This Is How Airbnb Plans to Win Over Hotels

  • Skift Take
    Oh, how times have changed. Instead of feeling threatened by Airbnb, some hotels are being wooed by the company. Online travel agencies, on the other hand, are about to get a taste of what it feels like to be disrupted by the likes of Airbnb.

    While it may seem antithetical for homesharing giant Airbnb to offer hotels on its platform alongside treehouses, apartments, and vacation homes, the truth is that many hotels have been using the site to get bookings for years.

    But it hasn’t been until recently that the company has begun making a more concerted effort to get professional hospitality providers, from bed-and-breakfasts to hotels, to advertise their rooms on Airbnb.

    Earlier this month, the company announced a technology partnership with cloud-based hotel distribution platform SiteMinder to enable its more than 28,000 qualifying hotels to easily list their inventory on Airbnb. In December, Airbnb 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.

    Cameron Houser, Airbnb Hotels Program Manager

    The credit for Airbnb’s current push into the hotel market goes to Cameron Houser, Airbnb’s hotels program manager. It was Houser who, as a marketing manager for the Mid-Atlantic region, began realizing that many of the listings she was finding on Airbnb were actually for hotels and bed-and-breakfasts, and not just homes.

    “We started looking at global data and, all of a sudden, we realized there are so many cool hotels on Airbnb that aren’t labeled as hotels,” Houser said.

    Guest reviews, many of which were also positive, would note how many of those guests were pleasantly surprised to discover that their Airbnb was actually a hotel and not a home.

    “A couple of people have come in and said, ‘I stayed at the best hotel [on Airbnb]; I just didn’t know it was a hotel,'” Houser said. “And the guests loved these places. They loved the host, loved the experience, loved the design. And that was sort of when I thought we might have something here. We should do something about this, and start to talk to these hosts, and start to talk to the guests who stayed there. Is this interesting to Airbnb guests? Can Airbnb do better for these hotel hosts?”

    So, a year ago, Houser’s role changed, and Airbnb’s hotel business “took off,” achieving what she described as “520 percent growth in the category year-over-year.”

    To date, she said that there are more than 24,000 boutique hotel listings on the platform, which is only a fraction (about 5 percent) of the 4.5 million listings that Airbnb has in total.

    But Houser hopes that with Airbnb CEO Brian Chesky’s announcement regarding new Airbnb categories, that number will grow, especially now that more Airbnb hosts are able to identify their listings officially as “boutique” hotels, as well as take advantage of the ability to create custom URLs for their listings as a Superhost.

    Shortly after Chesky’s presentation Thursday in San Francisco, Skift interviewed Houser to ask her more about Airbnb’s future strategies for the hotel market, and its plans to compete with the dominant online travel agencies, Expedia and Booking Holdings (formerly Priceline Group). Here are some of the biggest takeaways from our conversation.

    This Is Why Airbnb Wants to Add More Hotels

    When Chesky announced the debut of Airbnb Plus and the formal category additions of bed-and-breakfasts and boutique hotels on Thursday, some longtime hosts and Airbnb users wondered if, in doing so, the company was abandoning its roots for the sake of growth and evolution.

    Airbnb Plus is a new accommodation category that features verified, design-forward homes favoring hosts who adopt more professionalized hospitality services. The listings are prominently featured on the site and mobile app.

    Houser, however, doesn’t see these new features as taking away from the company’s original ideals.

    “It’s all about that amazing hospitality,” she said. “We think our guests have come to recognize hospitality as a key tenet of what they’re finding on Airbnb. So, my hope is that they will go, and they will try one of these boutique hotels out, and they will see that it’s an awesome experience, again.”

    She said that including hotels will help the company reach its goal of being “for everyone” — especially those who previously couldn’t find an option they liked.

    “My hope is that those folks who maybe had positioned us as a place that they weren’t really going to find an accommodation can now open their minds and hearts to Airbnb a little bit more,” she said. “And find, perhaps, a small hotel or a bed-and-breakfast that they’ve been looking for.”

    Why wouldn’t a company seeking growth want to open up its potential pool of customers by offering more of a variety of product? Limiting inventory can limit profits, so why not allow professional hospitality providers to add to Airbnb’s 4.5 million listings and counting?

    When we asked Houser if Airbnb Plus would ever include hotels, she said, “At this point, it is homes. We are trying to figure out what collections generally hotels might fall into. Plus is a consideration, obviously. Beyond [by Airbnb, a new luxury tier of accommodations and experiences] could be a consideration. So, I think that’s all in the future. I’ve got to get a lot done before we’re at that point.”

    Airbnb’s Sales Pitch to Hotels

    Perhaps Airbnb’s most attractive feature, at least for hotels that want to advertise on the platform, is the fact that Airbnb’s commission fee structure is significantly less costly than that of its online travel competitors, Booking and Expedia.

    Whereas Booking and Expedia might charge hotels a commission fee that’s as high as 25 percent, Airbnb charges all of its hosts — hotels included — a commission fee that ranges from 3 to 5 percent, and it also collects a “guest fee” from the guest. It’s a similar model employed by Trip Advisor and HomeAway, for example. Chesky, however has publicly noted that he sees Expedia and Booking as his primary online travel competitors.

    Airbnb also doesn’t require a contract from hotels like most of the online travel agencies do.

    When we asked Houser if this commission fee structure would change in the future, she didn’t say “never.” Instead, she answered, “Today we’re really concentrating on just trying to get this started.” And when we asked if Airbnb would ever require contracts from hotels, she said Airbnb intends to treat hoteliers the “same as any other hosts.”

    But beyond charging a lower commission and not requiring a formal contract, Airbnb’s biggest selling point to hoteliers, Houser said, has to do with the fact that the company is taking a “partnership” approach to working with them.

