Bilbo is certainly not a traditional hero in The Hobbit, but it might be a stretch to argue he is no hero at all. He does display cunning in how he tricks Gollum out of the ring (which is Tolkien's way of showing that a hero does not need to have brawn over brains to succeed in facing down monsters), and he does display courage when he saves the dwarfs from the spiders and the trolls. It must also be mentioned that Bilbo is the one to face down Smaug in Smaug's own territory, which is quite a heroic feat.

One could perhaps argue Bilbo is not a hero because he is peripheral during the final battle. In traditional heroic stories, from Greek epics to modern superhero movies, the hero usually challenges the antagonistic forces head-on in a final battle to the death. However, during the Battle of the Five Armies, Bilbo chooses to remain among the elves on Ravenhill, not entirely out of danger, but still very removed from it.

It is true that he does this partly for practical (some might say cowardly) reasons; it is pointed out that it is easier to escape from there. However, the text also says that Bilbo would rather defend the Elvenking should he have to make "a desperate last stand," implying that he is willing to fight should that become necessary. He is not happy about it and faces the prospect of defeat with terror rather than grace, true:

Misery me! I have heard songs of many battles, and I have always understood that defeat may be glorious. It seems very uncomfortable, not to say distressing. I wish I was well out of it.

However, this does not necessarily make Bilbo a coward or not a hero. Rather, this is Tolkien showing his audience how reading about being defeated in a glorious battle is far more romantic than actually losing one in reality.

Another rather unheroic moment is when Bilbo sees the eagles flying to the rescue and then ends up knocked out. When Bilbo awakes, the battle is over and won without him, and he learns he only survived because he was made invisible by the ring. This is rather a trend in Bilbo's journey, where chance and good luck often come to his rescue. A traditional hero is more active than this, forging their own way to glory and success.

Finally, Bilbo changes much during the journey, but he declines to change his cozy lifestyle in the Shire. Traditional heroes return home changed and usually change their home life as well, but not Bilbo. Tolkien's description of the journey back to the Shire shows that Bilbo is done with adventures:

"So comes snow after fire, and even dragons have their ending!" said Bilbo, and he turned his back on his adventure. The Tookish part was getting very tired, and the Baggins was daily getting stronger. "I wish now only to be in my own armchair!" he said.

These lines do not suggest that Bilbo has not changed at all (the journey did allow him to express the Tookish half of his ancestry, which craves novelty and adventure), but he is more than ready to resume (and perhaps better appreciate) his old life.

That might describe Bilbo's particular brand of heroism in brief. Bilbo is no traditional hero, luck tends to save him as much as his cunning does, and he makes it known he is not happy risking his life on adventures. But he does prove loyal and brave to the dwarfs in the end, despite being terrified the entire time.

It might be best to say that Bilbo does not fit the paradigm of the classical epic hero. Instead, Tolkien redefines notions of what a real hero is—away from those who excel on the battlefield and toward those who show other kinds of courage.

Unlike the heroes of Greek epics, such as the Iliad and the Odyssey, who choose glory over a quiet domestic life, Bilbo has no interest in typical heroics. As he says,

Sorry! I don't want any adventures, thank you. Not today.

This is the opposite of the attitude of Achilles in the Iliad, who is offered the choice between a short life of glory and a long life of domestic happiness. Achilles chooses a short life and glory. Bilbo does go on his adventure but longs for the domestic, saying,

I wish I was at home in my nice hole by the fire, with the kettle just beginning to sing!

Bilbo is also not much like Anglo-Saxon heroes such as Beowulf, a hero who crosses the sea to slay monstrous creatures. Bilbo has no interest in such feats, stating,

Getting rid of dragons is not at all in my line.

Bilbo is a typical hobbit, modest and interested above all in the simple life of the shire. However, while not a flamboyant martial hero, he shows his grit in quieter ways, such as outwitting Gollum and coming home with ring, as well as figuring out the secret of interpreting the riddle that opens the door to the dwarf hideaway. Tolkien wants us to know that seemingly ordinary creatures like Bilbo can hide extraordinary depths.

Although Bilbo does have many heroic qualities, the argument could definitely be made that the hobbit is not a hero.  He contributes absolutely nothing of value to the Battle of Five Armies, looking upon the fight "with misery" and viewing the possibility of defeat to be "very uncomfortable , not to say distressing" (255).  Even though his friends and companions risk their lives to stop the surge of Goblins at the Gate, Bilbo sought higher ground among the elves "partly because there was more chance of escape from that point;" his actions reveal a very cowardly intent not only not to fight at all, hiding behind the protection of the elves, but also a premeditated plan to runaway and abandon his friends if the battle went poorly (255). His lack of loyalty to his friends may surprise the reader, but apparently his need for self-preservation outruled any deeper sentiments of friendship he may have felt.

Lastly, it must be pointed out that Bilbo never even had the chance to redeem himself in that battle, because an errant stone smacks him on the helm, rendering him unconscious for the remainder of the battle.  His actions in the Battle of the Five Armies reveal Bilbo to be both lacking in loyalty and courage, two characteristics that a true hero should have in abundance.