Examining the impact of Airbnb on the Future of Hotel Industry in Australia

This research project drew upon the analysis of statistical records, population sampling, interviews and the review of literature to highlight some of impacts that Airbnb might have on the future of tourism and hospitality in Australia. The report ends with a list of recommendations on the possible remedy strategies.

Running head: Research Report 1
Examining the impact of Airbnb on the Future of Hotel Industry in Australia
Name of the Student:
Name of the University:
Author note:

Research Report 2
Table of contents
Abstract…………………………………………………………………………2
Introduction…………………………………………………………………….3
Methodology…………………………………………………………………..4
Results…………………………………………………………………………7
Discussion…………………………………………………………………….10
Conclusion…………………………………………………………………….12
Recommendations………………………………………………………….…13
References…………………………………………………………………….14
Appendix………………………………………………………………….…..15

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Abstract
The Australian tourism fraternity has been for a long time a core determinant of the county’s
economic status. The rich avenues for tourism attraction as well as the good network of roads
and communication has brought on board a number of stakeholders and clients which has in turn
seen the industry grow in leaps and bounds. The place of technology in enhancing the tourism
sector cannot be ignored either. With the rise of internet use and availability of handheld smart
devices to almost every member of the population, creating an effective link between the tourism
industry and its clients has been made much easier. It is however a fact worth noting that the
industry has been faced with a number of challenges hence hindering the effective growth and
sustainability of the industries core values and targets. There has been the rise of competing
entities providing similar services but at affordable prices. An example is the arrival of rival
bodies like Airbnb, an entity which offers accommodation services at affordable rates hence
rivaling the traditional standards used in the tourism and hospitality industry. At the same time,
other transport companies have introduced cheaper means of travel from one point to another
hence making the people opt for these alternatives while snubbing the tourism sector established
transport systems. These uprising can be considered as threats to the tourism industry which need
the right counter strategies in order to keep the future of tourism in Australia alive. This research
project drew upon the analysis of statistical records, population sampling, interviews and the
review of literature to highlight some of impacts that Airbnb might have on the future of tourism
and hospitality in Australia. The report ends with a list of recommendations on the possible
remedy strategies.

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Introduction
The dynamic nature of the corporate world has seen the tourism sector undergo
revolution in a number of aspects. The movement of people from one place to another has been
made easier due to the arrival of numerous transport options in addition to the good
infrastructure. The growth of the tourism industry has taken an upward trend in most developed
and even in developing countries. This feat could be attributed to the effective strategies put in
place by the management to enhance the achievement of the laid down targets (Andereck, 2009).
Due to the availability or resources, the fraternity in most counties has stayed keen on reviving
its image by rehabilitating old artifacts in addition to creating new attraction zones. All these
strategies have been aimed at enhancing a stable market for the services and products offered
within the fraternity. In Australia, the percentage of domestic tourists over the past 5 years could
be estimated at about 50% of the entire population. The number of international tourists can
however be placed at 65%. As noted by Bary (2017), the rise of collaborative consumption led
by the arrival of Airbnb in the market has however changed the scope of happenings in the
industry. The interesting concept here is the fact that a good number of the travelers are only
interested in visiting their preferred sites but not enjoying the accommodation and hospitality
services offered by the tourism sector. The presence of Airbnb has been noted as a major blow as
the hotel room owners have incurred losses in the past especially when the target market chooses
to embrace cheaper alternatives offered by other collaborative businesses. Since the tourism
industry is a self sustaining fraternity, the consistency of the industry is largely dependent on the
return obtained from the investment (Dredge & Gyimóthy, 2015)). When the returns emerge to
be less than the value placed during investment, it becomes hard for the industry to sustain some
of its procedures, departments as well as facilities. The threat as a result of the presence of

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collaborative business led by Airbnb is therefore a sensitive matter requiring the necessary
response. This makes the issue a good choice for the research process. It was projected that at the
end of the research process, a number of solutions shall have been noted and outlined in a bid to
ensure a good future for the tourism industry despite the presence of collaborative sharing.
Methodology
In a bid to obtain as much information as possible with regard to the research problem,
the process involved the use of both qualitative and quantitative approaches. The mixed methods
were applied as it gave the research a wider scope and a variety of points of view to pick from.
The data collection process involved the use of three approaches mainly population sampling,
use of questionnaires/direct interviews as well as the review of literature.
To begin with, random sampling was incorporated in order to obtain the right population
size which would later be subjected to other forms of information derivation. A total of 250
participants were picked from various locations across Australia. To ensure a balanced team, the
individuals were picked from various sectors within the tourism and hospitality industry. While
some of the participants were hotel managers and tourist center directors, the other portion of the
sample involved the ordinary population whose views would be crucial when it came to getting
the perspectives of the tourists (Chris, 2015). The number of participants would later be scaled
down to 200 after the necessary considerations and depending on the level of the subjects’
willingness to share the needed information. This method was chosen for the data collection
process because it allows a researcher to gain substantive information from a number of people
within a short period of time. This happens without necessarily interacting with every single
members of the entire population, an approach which otherwise be cumbersome and is

