The Disappearance Of Airport Shuttles: Self-Inflicted Wound For Airport Hotels

Emirates To Add ‘Premium Economy’ Class Seats To 105 Aircrafts
November 20, 2021
Belmond Eastern and Oriental Express, Bangkok to Singapore
November 20, 2021

Far fewer airport hotels have free shuttles than did before the pandemic. Hotels are short on labor, and they’re trying to cut costs generally, and many have dropped their airport transportation – one of the key elements of being an airport hotel.

There are multiple reasons for this,

 

  • Airport overnights are most common at major international gateways, and international travel slowed – though it’s coming back, and roaring back across the Atlantic with planes generally quite full. 
  • Airport hotels at outstations where crew overnight attract plenty of guests, but airlines need to provide their crew transport whether there’s a free shuttle for other guests or not. 
  • Hotels are cutting costs across the board, just like they’re eliminating automatic daily housekeeping and may not operate full restaurant hours.

Hotels seem to have a frame of ‘we need to do less for the customer in order to improve our margins’ as though the things they did for customers were gifts in good times rather than investments in attracting customers in the first place and delivering value that will achieve higher rates.

And hotels have forgotten that their biggest competitive threat is Airbnb, and their primary tool to differentiate themselves in the marketplace is service. Airbnb is largely self-serve (except when hotels list themselves on Airbnb!) so investing in services is what makes hotels different and gives customers a reason to choose them. And Airbnb’s most annoying feature is add-on fees, so the drip pricing of resort and destination charges makes hotels less differentiated as well.

Eliminating airport shuttles doesn’t just reduce competitiveness against Airbnb, it reduces competitiveness against other hotels. Once you have to organize your own transport from airport to hotel you might as well go a little farther off airport to a nicer place.

In other words, airport hotels offered shuttles for a reason in the before times – because it was in their interest to do so.  It is not something they did as a favor to guests.  They may think they’ve reached a new equilibrium, since so many other airport hotels have stopped offering shuttles (so they do not need to offer them to compete against other airport hotels).  But hotels that think this are conceiving of their competition too narrowly.

 

  • Off-airport hotels compete against on-airport hotels in many places, dropping transport makes paying more for the convenience of on-airport more desirable (raises the rates of on-airport via increased demand, and forces off-airport to lower their rates to attract guests). 
  • Off-airport airport hotels are competing against city hotels which offer access to more amenities and activities. Once you’re arranging alternative transport you might as well drive a bit further.

Cutting the things that attract guests away from alternatives is short-sighted, but it’s the path that many hotels are choosing to their detriment. The hotel industry complains it didn’t get bailouts, and so the large REITs that own many of them face challenges paying back large lenders, but it’s the lack of attention to customers that’s really creating their problems going forward.