Airbnb Plus' Risky Bet to Push Homesharing to a New Level

When Airbnb CEO Brian Chesky took to the stage in San Francisco on February 22 and said that "Airbnb is for everyone," it was more than just a company slogan.

It was a statement about the evolution of the sharing of homes that's becoming more professionalized, more standardized, and in some cases, a lot more like a hotel.

Of all the new features and products Chesky outlined, the official launch of Airbnb Plus in February was particularly emblematic of this convergence taking place in the hospitality industry where the traditional categories of lodging are beginning to blur.

Piloted under the project name Airbnb Select over at least a two-year period, Airbnb Plus consists of 2,000 verified listings in 13 cities around the world. These homes, Airbnb attests, have been verified by Airbnb to be "beautiful homes" with "exceptional hosts" and "premium support" for both customers and hosts, Chesky noted. And they include both entire homes, as well as private rooms and bathrooms.

Verification as an Airbnb Plus listing includes a home inspection/professional photography session that adheres to a 100-point checklist. To apply for Airbnb Plus, a host has to pay a one-time $149 application fee. In return, a host gets top placement in search on the platform, access to in-home services like design consultations, and the ability to charge more for their listings.

On average, Chesky said, Airbnb Plus listings go for less than $250 per night. And, he noted, a survey of Airbnb users found that 73 percent would pay more to stay in a verified home like an Airbnb Plus. And that's key: The reason why Airbnb decided to launch something like Airbnb Plus is because, as Chesky noted, "Guest expectations have evolved."

Airbnb Plus homes are meant to adhere to a list of amenities, as well as being design driven in their decor. This is an Airbnb Plus listing in Los Angeles. Source: Airbnb

What Airbnb Plus Really Represents

Whereas some travelers back in 2008 when Airbnb first debuted were content with the bare minimum amenities, as in literal air mattresses, they now expect much more — and so does Airbnb, as evidenced by its new basic hospitality standards for hosts.

Airbnb Plus represents the missing piece of the puzzle that Airbnb feels it needs to take homesharing into the mainstream. And while some see its debut as simply part of a natural progression for Airbnb as it grows and matures, others see it as a symbol of creeping commercialization that's taking away from the image that Airbnb has cultivated for itself over the past decade.

Either way, it's clear that Airbnb Plus is indicative of the maturation of the private accommodations space, and if Airbnb wants to grow, it needs to invest in making Airbnb Plus a brand that consumers can trust. What's not as clear, however, is exactly how Airbnb plans to grow this particular category with success.

"It's a huge step in the right direction, and long overdue," said Alex Nigg, an Airbnb Superhost (a host with exceptional reviews and ratings) and the founder and CEO of Properly, a company that helps short-term rental hosts have access to the right tools and people for cleaning their homes. "The devil is in the details though. If you want to reach convergence from alternative accommodations to the bigger lodging space, you need consistency of service. The challenge for an entity like Airbnb is to build consistency into the process, while preserving what's unique about Airbnb — each host and the character of their homes."

By year's end, Airbnb said it intends to have a total of 75,000 Airbnb Plus listings in 50 cities worldwide. To date, Airbnb Plus accounts for only 0.04 percent of Airbnb's total 4.5 million listings. If it reaches its goal by the end of this year, Airbnb Plus will comprise just 1.67 percent of the company's inventory. Airbnb spokesperson Nick Papas said the company was confident it could reach, or even surpass that number.

"We are well on the way to meeting and exceeding our goal, and have received over 20,000 applications to join Plus in just one month," Papas said. "We have the experience of scaling both the core Airbnb business and a global photography program, both of which have provided key learnings that will help us meet and exceed our goals."

Who Will Lead Airbnb Plus?

But does Airbnb have the bandwidth to inspect and vet all of those 20,000 homes and, even if it does, how does it make sure the quality of those homes is as good as when they were inspected? And who will lead this endeavor?

Whether Airbnb has the right executives on its team to ensure Airbnb Plus succeeds is another question the company needs to ask itself. In January, the person who was previously running the Airbnb Plus pilot program, former director of product Donna Boyer, left the company to join Stitch Fix, a clothing subscription service. And while the company currently has an Airbnb Plus head of operations, Paul Luning, it's also recruiting for another operations director for Airbnb Plus, and it's not yet clear if the company has hired a replacement for Boyer.

In early March, the company announced the hiring of former Amazon Prime chief Greg Greeley to lead its entire Homes division, a move that many business experts saw as an interesting choice, primarily because Greeley has no previous hospitality experience, but certainly plenty of loyalty experience.

"Today, we haven't seen a lot of property management, or vacation rental management know-how within the organization," noted Simon Lehmann, CEO and co-founder of AJL Consulting and former CEO of Interhome, a Swiss home rental platform that's been in business since 1965. "It's been more tech-led in terms of technology and the people they are getting onboard — not about products and deliverables. Yes, they acquired Luxury Retreats, but how much have they really done in the vacation rental space?"

