Skift Take

You know the saying, "The more things change, the more they stay the same"? When it comes to Airbnb's new endeavors in the accommodations space, it is certainly being inventive, but the company is also borrowing heavily from what hotels have been doing for centuries.

Airbnb is close to announcing its newest product, Airbnb Select, perhaps as early as next week, Skift has learned.

And it’s good news for those who have always longed for more quality assurance or control in the Airbnb accommodation experience.

Last month, Airbnb CEO Brian Chesky tweeted that on Feb. 22, the company would share  “our biggest changes to our platform in our 10-year history” and it’s a good bet that Airbnb Select is one of those changes. On Tuesday, the company would not confirm what it plans to announce on that date.

Airbnb Select is a program in which Airbnb invites selected hosts with high ratings and reviews to be part of a curated collection of listings that undergo an inspection and professional photography process. Properties must also meet a lengthy checklist of requirements for particular amenities and safety features. Sometimes, the invitation also includes the opportunity for those hosts to improve their homes with financial aid from Airbnb.

In return for being a part of Airbnb Select, these hosts’ listings will show up more prominently in search, and they have the ability to raise their nightly rates, should they choose to do so.

Airbnb Select listings aren’t exactly hotels, but they’re much closer, at least in quality standards, to the type of product and experience one might find in a hotel versus an average Airbnb listing. And it’s something the company has been working on for some time. In April 2016, we reported on one of those pilots, which focused on listings in Sonoma, California.

The program is yet another marker of Airbnb’s continued progress toward becoming a comprehensive online travel agency, or what executives have previously described as becoming a “super brand in travel” that encompasses just about every aspect of the travel experience, from where guests stay to what they do and what they eat.

It’s also symbolic of the increasing professionalization of the alternative accommodation space, and the fact that the lines between alternative and traditional accommodations are blurring. Just last week, the company, which is valued at $31 billion, officially opened up its platform to boutique and independent hotels via a technology partnership with SiteMinder. Soon, those hotels will be advertised alongside the company’s more than 4 million listings in total, which will also include Airbnb Select listings.

How Airbnb Select Works

While Airbnb hasn’t yet made a formal announcement about Airbnb Select, Skift spoke to multiple sources — including several Airbnb hosts who were invited to be a part of various pilot programs related to Airbnb Select — to learn more about how it works.

Here are some highlights from our conversations with them:

  • It’s invite-only, for now, and the invitation often begins with the line, “Airbnb is evolving and we want you to be a part of the next chapter.” The first step involves an online questionnaire. The majority of hosts who have been invited to participate in the various pilots are classified as Superhosts, meaning they have exceptionally good reviews and a high response rate. One source estimates that Airbnb Select will eventually comprise the top 5 to 30 percent of Airbnb’s inventory, emphasizing amenities, consistency of experience, and uniqueness.
  • Once a host goes through the online qualification process, the next step involves setting up an inspection and photography appointment. Airbnb sends an inspector and photographer to the listing. Usually, it’s a single person who both photographs the home and goes through a comprehensive checklist of different standards.
  • The criteria for Airbnb Select homes is pretty standard, such as having the following: a clean and maintained space; clutter-free interior design; a space for coffee/tea; a place to hang clothes; fast Wi-Fi; matching dinnerware; and nice linens and towels.
  • It doesn’t appear that Instant Booking — which some hosts prefer not to use — is a requirement for Airbnb Select listings. The hosts Skift spoke to said they weren’t asked to be a part of Instant Booking in order to be a part of Airbnb Select. Instant Book is a feature that Airbnb has been promoting heavily to its hosts because it is thought to minimize the occurrence of discrimination or bias taking place on the platform and also helps the company make more money by making the booking process easier.
  • There’s some confusion about whether or not the program is limited to entire home listings. One San Francisco-based host, Ivan Abeshaus, said he was invited to participate in Airbnb Select but decided against it because Airbnb wanted to include one of his listings — a private in-law unit that’s only been on the platform for a few months — that he rarely lists. Abeshaus was under the impression that Airbnb Select preferred entire home listings versus shared ones. However, two other San Francisco-based hosts said that shared home listings, or private rooms in a home, are now included.
  • Some invited hosts were also introduced to online interior design firm Havenly and given a rebate or discount to work with the firm to upgrade their homes. When a host contacts Havenly, he or she is connected to one of the company’s interior designers who reviews photographs of the host’s home and provides feedback, including suggestions for “nice to have” items that they can purchase on Havenly’s site. A host who buys those suggested items can use an Airbnb discount code, but only for items purchased for that specific listing.
  • Some invited hosts have also received access to financing, so if they need to bring their homes up to Airbnb Select standards, Airbnb may offer them a cash advance to pre-finance any improvements. Earlier this month, Airbnb announced that Fannie Mae, Quicken Loans, Citizens Bank, and Better Mortgage will now consider homesharing income earned via Airbnb for refinancing mortgages on primary residences.
  • These aren’t necessarily luxury homes. The hosts who have been invited to participate in Airbnb Select do have nice homes with high ratings and reviews, but these accommodations wouldn’t necessarily be considered luxury homes in the traditional sense. In other words, the homes you’d find on Airbnb Select aren’t the same types of homes you might find on Airbnb-owned Luxury Retreats. One invited host charges anywhere from $195 to $225 a night for his Pasadena guesthouses; another charges $150 a night for her shared listing and $250 a night for her entire apartment.

