Ananya Pathak

As Airbnb diversifies into royalty stay...

Airbnb has diversified from 'affordable lodging' into 'royalty stay'. Ticket booking platform MakeMyTrip has doubled up as a hotel booking aggregator. Hospitality company OYO now offers rented houses. Is sticking to your core job just old-school?

Accommodation-sharing online company Airbnb recently announced that the Gudliya Suite at the City Palace of Jaipur will be available to book on the platform, starting November 23, 2019. The California headquartered community-driven hospitality company launched a minute-long video highlighting the features of the palace.

Located within one of the private sections of the palace, the suite has been used only for royals and their special guests until now. For the remainder of 2019, it will be available to book on select nights at a special inaugural offer of USD 1,000 per night. From January 1, 2020, the suite will be available to book at a rate of USD 8,000.

Interestingly, during the initial days (2008), the idea behind 'AirBed & Breakfast' was to offer short-term living quarters and breakfast to those who were unable to book a hotel in the saturated market. In March 2009, with a shortened name 'Airbnb', the business expanded from air beds and shared spaces to a variety of properties, including entire homes and apartments, private rooms and other properties. In February 2018, the company announced 'Airbnb Plus', a collection of homes that have been vetted for quality of services, comfort and design, as well as 'Beyond by Airbnb', which offers luxury vacation rentals. And now the luxury suite!

Over the 11 years of its existence, the brand has come a long way from 'affordable lodging' to reach the worth of almost INR 6 lakh per night stay. From the air mattress in the shared living room to offering royal experiences, has the brand drifted away from its core offering?

This brings us to the realisation that, in its category, it's not only Airbnb that is diversifying. Founded in 2013, hotel aggregator OYO initially covered mainly budget hotels. The Gurugram headquartered hospitality brand started offering houses on rent from October last year, under its 'Oyo Living' label.

Online travel company MakeMyTrip started Indian operations in September 2005, offering online flight tickets to Indian travellers. The company also started non-air businesses like holiday packages and hotel bookings. One can now book apartments, villas and homes using the app.

The list is never-ending. Does this mean that sticking to your core job is just old-school these days? We reached out to experts from the industry to find out if generalisation is the new specialisation. And to understand how a brand can retain its value in such a scenario.

Expert comments.

Suraja Kishore, CEO, BBDO India

We should not apply old principles to new age economies. Two important shifts that I can highlight to make this point: 1. If old economy marketing was all about market share, new age economy is more about share of the future. 2. Businesses earlier were designed with focus on manufacturing a defined product, whereas new age businesses are designed with focus on platform. Digital platforms are constantly evolving and dynamic, thus allowing for diversification and collaborations beyond the defined horizons.

Suraja Kishore
Suraja Kishore

Brands in the new age economy should invest in deepening their product truth or brand experience in order to retain their brand value. Add to it a constant upswing of surprises in their offering to consumers, which can go a long way in enhancing brand affinity.

L Suresh, brand consultant

Sites like MakeMyTrip, Yatra and ClearTrip call themselves online travel companies for a reason. While all of them have flight tickets as their primary offering, they are trying to cover the entire gamut of travel. So you book a flight and land someplace. What would you need next? Acco? Hence, hotel bookings. You need a cab to take you to that hotel. Hence, cabs. Then there's sightseeing. And adventure sports next. In short, every aspect of travel and holiday is being covered. Rather than calling it diversification, I would say this is a way of growing (your market) by broadening your offerings. In other words, market development through category extension.

L Suresh
L Suresh

It will be interesting to see how these strategies work. A brand's image is often what the customer makes of it and rarely what the brand wants to be perceived as. The same goes with what is considered as its core offering.

Also Read: Airbnb moves from celebs to real stories...

There's however another reason for this diversification. The spate of mergers and acquisitions over the past few years have offered each of these entities a natural entry into a related category. For instance, MakeMyTrip owns Ibibo (which in turn owns GoIbibo and Redbus), and HolidayIQ, so you know what its offerings are going to be.

So what should the players in the category do to retain their brand value? For starters, they could venture into any related space, but should ensure that their core offering is not diluted. The last thing they would want is to send out confusing signals that deter their existing customer base. Airbnb might think that it’s already well-known for its budget rooms, and so, needs to talk only about its new initiatives. However, budget travellers need to be reassured that the brand’s offering hasn’t shifted, but has merely expanded.

Ronita Mitra, founder and chief strategist, Brand Eagle Consulting

The offerings introduced by brands depend on how they define their brand purpose.

If the brands are defining their purpose in the space of vacations and leisure, then they can virtually launch any product / service that services customers' needs in that space.

What is however happening today is a lot of borrowing of what others are doing. This will eventually create a lack of differentiation among brands which they need to be cautious about.

Ronita Mitra
Ronita Mitra

Within the brand purpose, it’s imperative that brands find their point of differentiation, stay true to it and find a way of delivering superior service in that space despite competition.

Also it’s of paramount importance to honk through all service elements and deliver a meaningful experience, rather than introduce an offering just because some other brand is doing so. The question brands need to ask before launching any new offer is what kind of capabilities they have or need to build in order to deliver the service in a meaningful manner to customers.

Toru Jhaveri, vice president- strategy, DDB Mudra Group

We live in the era of the ‘servicisation of everything,’ which is why it isn’t just the hotels and bookings category that is evolving. I would say this shift has less to do with diversification per se, and more to do with ensuring that there are a whole host of ways in which customers can discover your relevance, and an entire ecosystem within which they can interact with you.

Toru Jhaveri
Toru Jhaveri

I believe that the idea of a ‘core job’ has become much broader – you can be an exceptional hospitality brand but you still need to adapt to the fact that people want something very specific from you when they’re browsing on their phone; or when they’re actively planning business travel; or when they’re casually daydreaming about their next holiday.

I think it’s crucial to define what your ‘category of one’ is, and build from there. For instance, AirBnB has always been about living in cities, never visiting them. So living like royalty is simply the high-wattage, uber-privileged version of living like a local. It’s a unique experience, and one that only Airbnb can credibly deliver.