Airbnb Debuts New Tools for a Bigger Cut of the $138 Billion Vacation Rental Industry

It was only a matter of time before Airbnb began seriously addressing the vacation rental market business —a global market worth an estimated $138 billion in 2016 and expected to grow to a value of $194 billion by 2021.

Skift outlined Airbnb’s prospects in vacation rentals earlier this year.

Speaking to an audience of vacation rental management industry executives on Monday in Orlando at the Vacation Rental Management Association’s national conference, Airbnb co-founder and chief strategy officer Nathan Blecharczyk announced the debut of a new set of tools created for vacation rental property managers, some of whom manage hundreds or thousands of listings.

These tools, said Jonathan Lesser, Airbnb head of global host and community operations and general manager of vacation rentals, are Airbnb’s way of “embracing” the traditional vacation rental market, which is a significant portion of the alternative accommodations space that Airbnb has been slow to incorporate in the past. The tools are currently available to property managers worldwide who manage listings in popular vacation rental markets.

“Our platform was not originally designed for professional hosts in the traditional vacation rental market, yet they are hosts who provide great experiences to guests all around the world,” Lesser told Skift. “It was really time we made a statement about embracing them as a community on our platform.”

These tools, he said, make it easier for professional vacation rental managers to mange multiple listings, with “expanded pricing and availability settings to match the rules they have in their businesses” and to “improve calendar functionality with the ability to save and create rules set on pricing.” They also include tools such as a unified calendar and easy messaging capabilities, Airbnb says.

The new host tools also integrate with more than 70 other existing property management systems already being used by many vacation rental managers. Examples of these partners include Streamline, Live Rez, and Barefoot.

“Professional hosts use systems called property management systems, or PMSs, to manage their inventory, and they like to control all of their functionality from that platform,” Lesser said. “It’s easier for them and the inventory is more accurate on our site if we connect direct to the systems they use to manage their inventory.”

Lesser said Airbnb chose its property management system partners based on how many mangers, rentals, and markets they have using their software.

The decision to open up these new tools to outside partners makes good business sense for Airbnb. A 2017 Phocuswright report on private accommodations found that nearly 80 percent of property managers used a property management system in 2016, compared to an estimated 75 percent in 2012. Online channels overall drove close to 70 percent of property manager bookings in 2016.

“The majority of listeners in the audience use a third-party property management software because they list on multiple websites,” said David Jacoby, president and co-founder of Hostfully, a company that helps vacation rental and short-term rental hosts develop digital guidebooks for their guests to use for their stays. Jacoby attended Blecharczyk’s presentation, which included news of the new tools.

“This acknowledgment was important,” Jacoby added. “It was followed with a video that showed very clearly and easily how a manager can import listings from a leading PMS, Streamline, to create new listings on Airbnb. This has been a pain point in the past, and they seem to be improving on it,” Jacoby said.

“The verdict is still out as to how easy it will be for other vendors in the space to easily integrate,” he added. “Nate [Blecharczyk] really only mentioned the PMS space but did not talk about a Salesforce-like ecosystem or app store of vendors [for vacation rental managers to use.]”

The CEO of vacation rental management company Vacasa, however, doesn’t see the Airbnb tools as game-changing.

“A lot of these tools aren’t necessarily relevant to us or other larger partners like us,” said Eric Breon, Vacasa CEO. “These tools aren’t groundbreaking, but they do indicate more of a shift and tone in investment and the space itself. I think this is a good start, but still very much just the initial phase. Having Nate’s presence at the conference is a pretty significant shift. It’s exciting for Airbnb and for the [vacation rental] industry.”

A Tricky Situation for Airbnb

While Airbnb pursues an eventual initial public offering (IPO), the $31 billion company needs to grow even more than it already has, and the global vacation rental market could be a fruitful avenue.

While the traditional vacation rental space has long been dominated by other players, including Airbnb’s biggest direct competitor, Expedia-owned HomeAway, Airbnb is making some inroads. The announcement of new vacation-rental-specific host tools should help in that regard.

Lesser wouldn’t divulge exactly how many of Airbnb’s current 4 million listings comprise traditional vacation homes, but an estimate from a recent Skift Research report on the vacation rental market pegged that number at 1 million for Airbnb, and 1.2 million for HomeAway. Earlier this year, Airbnb also purchased Luxury Retreats, a Montreal-based high-end rental platform and service with more than 4,000 listings worldwide.

Other companies showing interest in the vacation rental space include Google and French hotel company AccorHotels, and there are many regional companies with strong footholds.