Hosts have been told they can make more money, and will have better search results when they are part of Airbnb Select.

“They said all those things,” said Van-Martin Rowe, a designer and Airbnb host based in Pasadena, California. “These are top-notch, on-the-board listings. Not only will you find what you need, but you won’t have a bad experience.”

Rowe said that he is satisfied with the bookings he has now, but added: “It would be nice if we could raise our prices, and if we were completely booked all the time.”

San Francisco Airbnb host Catherine Bae expressed similar sentiments.

“They marketed it as a higher level [of accommodation] and you have a different opportunity to get more listings,” she said. “They also say you can earn more and you have more support. I figured, ‘Why not?’ It can’t hurt. I can still be on regular Airbnb too.”

Bae said she has no concerns about the program, and expects it to help more people find her listing. Though she doesn’t plan to charge more for Airbnb Select listings, she hopes her rate can increase over time.

Abeshaus, however, said he is skeptical of Airbnb’s own pricing tool for hosts, called Smart Pricing, and wonders if that same pricing tool will apply to Airbnb Select homes. “The selling point of Airbnb Select is that it’s a way to make more money, but when you use Airbnb’s pricing tools, the [prices] are very often lower than we have listed before, and lower than what will get booked. They’re encouraging us to make prices lower than what the market can bear.” For that reason, he uses an outside firm, Beyond Pricing, to help him price his listings.

“The only explanation I can come up with is either they’re incompetent, which I know they aren’t, or they are doing this on purpose,” he said of Airbnb. “If they’re doing it on purpose, why are they selling me to get into the Select program just to do the obvious? Are they getting people committed to the platform by having them experience Airbnb cheaper than it really should be? Will that make people happy and more likely to come back as a guest?”

Not all hosts have been happy with the pilots, either. Abeshaus said another reason why he chose not to be a part of the Airbnb Select pilot program was because he’d seen some negative feedback on the program from other hosts. “There were a lot of complaints about photos and mandates for things, and having to do things a certain way,” Abeshaus said. “I’m still open to it, but I’m waiting to hear how it goes. I’ve been a host for a long time — since 2009 — and I’ve experienced a lot of new and different things that they’ve rolled out over the years, and sometimes it takes them a while to operate smoothly. I didn’t want to beta test this one if it turns out to be something I’m not interested in.”

Another source said Airbnb has run multiple pilot programs in relation to Airbnb Select over the past few years to find new ways to present a sub-segment of Airbnb’s inventory that’s higher in quality. However, one potential challenge for the company is that the person who was previously running Airbnb Select, former director of product Donna Boyer, left the company in January to join Stitch Fix, a clothing subscription service. For now, Airbnb’s homes division is being overseen by both Chesky and Vlad Loktev, vice president of product and homes operation, who stepped into the role in June.

