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Challenges Facing the Hotel Industry

The hospitality industry includes the hotel business, which is not only one of the most rapidly expanding industries in the world but also an essential and fundamental component of the hospitality sector. Even during an economic contraction, the hotel business has not demonstrated much of a tendency to slow down over the past several decades. The COVID-19 pandemic, on the other hand, wreaked havoc on an industry that hadn’t experienced a significant decline in several decades. After suffering its worst year in 2020, the hospitality and tourism industry has started to pick itself up and rebuild. However, difficulties still need to be looked into (Yang et al., 2022). These have been there for the past few years and require a lookup to be done right away.

Throughout the past few years, the hotel business has had exceptionally high levels of success, at least up until the point that the Covid-19 pandemic entirely halted the rise. Even though things are starting to look good in 2022, the industry still faces significant hurdles that could undermine its development. Since the beginning of 2017, the competition from Airbnb and other websites that facilitate apartment sharing has been one of the most significant dangers for the hotel industry (Destefanis et al., 2022). According to a survey published by Hospitalitynet, the current valuation of Airbnb is well over $10 billion, which is significantly greater than the valuations of several of the Large Hotel Chains in the world, such as Hyatt. In recent years, the fight between Airbnb and the hotel business has been interesting to keep an eye on. This is going to get significantly worse soon. Because it offers consumers accommodations at prices comparable to those of brand-new hotels or lower, this app has significantly and positively impacted the hospitality industry. The demand for hotels and other limited-service properties has decreased in essential markets and places with substantial tourist foot traffic as a direct result of Airbnb’s presence.

As a result of the widespread adoption of home-sharing platforms like Airbnb, the market for short-term rentals has been completely disrupted, leading to a dramatic increase in the number of rental units accessible in nearly every area of the world. When thousands of new lodging options appeared, it was inevitable that the hotel sector, which had previously profited from a scarcity of rooms, would face increased competitive pressures and a decline in the revenue hotel assets generated (Yang et al., 2022). Due to historically low supply, the hotel industry has consistently reaped economic gains. More and more people in the hospitality industry agree that short-term rentals will be crucial for the sector for the foreseeable future. Younger generations are increasingly opting for short-term rentals rather than hotels when planning vacations, and Airbnb has started making inroads into hotel income strongholds like business travel. Since the beginning of the most recent few years, there has been a general trend toward a rise in the number of nights scheduled for stays in short-term rentals across the United States. In addition, over this period, reservations for short-term rental homes have steadily increased as a percentage of total lodging bookings. Consistently, this pattern has been seen.


Compete With Rewards

Guest rewards programs are nothing ancient, but this is one area where the vacation rental business lags well behind its hotel counterpart. Here is one of the rare instances where the vacation rental sector lags behind the hotel sector. While it’s true that Airbnb has started looking into the possibility of creating its own rewards program, there’s a lot of room for expansion in the program’s breadth and reach, especially for customers who frequently use the platform (Destefanis et al., 2022). Hotels increasingly prioritize increasing their involvement in rewards programs to get a competitive edge because such programs can provide them with such advantages. After talking to a wide range of hotel patrons, we observed that the hospitality industry has been increasing both the depth and breadth of its patrons’ meaningful interactions with one another and the breadth and depth of the rewarding opportunities it offers through its many programs. This means that the awards are more substantial and can be redeemed at various establishments.

Offer Rivalry in Terms of Amenities

Hotels offer superior service in terms of cleanliness, comfort, safety, and ease of use compared to other types of lodging. Also, in comparison to short-term rentals, hotels provide more space and solitude. Anyone looking to book a short-term visit (a week or less) will find this information especially useful. There is no need to deviate from standard hospitality standards because hotels have survived for decades due to their consistent attention to amenities like room service, security that is available around the clock, and excellent cleanliness. To see how other hotels may compete with Airbnb by providing similar services, look no further than Locke Hotels (Strammen-Bakhtiar and Vinogradov 2019). Travellers on work or vacation who are short on time but interested in sampling the local fare may not always have the luxury of preparing their meals. Therefore, hotels that provide onsite dining or drinking have an immediate competitive edge. Display drink and food menus feature regional specialities to make customers feel like they are in their neighbourhoods. Some hotels, seeing Airbnb as a threat, have started highlighting services like pools, steam rooms, fitness facilities, parking garages, and free valet service to attract guests. To further their marketing efforts, they do this.

