How will Airbnb’s diversification affect hotels?

 

NATIONAL REPORT—Airbnb is for everyone. That’s the message Airbnb co-founder and CEO Brian Chesky had for the world last month when the home-sharing platform unveiled its road map for the future—complete with new collections and categories, revamped programs and a new way to search. But what does that all mean for the hospitality industry?

“When we came up with the concept, we told people about it, and they said, ‘You’re crazy. People will never stay with strangers,’” Chesky recalled. “Then, a few guests started using it, and so then people said, ‘Airbnb—eh, it’s not for me.’ And so Airbnb became this alternative that wasn’t for them. But something happened 10 years later. And that something is that 300 million people have actually used Airbnb now. But 10 years later, Airbnb is still an alternative; it’s still not for everyone. Our mission is that everyone can belong anywhere.”

How does the company plan to do it? First, it has introduced new tiers: Airbnb Plus and Beyond by Airbnb. Starting with 2,000 homes in 13 cities, Airbnb Plus properties are inspected and verified in-person against a 100-plus point checklist, covering cleanliness, comfort and design. Airbnb Plus hosts are offered top placement, in-home services, such as design consultation and expert photography, and premium support. Beyond by Airbnb, launching this spring, will offer custom-designed trips.

Second, the company is launching Airbnb Collections. While the platform was initially designed for solo travel, there are a number of reasons why guests stay at an Airbnb: family vacations, group getaways, work and honeymoons, to name a few. Airbnb Collections is designed to enable guests to search for properties that cater to these specific reasons for travel. 

Third, the company is investing back into its community with a revamped Superhost program, offering 14 new and updated benefits—including the ability to have a custom URL, making it easier for Airbnb hosts to market their properties digitally. Airbnb is also launching a new guest membership program later this year. 

While one of the differentiators that hoteliers have said there is between traditional hospitality and home-sharing sites is the services offered—some home-sharing hosts go above and beyond, while others just leave the key under the mat—this will enable hosts to offer perks on a broader scale. “We surveyed hosts and they said they care deeply about the quality of guests on Airbnb. We asked if they would offer any benefits to somebody if they were a Superguest,” Chesky said. “The majority of our hosts said they would offer discounts, exclusive inventory and last-minute bookings. We’ve had numerous companies offer to provide airport pick-up, flight upgrades and access to airport lounges to our best guests.”

Finally, Airbnb has introduced four new property types—Vacation Home, Unique, B&B and Boutiques—in addition to the existing Entire Home, Private Room and Shared Space. This move will enable professional hospitality companies—like small, independent boutique hotels—to have a place on the platform. All seven property types will launch this summer. 

“Airbnb was designed for when we were much smaller,” Chesky said. “This is a key problem. We designed Airbnb to have 100 homes in a city. Basically, the idea was a list of listings. Ten years later, our core design has not changed. But 10 years later, some things have changed: We went from hundreds of listings to 4.5 million places to stay. We probably have just as much choice as anyone, and I do believe the perfect place to stay is available for every guest—it’s just really hard to find.”

Designed to provide greater transparency over the types of accommodations available, the new categories will also enable the company to offer more sophisticated search capabilities. “Seven categories is not very specific—what if we got more specific?” Chesky asked. “We’re going to add thousands of new categories to make it easier to find the perfect place to stay. We’re building one of the world’s largest home databases.” So, for instance, if a guest is going to Paris and wants to stay in a private room in an apartment with a balcony, and wants to stay with a musician, they’ll be able to find a place that meets those needs. 

Reflecting on the announcements, Scott Shatford, co-founder and CEO of AirDNA, which provides data and analytics to vacation rental entrepreneurs and investors, noted that this doesn’t mean Airbnb is a platform for all hotels. “I don’t ever see Airbnb going into being a typical OTA and allowing you to book any type of standard hotel room. They’ve been pretty selective about the boutique hotels they’re adding in,” he said. “They’re adding hotels in markets where supply is constrained due to regulation, or where hotels are unique, bed and breakfasts, or things that aren’t the standard, cookie-cutter property. They also want to make sure the design is cool.”

Indeed, Airbnb does have criteria for hotels looking to list on the site. Among them are access to common gathering spaces and/or events; guestrooms with personal touches that are individually unique or local in design; guestrooms and common spaces that incorporate local influences; and unique design characteristics. It also looks for hosts who offer locally relevant or unique amenities; local maps with personalized recommendations; and local tours. 

Currently, there are 24,000 boutique hotels listed on Airbnb. There are also 180,000 B&Bs, up 100% from last year. According to the company, there’s been a 520% increase in boutique hotel listings over the past year. 

