Analyzing Airbnb's Impact on the Hotel Sector: A Global Perspective

This report examines the impact of Airbnb on the hotel sector globally, focusing on the challenges and opportunities presented to traditional hotels like Utopia Hotel. It explores the loss of revenue due to Airbnb's competitive pricing and increased supply, the impact on employment, and the erosion of customer loyalty. The report analyzes the strategies and recommendations to mitigate these effects, including investing in data management, strengthening feedback loops, and developing competitive pricing models. The study highlights the need for hotels to adapt to the changing landscape of the hospitality industry and leverage technology to remain competitive. The report concludes by emphasizing the importance of understanding the evolving needs of customers and implementing strategies that enhance their experience.

Running Head: IMPACT THAT AIRBNB HAS HAD ON THE HOTEL SECTOR IN OTHER
PARTS OF THE WORLD - UTOPIA HOTEL 1
Impact That Airbnb Has Had On the Hotel Sector in Other Parts of the World – Utopia Hotel
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Introduction
The sharing economy has helped in opening doors to several business ideas within the
hospitality sector but at the same moment disrupted longstanding industries. Airbnb remains to
be one of the most common company parts of the sharing economy that has developed a reliable
marketplace for different people to advertise, find as well as book the interesting along with
exclusive accommodations all over the global society. The fast progress of hotel sector together
with Airbnb is due to advancements in technology that offer the easy access to the tourism
industry all over the globe (Suciu, 2016). It has placed several questions in mind of many owners
of hotel such as Utopia Hotel on who to consider if Airbnb will be the threat and it has impacted
or will affect their operations of the business in the future. With the rapidly increasing volume of
the transactions shared in the economy, the existing business operations within hotel sector have
shown growing concerns over how the market will be affected (Adamiak, 2018). Therefore, the
principal target of this business research paperwork aims at exploring different impacts that
Airbnb has had on the hotel sector in several parts of the global society by examining strategies
that can be applicable by managers and CEOs of Utopia Hotel to overcome such effects.
Impact of Airbnb on Utopia Hotel
Loss of revenue
Operations of Airbnb have quickly become the significant threat to enterprises of
lodgings as explorers book with free has on the sites as opposed to with antiquated inns. Each
hotelier is constantly mindful of danger as well as the stiff competition that Airbnb poses to their
operations. It is evident that operations of Airbnb represent different impacts on the hotel

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industry (Dusheiko & Gravelle, 2017). It leads to losses in finances as hotels losses about four
hundred and fifty million dollars in direct revenues annually to Airbnb. Operations of Airbnb
have to drive to losses of employment opportunities making several hotel workers to lose their
jobs that results due to decrease in demands. Airbnb remains to be less work serious than lodging
divisions since they need not bother with similar levels of administration as other sectors in
tourism activities need. Therefore, hotel sectors loss several jobs directly to Airbnb making the
operations of such Utopia Hotels to suffer massive sum of money in income for different hotel
workers (McGowan & Mohan, 2018). The establishment of more Airbnb in the global society
leads to negative impact on operations of Utopia Hotel as it will lose their esteemed customers
that will prefer to book the room elsewhere to have a new experience in their services. The ideas
of deciding to book rooms in Airbnb make Utopia Hotel to lose more cash during their
operations, and this will negatively reduce activities and developments of hotels.
Airbnb reduces demand for hotel rooms as people and visitors can use operations of
Airbnb to get whatever they require. With such decrease in demand for hotel rooms, Airbnb
leads to additional effects for hotels and their employees as there is a decline in revenue
collection from Utopia Hotel rooms. In most cases, at the point when visitors choose not to
remain in the hotel, administration loses cash (Schwartz, 2012). The cash that the visitors would
have spent on nourishment, and additionally drinks at the eatery of inn and bar, is most likely
spent somewhere else. Accordingly, Airbnb makes inn to miss out on the income they generally
would have impacted from different guests. For instance, Utopia Hotel loses the considerable
sum of money on food together with beverages when travelers choose to book with Airbnb
during their visits to different regions (Garikapati et al., 2016). High demand for Airbnb services

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leads to lesser requirements for Utopia Hotel rooms that generally affect operations of such
hotels in different parts of the society.
The decrease in the power of distribution in marketplaces
Airbnb has been expected to be the major driver of hotel rates along with decrease in
revenues as extra supply influences power of distribution of different booking services in the
market. Oversupply on services offered by Airbnb will have the negative effect on values of the
Utopia Hotel business. For instant, according to the study conducted by Aznar et al., (2017),
Airbnb has had huge impact on revenue collection of Utopia Hotel. The authors estimated that
about thirteen percent loss of room revenues for hotel increases in the listing of Airbnb for
operations in the global society. The use of multi-sided technology platforms within Airbnb has
enabled the organization to collectively make use of under-utilized inventory by Utopia Hotel
through sharing of the fee that allows their targeted customers to book their rooms according to
their pockets. Many consumers have been able to enthusiastically adopt the services offered by
Airbnb as a way of reducing their operations in booking rooms for accommodations (Jaremen &
Nawrocka, 2017). Airbnb has been able to have rapid development of shared stages that have
been conceivable because of their capacity to scale supply in the close frictionless way alongside
the rich determination of various merchandise alongside administrations that they bring to the
table to customers. Such techniques have helped in boosting distribution powers of Airbnb while
reducing those of hotel sector. The other negative impact of Airbnb on Utopia Hotel arises when
different guest that book rooms on Airbnb pick not to remain in inns, so inns lose the advantages
of dedication that they attain when they stay in the chain hotel. In most cases, Airbnb makes

