Airbnb Doubles Down on Professional Vacation Rentals in Resort Areas

In urban markets in the U.S. and Europe, Airbnb probably handles more short-term rentals than any other online booking agency. But when it comes to whole-home rentals in resort towns, the rental booking juggernaut has struggled to expand, particularly with the full-service property management companies that own the turf.

Airbnb’s point person on the effort, Clara Liang, has been leading an effort to solve the “last mile” relationship puzzle with full-service property managers.

“We’re still listening and responding, but we acknowledge we have a backlog,” said Liang, vice president and general manager of the Lux division that overseas Luxury Retreats and Airbnb Luxe branded properties and general manager of professional hosting. Liang spoke to property managers during presentations Tuesday at a Vacation Rental Management Association conference in New Orleans.

Airbnb covets the so-called “destination market” of resort towns because the average transaction value on whole-home bookings tends to be higher than for urban short-term rentals.

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Problems to Overcome

Full-service property management companies have several beefs with the bookings giant.

Property managers particularly dislike Airbnb’s so-called extenuating circumstances policy, which lets guests cancel bookings up to 24 hours in advance of arrival. That’s a big-time problem on two counts. First, property managers often make revenue guarantees to the owners of houses that they’re then on the hook for when a customer fails to show up. Second, property management companies also try to make money by selling guests trip insurance, which then gets undermined by Airbnb’s policy.

Liang said Airbnb had good intentions with the policy. But it realized that some consumers had been abusing the policy. “Changes are underway,” Liang said.

Another complaint from property managers is how Airbnb collects taxes. The online company built its online workflow to collect taxes in a manner that is the simplest for individual hosts. But multi-property businesses have different needs.

“In the past year, we’ve been building a tax solution that’s just for businesses,” Liang said.

Management companies will eventually be able to specify tax items in their jurisdiction, she said. Airbnb will charge the guests those taxes and then pay out those amounts to the businesses to let them pay the authorities along with their other taxable earnings.

Separately, Airbnb is testing in a few U.S. states a process that enables property managers to be the merchant of record for tax purposes, according to some property managers. That approach differs from the model today, where Airbnb takes the payment and sets aside money for taxes.

Commissions have been an additional sticking point with property managers. In the past year, Airbnb has been pushing property owners to adopt a 14 percent host-only fee. Its prior default was to hit hosts with a 3 to 5 percent fee, with guests paying a fee that varied by the length of stay and the rate of the booking.

Liang said Airbnb intended for the host-only fee to make it easier for property managers to control the final price consumers saw across listing services on the internet. Some managers had complained to Airbnb that the variable, split fee structure meant that the price of the same listing differed on Airbnb compared with other online booking brands.

However, some property managers said they instead feared the host-only fee. They said they suspected that Airbnb would eventually drop the traveler fee to copy Booking.com, which doesn’t have one, and that Vrbo might follow suit. An industry-wide end of traveler fees would lead to a reduction in manager profits, they worried.

Liang said that Airbnb is letting full-service property management companies choose which payment model they prefer. But she cautioned that listings with host-only fees attracted more consumer views and generated more bookings on average.

Airbnb intends to make it easier for a host to more transparently display the fees they might want to charge guests. On their listings, managers will likely gain the ability to spell out fees for optional services, such as for allowing a pet or for providing a parking space.

Learning From Its Acquisition

Liang cited Airbnb’s acquisition last December of Luckey Homes, a concierge services provider and property management company based in Paris, as a catalyst for change.

“The Luckey team is helping us with in-house knowledge of the challenges and the opportunities to make our tools better for property managers,” said Liang.

For example, Luckey expressed frustration that Airbnb collected reviews from guests but didn’t make it easy for property managers to detect patterns or take action. So Airbnb has released a data feed called an API (application programming interface) that third-party software developers can tap.

Property managers will be able to download records to analyze customer feedback for insight. For example, managers will be more easily able to pinpoint which staff members handling check-ins or housekeeping may be falling short.

Many professional property managers assume they provide superior service compared with amateur and semi-professional hosts. But Airbnb’s customer review data suggested that, Liang said, “there’s a risk that the more check-ins a host handles, the harder it is to manage quality.”

For a few years, Airbnb has been developing online tools for managers. In the past few months, it added a “teams” feature that aims to make it easier for property managers to sell their units via Airbnb. Some of the seemingly small but operationally significant changes included adding the ability for managers to permit specific employees to change particular parts of listings and other capabilities across accounts.

Managers continue to gripe about the inability to change cancellation policies depending on the season. Some also dislike the lack of priority preference over amateur hosts when it comes to dispute resolution about a guest who may have damaged a rental.

Airbnb touts that it has taken some of the legwork out of managing calendar availability, prices, and other details in the past year.

The company said it’s now working on more price-setting recommendation and demand forecasting tools for owners, plus more tools for integrating with widely used third-party software tools like Salesforce, a customer relationship management system, starting for use in its Luxury Retreats brand of vacation rentals that it acquired in 2017 and that it markets on Airbnb under the Luxe brand.

The company is also working on offering more software tools to guest-facing and operational teams at rental companies.

Tackling the Premium Tier

A year-and-a-half-ago, Airbnb Plus arrived on the scene. The company selected some properties whose hosts have earned rave reviews and whose homes it has inspected. These properties, currently in about 300 cities, get a customized product details screen that typically leads to higher bookings.

In the next year, the company plans to expand Airbnb Plus. It also intends to make it easier for companies that get at least one property admitted to Airbnb Plus to more easily showcase their other properties.

Meanwhile, Liang said people shouldn’t worry that last year’s Luckey Homes acquisition is a prelude to Airbnb buying property management companies.

But some people remain skeptical.

“Airbnb always says it won’t do things that it eventually does,” said Carl Shepherd, the co-founder and former top executive at Vrbo (originally named HomeAway), when asked about the topic while speaking in a different conference session.

That debate aside, not everything Airbnb tries its hand at works out.

In April 2018, the company debuted Airbnb for events, a minor service for letting events organizers book homes off-site. But Airbnb has since closed the service from lack of use and acqui-hired Gaest, a small startup helping people event attendees for off-site lodging. The company still hasn’t revealed its next attempt at the challenge.

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