Rebranding Towards Authenticity

Buyer tastes evolve throughout time. In recent years, there has been a rise in the popularity of hotels and other forms of lodging that provide guests with access to authentic experiences and opportunities unique to their destination. Traditional hotels are sometimes at odds with the desires of their guests because of the pressure they feel to comply with the branding and standardization of large corporations. Visitors want to experience what it’s like to live like a native while they’re there. To draw in guests, hotels could highlight their significance to the community, their unique character, or other aspects that serve as symbols of their location. Like the best Airbnb hosts, hotels may provide guests with advice and recommendations on local attractions and activities (Strmmen-Bakhtiar & Vinogradov, 2019). A straightforward, cheerful, bullet-pointed email may give the impression of more personalized advice than a glossy booklet containing the same information. You might also give out a classy pamphlet with the data.

Furthermore, hosts may choose to consider tailoring the concierge service they offer their guests. A user’s decision to rent a house through Airbnb is informed by the host’s profile and feedback from previous guests. When making a hotel reservation in today’s hospitality industry, potential visitors are not given any information on the property’s staff. It’s a good idea to consider assigning guests to “hosts,” who might then send out welcome emails on the guest’s behalf and be a consistent point of contact.

Question 3

First, I did some study on the subject at hand. After identifying the most urgent issue that is now confronting the hospitality sector, I researched that specific issue. After gathering more information about the case, I devised a solution in the form of a project and a thesis statement supporting my position on the matter. As a result of the research I did, I am now able to formulate a thesis statement using the information I have learned about the hospitality sector.

My decision to write in the form of a research paper was based on my belief that doing so encourages curiosity, mainly when the subject matter at hand is expansive or unfamiliar. Curiosity is the driving force behind the search for answers to ever-more-complex issues, the persistent questioning of information, and the investigation of other sources and specialists. Students are allowed to investigate some extended part of the course topic in depth through a structured yet independent assignment known as the research paper.

Throughout constructing the task, I had the opportunity to pick up a lot of knowledge about the hospitality sector. I discovered that the days of long-lasting employee retention and passive, hierarchical management techniques are absolutely behind us. The hospitality business continues to face significant difficulties recruiting new talent, nurturing existing employees’ potential, and retaining existing staff members.

My perspective on how different companies compete with one another was questioned by the assignment provided, and I gained new insights. After studying the hotel industry and Airbnb, I concluded that it entails much more than simply selling customers a place to stay. This is the conclusion I came to after reading both of those types of articles.


In the long run, significant technology businesses will replace most well-known hotel brands because they will be better positioned to supply technological solutions and build marketplaces to attract clients. Niche markets that serve a specific subset of clients or the ultra-luxury end of the hospitality business are the industry’s future. Those who don’t zero down on their area of expertise are doomed to spend their careers as cash cows for a wide range of IT firms. Despite increased competition in their industry, some giant corporations may emerge victorious. Despite respondents’ pessimism about the company’s future, or their pessimism about the business in general, they agree that the industry needs to grow and change to realize its full potential and overcome its challenges. To what extent would this transformation be required? This is the only question that can be asked at this stage.


Destefanis, A., Neirotti, P., Paolucci, E., & Raguseo, E. (2022). The impact of Airbnb on the economic performance of independent hotels: an empirical investigation of the moderating effects. Current Issues in Tourism25(21), 3534-3564.

Strømmen-Bakhtiar, A., & Vinogradov, E. (2019). The effects of Airbnb on hotels in Norway. Society and Economy41(1), 87-105.

Yang, Y., Nieto García, M., Viglia, G., & Nicolau, J. L. (2022). Competitors or complements: a meta-analysis of the effect of Airbnb on hotel performance. Journal of Travel Research61(7), 1508-1527.


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