Stay Alfred specializes in managing high-end apartment rentals in major urban markets. This is one of its units in Nashville. Stay Alfred CEO says he uses Airbnb to advertise his units, many of which would qualify for Airbnb Plus. Source: Stay Alfred

Quality Issues

Hiring a freelance photographer to take professional photos of a home and simultaneously do a one-time home inspection are one thing. It's quite another to ensure quality and consistency of experience in every home every time thereafter.

"There are definitely some limitations on the execution side," Parker Stanberry, CEO of Oasis, noted. "There's a one-time vetting but that's no guarantee that six months or a year later that the home will be in the same condition." Oasis is a "home-meets-hotel" platform that got major backing last year from Hyatt.

Not only that, but does Airbnb have the resources or infrastructure "to continually inspect and verify each individual unit more than once a year?" asked Jordan Allen, CEO of Stay Alfred, an apartment and vacation rental platform that focuses on major urban markets.

Airbnb's previous track records suggest otherwise, said VTrips founder and CEO Steve Milo. He doubts that Airbnb has the "focus" and "execution" know-how to maintain consistency. VTrips is a property management platform for rental properties that manages approximately 2,000 rentals throughout the U.S.

"To date, what Airbnb does well is in markets they have created," Milo said, "but they don't do well in markets where they have to win the market."

Another thing the company has to consider is the fact that homes aren't like hotels, either. "They're not made for industrial use … so there's always tremendous need for professional care, maintenance of homes, and also professional service that goes on behind the scenes, to be able to solve those issues when things go wrong," noted Javier Cedillo-Espin, CEO of Onefinestay, a luxury vacation and home rental platform owned by AccorHotels.

Right now, the only mechanism Airbnb is relying on for quality control of Plus listings is what the company has always used for all of its listings: host and guest reviews. Airbnb Plus also provides "premium" customer service support, as well as support for its hosts.

Airbnb spokesperson Papas said that Airbnb's review system "helps ensure hosts continue to offer high-quality experiences," something Allen also agreed with. Papas also said, however, that Airbnb is "also building a series of new features that will help us check in with our hosts and guests to ensure guests continue to have the kind of experience they expect and deserve."

Papas added, "This program is new and we're monitoring various forms of feedback from our community closely to see what other types of quality mechanisms we might need. Airbnb Plus started with a limited number of markets precisely so that we could learn and test new ideas as we expand to additional markets this year."

Stanberry said that the success of Airbnb Plus will have to depend on "the level of vetting and quality control that Airbnb actually wants to do" and it may also need to examine whether or not its current standards for Plus are enough. "If it's trying to be more thorough and doing a more complete checklist, like making it mandatory to fix something it it's broken, that would be very hard to execute," he said. "This light-touch level approach they have now is more scalable, but also maybe doesn't quite meet the needs of the customer they're trying to reach."

How Airbnb Can Make Plus a Success

It's no surprise that possible features or ways for Airbnb to ensure the quality and consistency of its Airbnb listings come from the hotel and vacation rental worlds where having on-the-ground staff is standard protocol.

Milo, not surprisingly, thinks Airbnb needs to work with professional vacation rental or property managers to ensure the quality of its Airbnb Plus listings, as the majority of traditional vacation rental owners do in resort markets.

One example of a private accommodations platform that employs the traditional vacation rental management model is Airbnb's largest rival in China, Tujia. When Skift spoke in 2016 to Tujia co-founder and chief technology officer Melissa Yang about how the company manages its rentals, she said it involves finding third-party service providers to manage homes.

Another potential way to go about this is to "start accrediting partners on the ground who will make sure that standards are met, and that experiences are second to none," suggested Lehmann. One place to start is to start working with existing Airbnb property managers, like London-based Air Agents, for example.

Air Agents co-founder Mark Hudson started his company in 2015 when he and his co-founder were unhappy with the inconsistency of Airbnb vacation rentals they were booking while traveling through South America. Since then, they've built a business out of managing 200 properties throughout London, but hope to manage up to 1,500 by year's end.

Properly's Nigg thinks Airbnb should take advantage of the passion and expertise exhibited by its own Superhost community, and leverage that network to create an entire ecosystem of service providers who will help ensure that Plus listings, and the rest of Airbnb's listings, are well maintained and cleaned regularly.

"The key to scale this is to engage the biggest assets Airbnb has — the top 40,000 or 50,000 hosts," Nigg said. "They are really good at what they do. Give them tools to better manage their processes and develop an ecosystem of service providers and provide it to everyone else. You can scale this through a network of service providers and leverage the collective wisdom of the top hosts."

