As millennials make up a larger portion of business travelers, the industry has seen a rising emphasis on unique and local experiences. Travelers are increasingly using Airbnb for quick business trips, and meeting planners often go out of their way to design events inspired by the local destination. Now, this value shift is even starting to touch one of the oldest and stodgiest sectors in the space: corporate housing.
For decades, companies like Oakwood have dominated the corporate relocation market, giving travelers little choice over where they spend the next 30-plus nights, and providing an experience similar to that of a stay in a hotel. Companies with more variety and flexibility have only slowly begun to make an appearance, as digital technology helps make the market more accessible.
Perhaps the best example of this is Zeus Living, a startup which launched in 2015 with the aim of making long-term rentals feel less standardized and corporate, and more like being at home. In March, the company brought its total funding up to $24.1 million, as investors see promise in an industry that might be on the brink of change.
“The travelers themselves have become pickier, and rightfully so,” said Kulveer Taggar, CEO and co-founder of Zeus Living. “They have more control over the experience they want. And when you’re staying for multiple months, the threshold on the experience and the quality jumps quite a bit.”
Even Airbnb is trying to crack into the corporate relocation market. In early August of this year, the company acquired Urbandoor, a platform that also provides long-term rentals to business travelers.
However, as Skift has documented, it’s hard to give travelers a taste of local living when hosts are corporations, which Aribnb has been accused of in the past. Its acquisition of Urbandoor may not do much to appease that criticism, since the corporate housing platform sources its units from real estate companies like Greystar. Urbandoor will often convert entire apartment buildings or housing complexes into long-term rentals for business travelers.
Zeus Living is doing something a little different, better approaching what experience-driven business travelers are looking for. The company rents individual apartments or houses from their owners, who are people rather than corporations. This means that travelers are more integrated into the local community. By going on its website, travelers can get 3D tours of each of the offered homes.
The company currently operates in four cities in the US, including San Francisco, Seattle, Los Angeles, and Washington, D.C, but has plans to move into New York by the end of the year. When it first launched, in its initial home base of San Francisco, Taggar said that the company was surprised by what travelers wanted, but now sees it as a growing trend.
“They really wanted to live in the Mission, in the Marina, or in Pacific Heights and not in the sort of traditional corporate housing in the Financial District. They were placing larger emphasis on more local neighborhoods with restaurants and bars,” he said. “At first we thought being really close to the office mattered. But actually these other factors come into play and people are willing to trade off on a few things for that better experience.”
Taggar acknowledged that a large part of this cultural shift has come from Airbnb, which revolutionized the way leisure travelers explore a new city. Most importantly, it has given travelers different expectations of what a rental should be, thus putting pressure on companies looking to please their employees.
Slow To Change
This shift has only recently reached the corporate housing and relocation space, however. In large part this is because corporate housing is a bit trickier than short-term rentals for the typical two- to three- night business trip, which travelers usually book on their own, and often outside of policy.
When relocating an employee, there is even more pressure on a company to make sure the housing service is trustworthy, and that the units meet minimum quality and safety standards. If not, the company risks exposing itself to liability, or leaving workers without the basics to do their job.
“It’s not like you can just come in as a startup and automatically people will start sending you their executives and relocations and so on,” Taggar explained. “We’ve had to prove ourselves and sometimes it’s taken a track record of over a year, with these consistent experiences hitting the bar, before we could break in and start getting a lot of the business.”
Beyond the influence of Airbnb, it helps that employees are generally traveling more. Digital technology has allowed for conveniences like long-distance meetings, but it also means a lot more people work remotely, and companies are more likely to have distributed offices. Connecting face-to-face has not gotten any less important, however, meaning that business travel is on the rise.
“We’re seeing companies earlier in the life cycle open up these second and third offices and then naturally there’s travel between the offices,” said Taggar. “Especially when they’re setting it up, or when they’re trying to seed it with the culture, or when they bring people to H.Q. for training.”
With all of this said, the market is still heavily dominated by large, traditional corporate housing companies, and for now the company is edging its way into a tough sector, city by city. Meanwhile, Airbnb is an example of a startup whose commitment to local experiences has weakened as its grown, which is perhaps a warning for Zeus Living as it expands.