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Utopia Hotel to lose their loyal clients. Hence, when hotel loses their loyal customers to Airbnb
operators might think of the effective way of having its loyal plans shortly to retain and get more
clients from Utopia Hotel leading to decreasing power of distribution in services and activities of
the hotel in global markets. The alternative lodging services offered by Airbnb remain to be the
greatest game changers during different meetings held in different places (Phua, 2018). Airbnb is
in charge of exhaust lodging rooms amid such instances of expansive gatherings with record
participation as most participants book rooms with Airbnb in need to save on cost.
Strategies and Recommendations to reduce the impact of Airbnb on Utopia hotel
Investing in more data
Management of Airbnb understands that the use of data concerning their targeted
customers remained to be ideal approach that improves their existence. The management of
Utopia hotel needs to have effective approach of mapping the complete usage of data in ensuring
that the hotel remains competitive in the world. Utopia hotel management needs to focus on
investing in data to support their operations so that they can get different feedbacks from guests
to focus on effective approach ion how to improve their operations. These developments can
allow Utopia hotel sector to use the internet in supporting their operations. The purpose of
investing in data will enable Utopia hotel to rise in digital platforms that connect peer with the
aim of reducing costs of searching, contacting customers, and contracting more services for their
operations (Dusheiko & Gravelle, 2017). Investing in data will allow management of Utopia
Hotel to search for the improved ways on how to meet the demand of customers and improve
facilities of the hotel at any moment. Investing in data through advancement in technology will

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be essential in offering the new form of trust that will make Utopia hotel to retain more clients
during their operations (Byers, Proserpio, & Zervas, 2013). The management needs to have some
efforts on establishing data that illustrates which variable of financial sectors can be predictors of
the better performance of the financial industry in the hotel sector. Therefore, Utopia hotel
sectors can learn from disruptors like Airbnb that have introduced the use of data to access
information about their clients by receiving their feedbacks that can further help in reducing
negative elements that affects well-being of their guests.
Strengthening loop of feedback
It is clear that about seventy percent to seventy-five percent of different hosts as well as
guests of Airbnb always review operations of one another within a period of fortnight.
Consequently to such views, only about two percent to ten percent of Utopia hotel guests always
tend to leave behind their feedback on the offered services at every moment. Therefore, such
activities of operations in hospitality sector remain to be tremendous missed chance for Utopia
hotel to have appropriate understanding of the needs along with wants of their esteemed and
targeted guests (Gunter & Onder, 2017). It is necessary for the staff of Utopia hotel need to
understand how their operations affects various guests at any time they come to book rooms at
the hotel premises. It is important for the management and CEOs of Utopia hotel to focus on
strengthening feedback loop as a way of improving their operations and competition in the
marketplaces. There has been lack of feedback loop that exists amid guest and team that make it
difficult to develop useful trust along with delivery of services that are focusing on effective way
to personalize operations of Utopia hotel. Besides, managers together with CEOs of Utopia hotel

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should focus on considering how they can effectively aim at strengthening the loop of feedback
so as they can become able of attaining vital input from their guest and other visitors (Geode,
2017). Developing feedback loops by managers and CEOs can help Utopia hotel to efficiently
understand how their employees do communicate or collaborate back to their visitors.
Developing rooms that are at lower costs
Unlike traditional hotel services that have to comply with present regulations that include
local fire, safety codes, and requirements of ADA among other laws, Airbnb hosts are believed
to be capable of offering accommodation at lower charges. These have been possible because
AirBnB does not provide the same security as well as safety measures to their guests as hotel
sector does during their operations (Zale, 2016). The idea that focus on decrease in rates on
rooms by management of Utopia Hotel can help it in ensuring that they improve their
competence in providing the services of rooms at pocket-friendly prices that will also make this
hotel to compete effectively with AirBnB in providing vital services to their targeted and
esteemed clients. Management of Utopia Hotel can aim at pushing for the crackdown for the
regulatory shortfalls of the company, occupancy tax invasion, violation of safety together with
fire code, and lack of liability insurance to deal with costs of booking rooms in different places
(Essawy, 2017). Such recommendation will aim at helping the Utopia Hotel to improve their
operations by ensuring that they meet basic needs of targeted clients. The management of Utopia
Hotel sector in most regions needs to focus on the need to ensure that they overcome operations
of Airbnb and other competitors. Therefore, lowered costs of booking a room by Utopia hotel
ensures that its operations have fluctuating demands for rooms that make them unable to build

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enough capacity that can help in satisfying the peaks (Gunter & Onder, 2017). Therefore,
development of lower costs of booking by Utopia hotel can have positive impacts on operations
of hotels as they are unable to find the right middle ground of improving their competitive
advantage in the competitive marketplaces for hotel rooms.
Conclusion
It is evident that Airbnb users are always able to rent anything starting from the flat to the
rooms. Moreover, Airbnb utilizes accessible lodging stock to enable it to focus on extending
supply services of booking houses together with appropriate organization that lies on
technological usage. Such thoughts have been differentiating to Utopia Hotel that must be
worked at the predetermined area by prerequisites of neighborhood zoning. From these
explanations, it is evident that as far as managers of the hotel are concerned improving
operations in competitive markets. For example, Airbnb stage has zero negligible charges
making newly established room to be incrementally expelled from or together with stage with
overhead that is negligible. Due to such factor, Airbnb can be capable of scaling supply in the
near frictionless manner with the objective of meeting demand even on short timescales.
Conversely, managers can rely on ideas that increase hotel room supply by involving buildout
that can cause significant marginal charges for different chains of Utopia Hotel. Airbnb offers
the much wide range of services along with products than hotel sector. Without appropriate
measures on operations of hotel sectors, Airbnb will increase to have negative impacts on their
operations as its accommodation provider’s concentrates on reducing the number of existing
units of affordable housing in different major cities.

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