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practically impossible. The random samples offer a fare representation of the entire population
hence their opinions are enough to paint a picture of the entire population’s verdict on the
research issue.
Once the sample had been established, the second step involved the distribution of
questionnaires to the subjects. The individuals were contacted and the documents availed to them
through the most convenient means. The questionnaires were to be filed and thereafter collected
after a period of two weeks. This gave the respondents ample time to comprehensive answer the
questions especially the open ended ones. In addition to the issue of questionnaires, about 50
participants from the final list of 200 were picked and taken through direct interviews. During
these processes, their opinions in line with the tourism industry were deduced through direct
questions and interactive conversations (Guttentag, 2015). The use of questionnaires as well as
direct interviews is not only cheap but also serves as a faster way of obtaining information. For
the participants whose locations could not be accessed physically due to constraints of time and
resources, the questionnaires were sent to them via email (Faulkner & Tideswell, 2010). They
would then send back the duly filled questionnaires within the stipulated period. Direct
interviews are also effective since the research obtains the feedback immediately. This plays a
crucial role in speeding up the research process thereby reducing the related costs.
The last method of data collection involved a qualitative approach in which the review of
relevant literature was used to gain information about the research problem. A total of 15 peer
reviewed sources touching on the tourism sector were picked and reviewed. The information
obtained from these sources was arranged for consistency before being subjected to a
comprehensive analysis. Additionally, visual analysis of contexts was used. In this case, the
research reviewed videos and documentaries describing the tourism sector in Australia. Based on

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these direct observations, it was possible to deduce some of the challenges affecting the industry
hence the need for proper mitigation. The approach of data collection was used because it is
relatively cheap and fast (Gee, Mackens & Choy, 2009). At the same time, the researcher is able
to gain insight on a variety of perspectives on the research issue before deciding on the very one
likely to respond effectively to the research question (Goeldner, 2013). Through literature
review, it is possible to deduce a specific trend in arguments which enhances the reliability and
validity of the data.
In line with data analysis, the two main approaches used were descriptive statistics and
data visualization. Through descriptive statistics, the derived data was arranged in order to
indicate given trends which could then be interpreted mathematically. For instance, the responses
given to particular questions were counted and recorded before finding the median, mode, mean
and data averages. The tabulated results were then presented in form of graphs and charts in a
manner that was easy to interpret and understand. On the aspect of data visualization,
information was obtained through direct analysis of visual content as well as texts. These
reviews brought out particular trends which were tabulated and used to generate graphs and
charts. The methods of data analysis were chosen due to the fact that they enhance the precision
of the collected data. The mathematical interpretations of the inserted variables are pivotal in
giving a true picture of the situation in the area under study. The graphs are not only easy to
construct but are also easy to interpret. The methods of analysis also enhance data reliability and
validity.
The process of data collection was however characterized with a few challenges. One of
them was the issue of constrained resources which made it impossible to explore a wider area of
the population and hence get more views. Secondly, the process was faced with constraints of

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time. A lot was required to be accomplished with a short period which proved quite
cumbersome. Furthermore, some people declined to respond to certain questions citing
confidentiality issues. This minimized the amount of information which could be deduced from
the process. Despite these, the data collection process was successful
The process also followed the necessary ethical considerations. Due to the sensitive nature of
their positions and hence responses, the information was only kept and used for the purpose of
the research. In case a respondent was to be quoted, this was done on their consent. The
confidentiality of the information was kept high hence ensuring the right ethical standards.
Results
Through the data collection, a number of outcomes were obtained. Some of these have been
summarized in this section of the report.
The research process revealed that the number of domestic tourists visiting the various sites
could be estimated at 50% of the total population. This number increased to 70% after the
involvement of the collaborative business entities. The outcome however reduced the return on
investment in the tourism sector by over 25%. The results can be summarized in the table below
Table 1
Year 2015 2016 2017
Domestic tourists 45% of target 50% of target 60% of target
Domestic tourists after
introduction of
collaborative businesses
50% of target 60% of target 70% of target