But for Airbnb, a company that has long built its image on the concept of true home sharing, establishing deeper ties to professional property managers will be very tricky.

“It’s kind of a Jekyll and Hyde split of deciding how much they do want to work on that,” Andrew McConnell, co-founder and CEO of Rented.com told Skift earlier this year. “With vacation rentals, you have to accept that it’s not a shared space; you’re renting a home. It’s different from Joe, Brian, and Nate [the Airbnb co-founders] having a few airbeds in their apartment. It’s a business. These managers aren’t expecting to deliver a totally personalized, hanging out with the owner type of experience.”

These hosts stand in stark contrast to the middle-class families and hosts whom Airbnb so often portrays in its marketing materials and advertising.

To that point, Lesser said, “We really believe in people who can provide great hospitality and in many of these markets, these are some of the best hospitality providers in the world. It’s interesting. They’re not big businesses. They’re often husband-and-wife entrepreneurs who got into the business because they believe passionately in providing great hospitality to guests. So, we believe this is very much a part of our brand and core marketplace.”

Another challenge for Airbnb is that these property managers are also brand-agnostic when it comes to choosing which platforms they use to advertise their listings, which explains Airbnb’s decision to open up its new vacation rental manager tools to other software providers and platforms.

“If Airbnb wants to scale on the revenue side, working with existing vacation rental managers and getting that supply is really the way to go,” Jacoby said. “But then they’ll be more like an online travel agency where that listing is on Airbnb, and Booking.com, and HomeAway, and Tripping.com, and all these other sites.”

Exclusivity isn’t the rule when it comes to vacation-rental distribution.

“It’s rare to have exclusivity of listings for these types of rentals,” McConnell added. “At Rented.com we work with 900-some managers and I think the minimum number of sites people put them on are anywhere from 10 to 20.”

But that also means that the exclusivity of listings on the Airbnb platform would diminish the more it adds traditional vacation rentals to its inventory. (Airbnb hotel, anyone?)

Enabling Commercial Operators?

Another challenge Airbnb will have to confront as it courts professional property managers is making sure its new vacation rental management tools aren’t abused by people who wish to operate professional — but also illegal — short-term rental businesses in cities like New York City and San Francisco.

While Airbnb has taken some steps to comply or work with local short-term rental laws in cities such as San Francisco and New York City, the regulatory battles between Airbnb and cities continue, and there will no doubt be critics concerned that these tools — which allow someone to manage thousands of listings at a time — could fall into the wrong hands.

And their concerns have merit. Even though Airbnb has instituted a One Host, One Home policy in New York City, for example, there have been multiple stories that have emerged of people who have been able to find loopholes that allow them to manage multiple New York City listings on the Airbnb platform.

Airbnb, for its part, has said it has removed more than 4,200 listings that violated this provision since November 2015 and that 96 percent of its New York City hosts who rent an entire space have only one listing.

An Airbnb spokesperson assured Skift that the new tools would not be abused, saying they would not replace or override tools, policies, or existing platform protocols already in place in cities such as San Francisco or New York, for example.

What’s not entirely clear, however, is how Airbnb plans to prevent or police that type of usage from occurring — whether in the form of platform protocols or active monitoring of the platform. For example, in San Francisco, because Airbnb now asks for any new listings to include city-backed registration details, it would, theoretically, be harder for someone to run an illegal hotel business on the Airbnb platform.

However, in New York City, no such registration requirement exists. What’s stopping a property manager who is physically based outside of New York City from managing multiple listings on the Airbnb platform in the city, and having access to these new property management tools?

Looking to Disrupt the Vacation Rental Market

When asked if some elements of the new vacation rental management tools would eventually be added to other hosts’ Airbnb tools, Lesser said, “The large majority of these tools are specifically designed to make it efficient to manage multiple listings on Airbnb so they don’t apply to our core home sharing hosts. Some things, like pricing settings that allow you to have different price rules for different lengths of time, we will ultimately expose to our core audience.”

So, it seems Airbnb may soon be augmenting its Smart Pricing feature for hosts, which enables them to automatically set their prices based on demand. In March 2016, Airbnb also debuted a new co-hosting feature that lets multiple hosts manage the same listing.

And as Airbnb makes its push to get more hosts — professional property managers included — to opt into features like Instant Booking, it’s clear that Airbnb wants to also use what it’s learned and developed from its core home-sharing business, and apply that to the vacation rental market.

“Things as simple as Instant Booking are not that common in our industry,” Breon noted. “As we start doing things like Instant Booking to make it easy for people to plan their trips, that will also continue to be a strong driver in that space.”