"If I'm a really good host with a really good standard operating procedure," he explained, "my cleaner uses those standard operating procedures. That makes my cleaner really good, and he/she can handle about another 30 to 50 properties and that helps additional hosts without them having to do anything else."

Nigg thinks that working through Superhosts makes more sense because professional property managers can only cover up to 30 to 50 percent of Airbnb's overall 4.5-million listings. He thinks that if Airbnb really is positioning Airbnb Plus as a sort of midpoint between the traditional homeshare/social stay and a more professionally managed stay, leveraging a sub-segment of Superhosts to indirectly build and train a services ecosystem available to all other hosts is the way to go. Others also believe that Airbnb should be incentivizing its best hosts to maintain the quality of their homes, perhaps with lower commission rates or by keeping rates low for those who are particularly exceptional.

Other examples Airbnb can follow include the models employed by companies that include Lyric, Oasis, and Stay Alfred, all of whom use some levels of technology and on-the-ground teams to manage their properties.

Lyric, an apartment rental property management company with investment from Starwood Hotels founder Barry Sternlicht, sees itself as an ideal partner for helping Airbnb build up its Airbnb Plus inventory. Shown here is one of Lyric's apartment rentals in Austin. Source: Lyric

Inventory Issues and Solutions

While some rumors have surfaced that Airbnb may consider buying property management companies such as Lyric, Sonder, Oasis, or Stay Alfred to beef up its Airbnb Plus inventory, most industry experts discourage such a move.

When asked if Airbnb would want to buy Sonder, Sonder co-founder Francis Davidson said, "Fundamentally, Airbnb's business is not focused on operating spaces themselves but on building a trust-infused marketplace for unique accommodations and experiences. I think we'll see Airbnb work hard on ensuring that more and more high-quality supply can be sold through their platform. Where Airbnb has built the Booking and Expedia of the new economy, we're building the Marriott or Hilton."

Lehmann said he doesn't think Airbnb needs to actually own this type of inventory and that the company should let other accommodations providers, like the hotels, look into buying up these other players.

Executives from Stay Alfred, Oasis, and Lyric think there is opportunity, however, for Airbnb to partner with them and ensure that their respective inventories are a part of Airbnb Plus.

“The majority of people thought incorrectly about the rise of peer-to-peer accommodations and that it’s all just backpackers,” Lyric CEO Andrew Kitchell said. “I think people have it wrong with professionalization, too. Professional operators will step in to help tell that story; its success will depend on professionals answering the call. There’s a lot of room for the narrative to change, and we’re going to do our part to drive it.”

Another way to add more Airbnb Plus inventory is to seek out purpose-built rental inventory in both urban and vacation destinations. VTrips' Milo said he's been working with a number of real estate developers who want his company to manage new, purpose-built vacation homes, made just for rentals.

Airbnb itself has already gotten into this space with its partnership with Newgard Development Group to construct Niido Powered by Airbnb apartment complexes in Florida. In these residential buildings, tenants are encouraged to rent out their apartments on Airbnb when they aren't using them and their landlord, Newgard, collects a commission when they do.

If Niido Powered by Airbnb sounds a lot like a hotel that's because, for the most part, it is in a lot of ways, especially in how it mirrors the relationship that hotel management companies have with real estate developers.

"To get around regulatory control, you can build developments like these, but what you end up with is basically a hotel," Properly's Nigg said.

Another simple way for Airbnb to increase its inventory of Airbnb Plus approved listings is to go straight to hotels, which is a strategy the company is already employing more generally. To date, Airbnb says it has approximately 24,000 hotels using its platform and the company hopes to see that number grow by attracting boutiques, independents, and bed-and-breakfasts, while avoiding branded chain hotels that Chesky has described as "mass-produced."

Airbnb's hotels program manager Cameron Houser told Skift in February that, for now, Airbnb Plus will only consist of homes and not hotels, but she didn't rule out the possibility of them appearing in Plus eventually.

Even if Airbnb avoids listing hotel rooms from the Marriotts, Hiltons, and Holiday Inns of the world, does the company risk losing its "uniqueness" by having hotels, purpose-built "Airbnb-friendly" apartments, or verified Airbnb Plus homes on its platform? That's one major issue the company has to contend with as it pursues growth and more mainstream acceptance, and Airbnb Plus will be a testing ground for that struggle.

The Stakes for Airbnb Plus

There's plenty riding on the success of Plus, and what it means for the growth of more standardized private accommodations. If Airbnb is successful in growing Airbnb Plus, it'll have achieved its goal of not just making "Airbnb for everyone" but making private accommodations or home rentals as conventional as checking into a hotel.

"This is the most important move Airbnb has made in the last 10 years, probably," Nigg said. "The operational details are going to matter and it's a huge opportunity. If Airbnb Plus is executed well, it will make a huge difference and take Airbnb — and homesharing — into the mainstream."