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Table 2
Year 2015 2016 2017
International tourists 55% of target 58% of target 65% of target
International tourists
after introduction of
collaborative businesses
60% of target 65 % of target 75% of target
Table 3
Impacts on tourism sector in terms of return on investment
Year 2015 2016 2017
Profits from domestic
tourism
5% rise 10% drop 5 % drop
Profits from
international tourism
10% rise 5 % drop 5 % drop
The results above can be summarized in the graphs below
Graph 1: Tourism trends before the impacts of competitors
2015 2016 2017
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Domestic Tourism
International tourism

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Graph 2: Tourism trends after the impacts of competitors
2015 2016 2017
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Domestic
International
Chart 1: Impacts on tourism sector in terms of return on investment
Return on Investement
2015
2016
2017

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Discussion
The findings outlined above give a clear summary of the current trends in the tourism
sector in Australia. The downward trends especially in terms of return on investment are a clear
wakeup call hence the need for the necessary adjustments and counter strategies. The results
reveal that the tourism fraternity hit an all time high in 2015 but has been facing a downward
travel especially after the cropping up of alternative service providers (Hernandez, Cohen, &
Garcia, 2009). Based on the outcome above, the number of domestic tourists visiting various
sites in Australia has been increasing in the past three years with the introduction of collaborative
businesses. At the same time, the international tourist rates have increased an achievement which
could be associated with better travel plans and accommodation exercises offered by other
providers (Lindberg, Andersson, & Dellaert, 2011). It is however a fact worth noting that the
increase in the number of visitors in the tourism industry has not come with much value with
regard to return on investment. This is because the sector comprises various elements for
instance the transport sections, accommodation and housing, tour operators and travel agencies
just to mention but few. The strategic plan such that each of these sections is supposed to bring
revenue to the fraternity based on the services offered.
Despite the strategies put in place to ensure maximum gain within the tourism sector, it
can be noted that the rise of competitors within the market has had negative impacts on the
achievement of specific goals and organizational objectives. The rise of collaborative
organizations like Airnb has led to segmentation of the already crowded market. This is because
the businesses offer services at more affordable rates in comparison to the traditional approaches
and standards used in the tourism industry. The businesses offer services such as accommodation

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for temporary tourists, sharing of houses and home stays (Mason, & Cheyne, 2010). From the
direct interviews, it was deduced that most tourists prefer the cheaper alternatives offered by
other companies to the rather expensive rates applied especially in the high end hotels in
Australia. The visitors therefore opt to enjoy the sceneries, moving from one end to another an
pay for these services. However, these individuals obtain accommodation services from other
providers like Airbnb which has largely affected the return on investment especially in the
housing and accommodation section of the tourism industry (Murphy, 2015).
The three year analysis above can be used to project the future of tourism in Australia. It
clearly implies that the sector is likely to face major challenges if the issue of competitors is not
adequately addressed. Through the review of literature, it was deduced that the collaborative
businesses are continuously getting a fair share of the market due to their effective marketing
strategies (Oskam & Boswijk, 2016). The rise in technology has offered an appropriate platform
for marketing hence the ability for business entities to interact with their clients through online
avenues. There are numerous rival sites on the online platforms which are constantly wooing
travelers to their side. For instance, the Australian airlines serve as the major air transport option
for most international tourists. However, there has been the rise of smaller and privately owned
airlines which offer similar services at relatively lower prices. The rival entities have websites
exploring their products, services as well as prices (Tosun, 2012). Due to the fact that a good
number of people have access to the internet, interacting with these offers becomes easy
especially for the international tourists. This leads to a scenario where international tourists
choose to minimize on their spending costs by snubbing the transport services offered by the
Australian tourism sector and instead using cheaper alternatives while moving around.

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In addition to the challenges posed by the collaborative business entities, the direct
interview especially on the tourists indicated the conditions of some of the housing facilities as
one of the major reason for picking other alternatives. The middle class tourists depend on
relatively low class hotels which however must be within the right standards to enhance
consumer satisfaction (Pinsker, 2017). The visitors however intimated that some of these hotel
rooms are in bad states and lack the basic requirements which would ensure the comfort of the
travelers while using them. Despite the fact that the challenge could be a minor in comparison to
the giant concept in the presence of competitors, it is a crucial issue which equally deserves to be
addressed appropriately.
Furthermore, the challenges facing the tourism industry could be associated with
ineffective management structures and leadership approaches. Based on the findings from the
case studies and literature review, it was deduced that the tourism industry suffers a deficit of
workers every year. According to the 2017 annual report, the sector need to revamp its
workforce by over 20% in order to effectively meet its goals and standards in terms of service
delivery and quality assurance. This reveals a clear state of low employee retention in the
tourism sector, a phenomenon which could be linked to poor leadership approaches. The workers
need motivation, education, exposure and good reward. When these aspects lack, the human
resource fraternity is likely to be less productive. The right leadership approaches would
therefore ensure a committed workforce and hence the holistic realization of the sector’s goals
and objectives.

