Airbnb Strikes Deal to Make a Bigger Hotel Push

If there were any doubt as to Airbnb’s true intentions of competing with online travel agency giants such as Booking.com or Expedia, they need to be laid to rest immediately.

Wednesday, the $31 billion company announced the formation of a technology partnership with SiteMinder, a cloud-based hotel distribution platform used by more than 28,000 hotels around the world.

Now, hotels that use SiteMinder and meet certain criteria from Airbnb can easily list their inventory, including real-time availability, rates, and content, on Airbnb thanks to new technology that both parties have developed together.

It’s still not entirely clear what criteria hotels will have to meet. But we expect that as long as a hotel isn’t considered a proprietor of “mass-produced hospitality” — as Airbnb CEO Brian Chesky has said publicly in previous discussions — it will be allowed to list its rooms on Airbnb. In a press statement announcing the new partnership, Airbnb said: “Guests can expect the locally influenced and unique accommodations they expect when booking an Airbnb listing.”

Airbnb spokesman Nick Papas directed Skift to this page on the Airbnb site, which explains the company’s standards for hotels. Some qualifications include access to common gathering areas, personal touches and local influences in guest rooms, and unique design characteristics.

Papas said that nearly half of the world’s hotel rooms are managed by small and independent companies rather than large chains.

“Airbnb is excited to work with smaller independent owners and ownership groups to assure guests continue to feel an intimate, special, belonging type of hospitality with every stay,” he said. “Smaller independent hotels and B&Bs have always worked towards these same goals and we feel Airbnb is perfectly aligned to bring them the guests they seek.”

Mike Ford, managing director of Sydney-based SiteMinder, told Skift that Airbnb will decide which of its 28,000 hotels can list their rooms on Airbnb, but that it’s up to each individual property to decide whether or not they want to advertise their rooms on Airbnb. The partnership, he said, “was a no-brainer.”

This isn’t the first time Airbnb has rolled out the welcome mat for more traditional hospitality providers to use its platform as a distribution channel. In December, the company announced a partnership with the Association of Independent Hospitality Professionals and ThinkReservations that makes it easier for bed-and-breakfast owners to advertise their rooms on Airbnb.

In August, Chesky tweeted that Airbnb had more than 15,000 boutique hotels on its platform after allowing them to join in November of 2016. The partnership with SiteMinder increases that number significantly, but even if all of SiteMinder’s 28,000 hotels were to begin using Airbnb as a distribution channel, the combined estimate of 43,000 boutique hotels would only make up about 1 percent of Airbnb’s total 4 million global listings.

Airbnb’s Evolving Relationship with Hotels

Whereas Airbnb was initially known as a place where people could find shared accommodations, and it wasn’t uncommon for guests and hosts to interact during a guest’s stay, today’s definition of an Airbnb stay has since expanded to include boutique hotels, traditional vacation rental homes, timeshares, luxury villas, inns, bed-and-breakfasts, and even Airbnb-branded apartment complexes.

“It was obvious this would happen,” said Guilain Denisselle, a global hotel technology consultant and co-founder of Tendance Hotellerie, a site that focuses on hotel technology and distribution. “The sole question was: which channel manager would be the first?”

Denisselle said that this is a good move for Airbnb primarily because it is “an answer to the move of OTAs [online travel agencies] into the Airbnb landscape” and it fulfills Airbnb’s “deep need to expand its inventory. You can’t increase your customer base if you don’t offer them more product.”

By breaking down silos and expanding more into traditional hotels, Airbnb is giving its global community of users more choices for their travels — similar to how online travel agencies operate by having a wide variety of inventory, and similar to how major hotel companies have expansive portfolios of different brands and hotel types.

This is a positive for hotels, said Erik Blachford, venture partner with venture capital fund TCV.

“People will go on Airbnb and look at the more traditional type of Airbnb inventory and if they don’t find what they want, it’s the most logical thing in the world to click on a hotel,” he said. “If hotels can present themselves as an option for someone who is otherwise looking for alternative lodging, it’s a really nice way for them to get in front of someone who has probably already decided what city they want to visit. Hotels have to be everywhere that people are shopping.”

Denisselle also said that if Airbnb remains differentiated, at least in terms of how it uses technology and design, it could have an advantage over other booking channels.

“As Airbnb did for pictures or the way they engage the relationship [between host and guest] ahead of the booking itself, Airbnb will ‘educate’ its hotel partners on how to succeed,” he said. “On the technology side, Airbnb is using artificial intelligence to make sure the web visitor gets the best offers depending on his/her profile. After that, the contact is 100 percent human, even if a machine sends reminders and how-to information.”

The difference with online travel agencies, he continued, is that they operate without that human touch.

“OTAs are using AI to push automated content and automated messages to the consumer,” Denisselle said. “Nothing is human in the process between the payment page on the guest side and the front desk at check-in.”

Should Online Booking Sites Be Concerned?

Even so, Denisselle said he doesn’t think online travel agencies should see this move as a threat — at least not yet.

“OTAs should not be afraid because Airbnb’s hotel inventory will look the same as theirs,” he said. “The key factor to succeed, for Airbnb, is not to be the same as everyone else but to be unique and to provide a unique experience to the guest. To me, Airbnb means having some sort of relationship — it’s not just transactional — and OTAs don’t do that even if they try hard. They won’t be worried by something like this.”