And, earlier this year, the company launched a new technology partnership with SiteMinder to support boutique hotels and B&Bs. The new technology, developed jointly by the two companies, makes it possible for hotels to connect booking information to their existing management system in real time. Additionally, SiteMinder can automatically retrieve an Airbnb host’s listing information, which removes the need for hotels to recreate their listings and allows them to get online quicker. 

Dai Williams, SVP, global partnerships at SiteMinder, said that there has been a lot of interest from hotels around the world. “Airbnb as a consumer brand is very strong, and it’s clear hotels recognize the potential that comes with working with a brand that attracts such an engaged and loyal type of customer,” he said. “Our partnership with Airbnb has, very simply, brought a high-demand channel to the fingertips of every boutique hotel and B&B. So, the potential is enormous, and I think it’s prompting all hoteliers, irrespective of size, to place greater emphasis on the authentic, personal and unique hospitality that travelers so crave today and will demand more and more in the future.

“We developed this solution very much with the independent operator in mind, specifically for boutique hotels and B&Bs that absolutely excel at hospitality but are often challenged to reach and attract guests in the face of competition from larger hotels and booking giants,” Williams continued. 

According to Airbnb, there are several benefits for hotels: lower fees compared to OTAs; the company’s built-in trust features, including guest profiles and reviews, as well as trusted payments; and no contracts. 

Frances Kiradjian, founder and CEO of the Boutique & Lifestyle Lodging Association (BLLA), said of Airbnb, “They’ve got a huge following, they’re trying to intermediate the OTAs, no doubt about that—they’re definitely a player and their distribution costs look to be lower, at least at the moment.” However, she noted, many hotels are moving toward strategies around booking direct, which was one of the reasons the lodging association launched Stay Boutique, a booking site that links directly to the hotel’s URL. “They want to own the customer… We have to wait and see what the results will be once [Airbnb] starts placing these new categories,” she said.

She also noted that hotels might need to be careful about the types of customers they receive. “I remember the day a lot of them said, ‘We really don’t want the Hotels.com type of customer, because we tried that already and it just didn’t go together,’” she said. “So if you’re looking for a particular kind of customer, you want to be careful where you’re listing your hotel as well.”

Shatford said that many of the hoteliers he talks to who use Airbnb tend to list premium rooms. “Some hotels have a hard time selling their premium suites, their upsell properties,” he said. “They’re having to give away those two-bedroom suites, those premium units. A lot of people are diving into that because they know there’s a lot more demand for bigger properties on Airbnb, a lot more group travel. A lot of them are cherry-picking these higher-end properties and putting them on the platform.”

For its part, the American Hotel & Lodging Association (AHLA) had a strong response to Airbnb’s overall announcement. In a statement, Troy Flanagan, VP of state & local government affairs, said, “Whether it’s called Plus or Boutique program, Airbnb’s latest scheme is just further proof the company is trying to play in the hoteling space while evading industry regulations. If Airbnb wants to enter the hoteling business, then it needs to be regulated, taxed and subject to the same safety compliances and oversight that law-abiding hotel companies adhere to each and every day.”

Rob Fulton, CEO of the Association of Independent Hospitality Professionals (AIHP), a member based, nonprofit national innkeeping association for B&Bs, small inns, and independently owned lodging properties, agreed that there needs to be a level playing field. “The concerns for us, which we’ve shared with Airbnb and other home-sharing platforms, is creating a fair and level playing field; that’s really the challenge for our members, from the tax and regulation side,” he said. 

However, the organization has also partnered with Airbnb to help enable innkeepers to use the home-sharing platform. “We feel we’re going to be more successful that way,” Fulton said. “We don’t want to fight; we want to educate and enact some change that way. That’s been successful for us.” 

Fulton noted that adding a professional B&B category was high on the list of the organization’s priorities. “For our members, small independent lodging, to be able to have a way to identify themselves on a platform like Airbnb is a great first step for us,” he said. “Now, we want to make sure those in the category are the ones that are supposed to be there, and I know we’ll work with Airbnb and others to do that. We were thrilled to see it.”

Noting that AIHP has almost 400 properties—with almost 50% listing on Airbnb—Fulton said, “We see it as an opportunity. We encourage our members to participate on the platform.”

For his part, Williams sees the introduction of the new categories as beneficial to properties on the platform. “It’s made it that much easier for hotels to be found,” he said. “Travelers searching for boutique hotels or B&Bs can now find those with the click of a button, so I see the changes as only providing further support for the hoteliers who choose to take advantage of the Airbnb channel.”

Shatford agreed, noting that the overall changes were smart. “At this point, alternative accommodations are becoming a commodity. Booking.com and HomeAway are making great strides. Over the last couple of years, anybody professionally operating in this space is listing across all of the major platforms,” he said. “Really, the challenge is for all three of these players to make that consumer experience as pleasurable as possible. If they can do anything to create more classifications, categories, property types, it makes that search process easier.” HB 

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