    “I think this idea of partnership is core to the program that I’d like to build, and I think we are building,” she said. “I’ve got to go out and talk to as many of these hosts as I can before even touching the product that I think is supposed to be built for them.”

    In the process of building up Airbnb’s hotel business, Houser said she has “talked to many hundreds of hotels.”

    “The hope is that we will be building something that is for hosts and by hosts, in these categories, and that they feel like this is absolutely the thing they’ve been waiting for,” she said. “This is the community of hosts they want to be in, the type of hospitality stands for what they have to offer. And I think that will continue to even grow bigger and bigger, as we’re able to say, we heard you.”

    And what results from these conversations, she hinted, is “going to look very different from things you’ve maybe seen elsewhere.”

    What Airbnb Is Looking for in ‘Boutique’ Hotels

    In allowing hotels to advertise their rooms on Airbnb, the company said it wants to be discerning about which hotels can actually be on the platform. The company has a few key items on its wish list for hotels.

    “The first is, obviously, making sure that the space feels something like our best home spaces. They’re unique, and they have a design perspective,” she said. “I was laughing the other day, because it could be many different types of design perspectives that make up a design perspective, but there is something kind of unique that they have [to] put forth for a guest to enjoy, and it feels like something new and different.”

    Communal areas, something hotelier Ian Schrager has often noted as a main differentiator and advantage that hotels have over a traditional Airbnb homesharing arrangement, are also emphasized in Airbnb’s requirements for hotels.

    “We would love for them to have community spaces, so that guests might meet by chance at the coffee shop downstairs, or the rooftop deck, or around the breakfast table, whatever it may be,” Houser said.

    Another important criteria is having “a host who is available and excited about guests, and really wants to make sure that they know what they need coming in, and that they have what they need coming in,” something most hotels already provide.

    Why You Won’t Find ‘Mass-Produced’ Hotels on Airbnb

    If Airbnb really wants to go toe-to-toe with Expedia and Booking as Chesky has reportedly said, why not open up its platform to all hotels, and not just to boutique hotels and bed-and-breakfasts? Why not pursue those “mass-produced,” or bigger, branded hotels as Chesky has referred to them?

    Houser said that focusing on just boutiques and bed-and-breakfasts ensures that the company stays true to its vision.

    “We really want to champion the small business,” she said. “It feels at home with our mission. It is so much what we’re about all over the place. That brand of hospitality, that version of what a space could be and looks like. Community function, all of that to us, feels exactly like what we’re looking for.”

    She added that there was also demand from boutique hoteliers for Airbnb to include them on the platform. “Largely, these hosts came to us, which is so exciting,” she said. “There’s something to be said for self-choosing the distribution channel you want to work on, and the partners you think would be the best for you. And that is, by and large, what we’ve seen the hosts come through the door to do: They choose Airbnb.”

    Airbnb’s users are also seeking out more boutique experiences. “I think the other piece is that our guests really choose the sort of smaller, intimate settings,” Houser said. “And that seems to be what they have in mind when they think of Airbnb. So, we really do want to stay true to what we’re hearing from hosts, and the hosts coming to us, as well as what we’re hearing from our guests and what they get excited about.”

    What Hoteliers Want from Airbnb

    In her conversations with hotels, Houser has found that what hoteliers want most are features that make it easy and seamless for them to use Airbnb, including the recent technology partnership with SiteMinder. That partnership removes friction for hotels that want to use Airbnb as a distribution channel, especially with regard to setting rates, availability, and restrictions in real time.

    She said that many hotels she’s spoken to are excited about the new benefits that are coming to the Superhost program, including customized URLs for listings, in addition to improved marketing tools.

    “They’re very savvy marketers, and they have these beautiful spaces that are very unique as far as branding goes. But also, they want to get in front of the right guests,” she said.

    The addition of a “boutique” category, too, is crucial for building the company’s hotel listings.

    “I think that it also opened our doors to say [to hotels], ‘You have a home here. And we do want to champion you. And we do believe in your business. And we think that what you have to offer is exactly what we’re looking for,'” she said. “Now it feels much more like it is something that we’re very committed to, and we are.”

    Would We Ever See Airbnb-Branded Hotels?

    We’ve already seen some examples of how Airbnb is, unofficially, acting a bit like a hotel soft brand collection, using its brand awareness and recognition to power the businesses of independent accommodations providers, or hosts. Those examples include the newly launched Airbnb Plus and the company’s partnership to develop Airbnb-branded apartments in Florida.

    Houser said she’s come across hotels that are building their entire distribution strategies around Airbnb. “If you’re building a hotel exclusive to Airbnb, you’re literally building a business on Airbnb,” she said. “What types of features do you want? What are you using? How can we help you do that?”

    Asked if Airbnb was thinking about becoming the next big hotel brand, or deepening its relationship with hotels as Skift explored earlier this year, Houser said it wasn’t a focus for now.

    “It’s really cool and quite humbling, frankly, that a hotel would want to build their entire business on Airbnb,” she said. “They’re some of my favorite properties, in a lot of ways, because they’re very much oriented around the ethos of this place, and really built with Airbnb in mind from the ground up. [But] I don’t necessarily think that at this point it’s something we’re concentrating on.”

    For the time being, her focus is on making sure Airbnb has the right tools for boutique hoteliers to use.

    “I hope we have what they’re looking for when it comes to a brand who has that same reverence for fantastic hospitality, who wants to support them from a community perspective, who is sort of thinking about the future of travel a lot and has really made that a broad statement,” she said. “My hope is that the entire package will make sense for properties going forward.”

    Photo Credit: The Romantik Hotel GMACHL in Salzburg, Austria is one of many hotels that advertise rooms on Airbnb. Airbnb

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