are not only Booking.com and Expedia's vrbo but also all major hotel chains, boutiques, and luxury hotel brands, all of which have loyalty or reward programs.
For example, Marriott's loyalty program Bonvoy grew 16% in 2024, reaching 228 million, generating 73% of US room nights booked and 66% of roomnights globally. Marriott's Homes & Villas program offers over 140,000 curated homes and villas globally and is direct competitors to Airbnb's core business.
Hilton also reported that their guest loyalty program Hilton Honors has reached 211 million members in 2024, a 17% increase from the previous year.
Here is another example of another one of Airbnb's strategic misses: Sponsored Listings:
Currently Airbnb does not offer sponsored listings where hosts can pay to have their properties appear higher in search results. Instead, Airbnb's ranking system relies on factors like guest reviews, host history, and perceived value of the listing.
With hundreds of listings in the main STR markets, how can your STR property differentiate itself from the rest? Sponsored listings, of course! The Yellow Pages invented sponsored listings nearly 150 years ago. Yahoo introduced sponsored listings in the online world 30 years ago. Google did it 24 years ago. Expedia's Travel Ads were established 17 years ago. Booking.com did this more recently. It's a no-brainer!
Why doesn't Airbnb offer sponsored listings? The answer is, once again, pure arrogance and lack of recognition of online travel's best practices.
Unlike Airbnb, Booking.com has a robust loyalty program and flourishing Sponsored Listings product. No wonder Booking.com is catching up fast with Airbnb in the STR sector.
See related LinkedIn post by Miroslav Gospodinov
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