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The next phase in Airbnb’s growth and breadth of offerings is taking shape as it begins to add a limited number of hotels that also participate in newly acquired HotelTonight.
The move comes in tandem with Airbnb eliminating guest fees on new hotel listings as a way to get more competitive with Booking Holdings, and to be more consistent with the way travelers are accustomed to booking hotels.
For now, Airbnb is not at the point that it is taking HotelTonight hotel partners and integrating them onto Airbnb’s platform at scale, but it is testing the process with some HotelTonight partners to see what works best. It wouldn’t be an automatic transition, regardless, as HotelTonight’s boutique property partners would still have control over whether they want to distribute through Airbnb.
The move to eliminate guest-booking fees, and to implement a host-only fee model for all hotels that newly sign up to the Airbnb platform — except in China — starting June 4 is part of Airbnb’s transition from an alternative accommodations site with apartments and vacation rentals, to one with more hotels, as well.
“We’re focused on reimagining travel by building an end-to-end travel platform that combines where guests stay, what they do, and how they get there, all in one place,” an Airbnb spokesperson said. “The Airbnb and HotelTonight teams are working to use this global platform to create more opportunities for hotel partners to directly plug into and benefit from our guest demand.”
Airbnb has begun cross-promoting hotels across both the Airbnb and HotelTonight platforms, adding a link to HotelTonight in certain cities for travelers who want to search for additional stay options.
For now, at least in some cases, it is difficult to compare properties that list on both Airbnb and HotelTonight. One such property, Hotel Stratford in Union Square in San Francisco, offered a stay Thursday night in a Queen room for two guests at a total rate of $202 per night on Airbnb. The Airbnb listing showed a variety of charges on top of the room rate, including a $34 cleaning fee, a $20 service fee (16.2 percent of the $123 room rate), and $20 in “taxes and fees.”
On HotelTonight, however, where Hotel Stratford selects the room type for the guest, the total rate for Thursday night was $126 — far lower than on Airbnb although it’s unclear if the comparison was apples to apples. There was $21 in “taxes and fees” displayed, but there were no cleaning fees or service charges shown.
Hotels distributing through Airbnb set their own room rates. In Airbnb’s view, eliminating the guest fee for new hotel listings gives properties more control over pricing.
Working Out the Complexities
As Airbnb works with some HotelTonight hotel partners to add them to Airbnb, there clearly are a lot of kinks to work out.
Adele Gutman Milne, vice president of sales, marketing and revenue at Library Hotel Collection, said the hotel already works with HotelTonight and would consider extending the relationship to participate in Airbnb, as well, although there are numerous issues to work out.
“For example, at our New York City hotels, we have finally given in to the whole resort fee scenario that has become so prevalent in New York City, but we want to make sure the fee is well-communicated to the public, and we don’t think that has been well-addressed yet,” Gutman Milne said. “For now, they would have to pay taxes and fees at the hotel and we worry this will cause confusion.”
The Library Hotel Collection executive said the company would also like the flexibility to set its own cancellation policies on Airbnb instead of choosing from preset selections.
“There are a couple of other details, but we feel these will probably be dealt with in time, so if we have need dates with ample inventory, as long as Airbnb will display our rates, rooms, availability and pricing in a fully expressive way that meets our needs and the needs of our guests, and if we are prepaid for the room and tax, and financially covered with a credit card authorization on arrival for incidentals, we are certainly open to adding them to our distribution,” Gutman Milne said.
Tom Botts, former chief marketing officer at Miraval Group and currently chief commercial officer at Uplift, said that independent hotels are concerned about the consolidation in the lodging sector, and “need distribution to meet their revenue goals.”
“If they are not on the shelf where people are looking accommodations, they have no chance of getting the room night,” Botts said. “If you can’t beat ’em, join ’em, as the old adage goes. Hotels, after years of trying to thwart Airbnb unsuccessfully have finally agreed that they are here to stay. And the converse is true too — just look at Marriott’s new foray into Homes & Villas.”
The Implications for Booking and Expedia
Skift Senior Research Analyst Seth Borko feels that Airbnb’s transition toward host-only fees could be a challenge for Booking.com and Expedia.
“Previously they were going to have to compete against Airbnb with similar inventory but charging their suppliers a significantly higher commission,” Borko said. “That Airbnb is shifting to match the booking sites’ model means that there will be less of a difference between the three from a supplier’s perspective.”
Hotel owners could find some advantage in the changes, but Expedia and Booking could feel pressure, Borko said.
“Even so, the entrance of Airbnb into the independent hotel space in a major way — and one can argue that 60,000 properties is not yet ‘major’ — would shift some leverage back to the hotel owners and put pressure on online travel agency take-rates and operating margins,” Borko said. “Over the long term, this could be a major threat to the online travel agencies, in our view.”
Fee Convergence Among Homes and Hotels
T.J. Clark, co-founder and CEO of Turnkey Vacation Rentals, questions whether guest fees will ultimately survive in the alternative accommodations sector.
“We have certainly seen this in the history of hotel distribution when Orbitz dropped its booking fee and, like dominos, the online travel agencies followed suit quickly with OTA booking fees never to return. It’s a good example of the competitive marketplace favoring the consumer.”
Joe Haslam, chairman of Hot Hotels in Spain, sees Airbnb’s HotelTonight acquisition as an efficient way to scale up in the increasingly combined home-hotel category.
“I was struck by the number of mentions of the phrase boutique hotels in the press release following the acquisition,” Haslam said. “Airbnb has come a long way from a spare room for a little extra money. Many hosts are now so sophisticated that they are boutique hotels in all but name. In contrast, many boutique hotels have added apartment-style offerings to their traditional portfolio of rooms. As the differences become less and less, adding the HotelTonight inventory is a quick way for Airbnb to provide the full range of options in this new combined segment.”
Stickiness for Airbnb
Airbnb’s moves to add more hotels, including some that already partner with HotelTonight, could benefit Airbnb’s alternative accommodations business, as well.
“We also know that offering hotels and vacation rentals on the same platform can complement one another,” Borko said. “For instance, Airbnb found that when guests first book hotels on Airbnb and then return to the platform, nearly 90 percent booked a home for the second trip.”
The next phase in Airbnb’s development is ramping up its selection of boutique hotels.
After that, can partnering with the Marriotts, Hiltons, InterContinentals, and Accors really be far behind?