Airbnb’s focus on adding independent hotels instead of all-and-sundry is a smart approach. The vacation rentals company made more than $1 billion in revenue for the second quarter and intends to go public during 2020. It can't afford to meddle with the model.
How is Airbnb adding hotels onto its platform following its acquisition of HotelTonight for $400 million several months ago? Its newly appointed head of hotels and serviced apartments, Sam Shank, also HotelTonight CEO, gave away little at Skift Global Forum on Thursday, but just enough to show that it’s approaching it delicately.
This comes as Airbnb announced this week that it expects to become a publicly traded company during 2020. The company said it made more than $1 billion in revenue for the second quarter of 2019, the second time it exceeded that level in its decade-plus history.
Shank said he is focusing on adding hotels for Airbnb that are “independent, boutique, lifestyle,” which fits well with the vacation rental company’s ethos. He wants to offer these hotels the ability to merchandise themselves “in a way they have never seen before.” By leveraging Airbnb’s strengths in design, storytelling and authentic experiences, hotels could tell their own stories, be it the local connections they are making with their communities or what makes them special, he said.
Clearly, there is need for a strategy that will bring hotels onto Airbnb platform without diluting its authenticity. Already, Airbnb seems to be losing its religion, with moderator and Skift Executive Editor Dennis Schaal relating his own experience of having an Airbnb rental in Chicago, but being greeted by a host in Boston that is a real-estate company. “Airbnb used to be about local experiences,” Schaal said.
HotelTonight, too, has had its identity compromised. Unlike same-day bookings before, bookings today could be done for up to 100 days. This makes HotelTonight not any different from other hotel booking platforms.
Shank, however, maintains the two brands remain undiluted and the strategy is for them to co-exist.
“The HotelTonight brand is going to continue, the service is going to continue within Airbnb,” he said. “It’s a portfolio brand approach because HotelTonight means something different to Airbnb. It is hotels only, for spontaneous travelers, also for last-minute travel, and is a mobile-first product. So the brand has different emotions versus Airbnb, which is more of the considered trips and longer stays.”
“It is a great illustration of why it is nice to have two brands and two products,” he said.
Airbnb adding hotels is analogous to what HotelTonight experienced when it went to 100 days, added Shank. “People say, oh, you’re not different anymore. But what I define as unique is what we choose to do, not what we restrict ourselves from doing, including offering our geo-location specific rates, the curation that we bring, the editorial voice of HotelTonight,” he said.
Adding hotels onto Airbnb’s platform is a response to “a lot of people” who prefer to see all lodging solutions in one place, giving them choices on the right type of lodging for them, he said.
“We have done a few announcements on how successful hotels have been for Airbnb despite the fact the platform was built for homes. What I’m doing, with my team and the team at Airbnb, is building the hotel category on Airbnb and we are very excited about the progress we’re making, what we’re going to bring about. I’m fired up. More to come on that,” he said.
He said hotels would want to be on both platforms. “We have always had a supplier-friendly approach. HotelTonight is really about generating incremental revenue, started with same-day booking and filling an empty room. Making incremental bookings for hotel partners is going to be the key tenet of the work we’re doing on Airbnb,” he said.
And what does Airbnb bring to HotelTonight? A huge audience, he said, admitting this has been HotelTonight’s biggest struggle. “Airbnb has a massive audience in 190 countries with hundreds of millions of people that come to the platform.
“The mission of Airbnb is also mind-blowing, something we never had. Our mission is to make the world more spontaneous. Airbnb’s is to create a world where anyone can belong, a better place through travel. It is inspiring to be a part of that mission,” he said.
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Photo credit: Sam Shank (left), Airbnb head of hotels and HotelTonight CEO, speaks at Skift Global Forum in New York City on Sept. 19, 2019. Skift