Still, Blachford believes online travel agencies would do well to pay attention to this move by Airbnb.

“Listen, it’s game on in the hotel business for online travel,” Blachford said. Over the next few years, the mix of lodgings offered by the big players, Airbnb among them, will shift in percentages of hotel and alternative accommodation bookings.

“You’re going to see this is a game of percentages where everyone will end up offering everything, and the winner will be who can put together the best consumer proposition on site,” he said. “It’ll be interesting to see how everyone positions this, marketing-wise. This is the emergence of Airbnb as an online travel agency in a more traditional sense.”

Hotel executives, many of whom have been considered adversaries of Airbnb, are warming up to the idea of Airbnb becoming a bigger player in hotel distribution, as Skift reported earlier this week.

David Kong, CEO of Best Western, said his company could gain leverage if Airbnb and Google were to compete more intensely with online booking sites. Hilton CEO Chris Nassetta has also made similar remarks.

Some hotels, no doubt, may find Airbnb’s commission structure to be more favorable than what is traditionally offered by online travel agencies. This is especially the case for independent hotels, which often pay commission rates that range from 15 to 25 percent to online travel agencies.

On Airbnb, the commission rate for the host — or in this case, the hotel — would range from 3 to 5 percent, and Airbnb also collects a commission from the guest, which ranges from 5 to 15 percent. In total, Airbnb collects fees that range from 8 to 20 percent, but they are collecting the money from both the hospitality provider and from the guest.

Seth Borko, senior research analyst for Skift Research, said the deal with SiteMinder puts Airbnb into more direct competition with booking sites.

“For the past few years, Priceline Group and Expedia, Inc. have been focused on building their inventory of alternative accommodations and vacation rentals,” he said. “This feels like another way Airbnb is taking the fight back onto the incumbent’s home turf by adding traditional inventory to its platform. It’s still a very small step, but it will be interesting to see how it plays out, especially from a pricing perspective.”

SiteMinder’s Ford said hotels should welcome having multiple options to sell their rooms.

“Airbnb adds a new dimension to how hotels diversify the sources of their guests. For hotels that are listed on Airbnb, it’s another source and another source that hotels should be embracing,” Ford said. “They shouldn’t fight it. They should join it and be a part of that demand pool. The fact that Airbnb is taking an interest in making things easier for the boutique hotel side is a good thing for the industry.”

The bigger question that lies ahead, however, is whether Airbnb will eventually change that model in the future and decide to charge more. And if it does, would those charges be tiered? Would hotels have to pay more than a traditional Airbnb host would?

Even if online travel agencies don’t see Airbnb as a threat today, the truth is that those entities are also finding themselves in the process of evolving — just as Airbnb and hotel companies are doing.

What Is Airbnb Becoming?

That’s a question a lot of people are asking themselves today, especially given the company’s recent moves toward entering the luxury space, in addition to more actively courting professional vacation property managers and, now, hotels.

Whatever it is becoming, it’s certainly a different company than it was in the very beginning, when co-founders Chesky and Joe Gebbia advertised air mattresses in their San Francisco apartment back in 2008.

Ivan Abeshaus, a longtime Airbnb host from San Francisco who has been hosting since 2009, said that when he first became a host, co-founder Nate Blecharczyk would often respond to his inquiries.

“Early on, Airbnb.com was airbedandbreakfast.com, and it was a unique way to travel,” Abeshaus said. “It was different to stay in someone’s home while they were there, and it did not exist online, really, other than on Craigslist. When they jumped into this space and started Airbnb, it was unique. Now they are moving into established markets, and they have to compete with everyone.”

He pointed out that in addition to hotels such as a Westin or W, the company has to compete against tour companies with its move into tours and activities.

“The first product was just home sharing, they were the only ones doing it, and all they had to sell was this great new way to travel and the idea of staying with a host,” Abeshaus said. “Now it’s different — they’re competing with how people already travel, but I guess this is just a part of the next phase.”

Some hosts, however, are concerned that in this next phase, Airbnb is moving too far from its early ideals. During a recent Q&A session Chesky held for Airbnb hosts, he assured them that allowing hotels onto the Airbnb platform isn’t a sign that the company is “leaving our roots” or “going commercial” in the pursuit of an initial public offering, which he has also said won’t be happening this year.

What Airbnb’s next phase will include, however, is exactly what Abeshaus described: In some ways, it’s a return to traditional hospitality, or to what traditional travel companies have done for decades. In the next few weeks, the company may eventually launch Airbnb Select, a program that selects and highlights certain Airbnb home listings that offer amenities similar to a hotel. And both Chesky and Blecharczyk have hinted at establishing a formal Airbnb loyalty program.

“This move to bring traditional hospitality providers onto Airbnb’s platform makes Airbnb begin to feel almost like a soft brand and distribution channel for small, independent operators,” Borko said, noting that 30 percent of U.S. hotels — representing nearly 1.6 million rooms — are independent. “It will be interesting to see if Airbnb moves further down the path towards becoming a soft brand provider, perhaps by offering a loyalty program.”

Whatever Airbnb is becoming — or whether it is succeeding in becoming the super brand of travel that it aspires to be — its latest moves underscore a long-held truth in travel distribution: the one with the most inventory generally wins.

Below is a document that Airbnb created for hotel owners who want to learn more about using Airbnb as a distribution channel:

Download (PDF, 28KB)