Multiple sources said that Airbnb Select listings will be advertised differently from other listings on the site — in addition to showing up more in search — as well as organized differently. That may take the form of a separate page or URL on the platform, for example.

A new layout or interface will likely apply to all of Airbnb’s homes listings as well, to make it easier for consumers to find the type of accommodation they are looking for. Anyone familiar with how homes are currently presented on the platform will likely welcome a new format for identifying and categorizing the millions of listings that the company has on its site. Perhaps this new format involves the development of a new reservation system or algorithm for how listings are displayed on the site, as Rowe noted.

He mentioned that a few months ago, Airbnb also reached out to him about being part of a pilot group that was testing out a new reservation system or program that isn’t Instant Book, although he already uses the feature. Once he joined this pilot group, he saw his bookings increase dramatically. “All of a sudden, we started getting a lot more bookings. I don’t know if this was a precursor to Airbnb Select or not, but there was definitely something different in terms of how many hits we got. We were just booked solid.”

How Hosts Feel About Airbnb Select and the Company’s Growth

Not surprisingly, most of the hosts we spoke to — all of whom were invited to be a part of Airbnb Select — felt that the new program is a step in the right direction for Airbnb.

“I think it’s a really good option for people who do want a higher level of accommodation,” Bae said. “I think it’s just giving people an option that may have been harder to find. It’s the same listing but a little more curated for a specific population.”

Rowe shared Bae’s views, saying, “I think what they are doing is really trying to prevent people from having either too high of expectations or too low of expectations. I think that as Airbnb has grown, there have been a lot of horror stories … even though there are so many positive experiences that offset those. But with Airbnb Select, the company is saying you can find those positive and polished listings, too, and people really care about that.”

Rowe, who was invited to join Airbnb Select almost a year ago, also said he’s “thrilled they are going to start it” and noted that “earlier target dates have passed,” implying that the launch date for the program has been delayed.

One thing Bae said she is slightly concerned with is that Airbnb users may expect her home to be just like a hotel if it’s classified as an Airbnb Select home. However, she said she believes Airbnb has done a good job of setting people’s expectations appropriately for their Airbnb stays over the past decade.

One thing she said she isn’t as concerned with is having her listings show up alongside those of actual hotels. “I think people like me actually have an advantage over hotels because our prices are better and we are more competitive than the hotels,” she said.

Abeshaus, however, while emphasizing that he’s loved being an Airbnb host for the past nine years, said he does wonder about the company’s strategy for growth and whether it veers sharply away from Airbnb’s more humble origins.

“One of the reasons why my wife and I love hosting is the uniqueness of all the places we stay in, and sharing our style with guests,” he said. “I think that’s one of the charms of the platform. They’re moving away from that with this.” 

Other hosts have also expressed concerns that the company is evolving into a hotel company of sorts. In a recent Q&A session Chesky held for Airbnb hosts, he assured them that allowing hotels onto the Airbnb platform wasn’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 happen this year.

Airbnb’s Twists on the Traditional Hotel Business

In some ways, what Airbnb is doing with Airbnb Select is a slight reinvention of what hotel companies are already doing with their soft brand collections. With those, individual hotel owners pay hotel companies to give them access to their own marketing, distribution, and loyalty programs, as well as a set of some brand standards to follow that aren’t quite as strict as a branded property would have.

With Airbnb Select, hosts don’t have to pay anything additional to be a part of the program for now, but they do get boosted distribution and marketing access by being a part of the program. And in some cases, Airbnb is giving them money to upgrade their listings so they adhere to a particular set of standards, or look, that assures the quality of these homes.

One host who wished to remain anonymous contrasted Airbnb’s approach to growth in the accommodations space with how hotels approach growth, saying that for hotels, it’s a “top-down approach” where brand standards for quality control are set at the top and then enforced. With Airbnb, however, it’s a more personalized approach, as evidenced by the design pilot with Havenly. 

“They weren’t trying to impose a design philosophy on me,” the host said.

The way Airbnb is implementing some form of standards is different from the way hotels might approach it, but in some ways, very similar.