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Conclusion
The discussions above summarize some of the challenges faced by the tourism sector in
the current state of affairs. The arguments in this report also bring out the possible impacts that
these challenges could have on the future of the tourism industry in Australia. One of the main
issues outlined in the report is the presence of competitors and their influence on the progress of
the sector. The presence of alternative transport and housing service providers has served as a
major blow to the sector by segmenting the marketing and in turn impacting the return on
investment. In effective leadership approaches and lack of adequate training and exposure on the
side of the industry workers has also been outlined as a challenge likely to affect the growth of
the industry in the coming days (Pechlaner & Volgger, 2012). There is therefore the inevitable
need for the government and key stakeholders to, put in place the right counter strategies which
would ensure the continuity of the tourism sector despite the dynamic nature of the corporate
market. While it is practically impossible to ward of competition, it is possible to put in places
that retains the tourism sectors’ relevance in the local and international market.

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Recommendations
In order to salvage the future of the tourism fraternity, the following recommendations could be
considered.
 The government should set aside resources for the rehabilitation and establishment of
more facilities in areas where low customer satisfaction has been recorded
 There is need for efficient leadership approaches in the tourism sector to enhance proper
service delivery.
 Training of industry workers should be stepped up to enhance their skills and motivation
levels in the various areas of operation.
 The sector should introduce effective counter strategies like cheaper accommodation and
transport services to counter the threat of losing the market to other competitors like
Airbnb.

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References
Bary, E. (2017). For Hotels, the Airbnb Threat Could Be Receding. Barrons.com. Retrieved 1
May 2018, from https://www.barrons.com/articles/for-hotels-the-airbnb-threat-could-be-
receding-1510335326
Chris, R. (2015). Trends in hospitality management research: a personal
reflection, International Journal of Contemporary Hospitality Management, 27(3),340-
361.
Dredge, D., & Gyimóthy, S. (2015), ‘The collaborative economy and tourism: Critical
perspectives, questionable claims and silenced voices’, Tourism Recreation Research,
40(3), 286-302.
Faulkner, B., & Tideswell, C. (2010). A framework for Monitoring Community Impacts of
Tourism. Journal of Sustainable Tourism, 5, 3–28.
Gee, C. Y., Mackens J. C., & Choy, D. (2009). The Travel Industry. New York: Van Nostrand
Reinhold.
Goeldner, C. (2013). How Tourism and Hospitality Research Has Evolved: A North
American Perspective. Proceedings of the 54th TOSOK International Academic
Symposium: 157–167
Guttentag, D. (2015). Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), 1192-1217.

Research Report 17
Hernandez, S. A., Cohen, J., & Garcia, H. L. (2009). Residents’ attitudes towards an instant
resort enclave. Annals of Tourism Research, 23, 755–779.
Lindberg, K., Andersson, T. D., & Dellaert, B. (2011). Tourism development: Assessing social
gains and losses. Annals of Tourism Research, 28, 1010–1030
Mason, P., & Cheyne, J. (2010). Residents’ attitudes to proposed tourism development. Annals of
Tourism Research, 27, 391–411. [30]
Murphy, P. (2015). Tourism: A Community Approach. London: Methuen.
Oskam, J., & Boswijk, A. (2016). Airbnb: the future of networked hospitality businesses. Journal
of Tourism Futures, 2(1), 22-42.
Pinsker, J. (2017). How the Hotel Industry Views Its Future (and Airbnb). The Atlantic. Retrieved
1 May 2018, from https://www.theatlantic.com/business/archive/2017/09/hotels-
magazine-industry-airbnb/540525/
Pechlaner, H. and Volgger, M. (2012). How to promote cooperation in the hospitality industry:
Generating practitioner-relevant knowledge using the GABEK qualitative research
strategy. International Journal of Contemporary Hospitality Management, 24(6), 925-
945.
Tosun, C. (2012). Host perceptions of impacts: A comparative tourism study. Annals of Tourism
Research, 29, 231–253.

Research Report 18
Appendix
Table 1
Table 2
Table 3: Impacts on tourism sector in terms of return on investment
Graph 1: Tourism trends before the impacts of competitors
Graph 2: Tourism trends after the impacts of competitors
Chart 1: Impacts on tourism sector in terms of return on investment