“Standards matter in the hotel business,” said Erik Blachford, a venture partner of Technology Crossover Ventures (TCV), a venture capital fund that specializes in funding tech companies, including Airbnb. “No question they are deep in that business, even if they don’t own hotels.” He said that the company’s regulating mechanism for standards, reviews, works for the most part, but not for the higher end of the accommodation spectrum.

“I guess you could sort of say Airbnb has always been this big, distributed hotel brand with rooms in lots of different buildings,” Blachford said. “Certainly, from an inventory and marketing point of view, that’s kind of how it looks. Airbnb Select strikes me as another way of doing it.”

He likened Airbnb Select to selected floors in hotels that have extra amenities and access to a club lounge as an example. “It’s going to be an innovative thing, but it’s kind of a page out of the standard playbook when it comes to hospitality.”

Airbnb Select is separate from another one of the company’s endeavors that also puts a twist on the traditional hotel concept: “Airbnb-friendly” apartments which operate on a model that’s similar to how asset-light hotel models work. Like a hotel company, Airbnb is allowing the building developer/landlord to use its name in developing these buildings, and the landlord profits whenever tenants rent out their units. The first such development, called Niido Powered by Airbnb, is scheduled to open in Kissimmee, just outside of Orlando, Florida, this year.

Airbnb’s Challenges

As Airbnb continues to pursue growth, ensuring quality at scale will remain a challenge, as will controlling the overall travel experience in a distributed, sharing economy-based model. Hotels have managed to perfect that process over hundreds of years, without having to contend with millions of individual owners or hosts. Whether Airbnb can do the same with a much more fragmented audience will certainly be interesting to watch.

One big advantage that Airbnb has over hotel companies is the awareness, brand-name recognition, and scale to compete with the hotels’ No. 1 frenemy when it comes to distribution: online travel agencies, or OTAs. Its recent moves to add more bed-and-breakfasts and independent and boutique hotels, said Blachford, “is the emergence of Airbnb as an OTA in a more traditional travel sense.”

As reported with the recent departure of chief financial officer Laurence Tosi, it was clear that Tosi preferred a traditional Wall Street approach to growth via mergers and acquisitions. Chesky, by contrast, wants to grow the company organically, and through product innovation. Whereas Tosi wanted the company to focus more on growing its core product, homes, Chesky has had loftier visions of entering into new sectors, including aviation.

Now that Tosi is out, it will be interesting to see exactly how Airbnb pursues its growth, even if it isn’t planning to go public this year. And if that growth is to be achieved via product innovation, we certainly hope those products will deliver.

One other major executive role that the company needs to fill, aside from finding a new CFO, will be finding a new chief marketing officer after former CMO Jonathan Mildenhall left the company in October 2017. No replacement for Mildenhall has been announced, but as we’ve seen in the past, the marketing behind a new product is just as important as developing that new product.

What Else To Expect During Next Week’s Product Launch

One source said that the company’s biggest weak spot relates to product stagnation, and that if Airbnb wants to really become a super brand of travel, or to eventually go public, it needs to do more in terms of developing new product.

The last major new product that the company debuted was in the fall of 2016 when it announced the launch of Airbnb Trips.

In addition to announcing the formal launch of Airbnb Select, we also wonder if Chesky will announce the debut of an official Airbnb loyalty program — something he and co-founder Nathan Blecharczyk have hinted at previously and which sources have confirmed the company is currently working on.

We doubt the company will announce anything related to its intentions to expand into flights at this time, but we do anticipate the debut of additional tools that will make it easier for hosts to, well, be hosts.

An Airbnb spokesperson recently said that the company is committed to “making hosting the best possible experience it can be.”

Another thing we’ll be watching for is any news related to Luxury Retreats, which Airbnb purchased last year. Will this be the year that Airbnb finally reveals details about Airbnb Lux? We’ll certainly find out next week.

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Tags: airbnb, homesharing, hotels

Photo credit: A listing belonging to Van-Martin Rowe, an Airbnb host from Pasadena, California, is pictured. Airbnb invited him to participate in the Airbnb Select pilot program, which is expected to officially launch soon. Airbnb

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