Skift Travel News Blog

“Google will kill Airbnb,” tweeted Nick Huber, who writes about business and real estate, owns a self-storage company, and has 247,000 followers on Twitter.

Two people independently messaged me about the tweet, which has generated a few thousand “likes,” and hundreds of retweets since Sunday.

One Skift colleague said of the tweet: “Everything this guy says in his tweet thread is wrong.”

Conversely, a superhost in Europe messaged me about Huber’s tweet: “I would have to agree. Everybody loves a direct booking (both hosts and guests), with no whopping service charges.”

Google will kill Airbnb. pic.twitter.com/dpu2Khk9k7

— Nick Huber (@sweatystartup) August 28, 2022

Hosts Just Need to Put Links to Properties in Google … Hmmm

If only it were that simple.

Huber argues that hosts and guests can avoid Airbnb’s substantial fees, and both can save money with direct bookings. Actually, he claimed that Airbnb takes 25 percent of the transaction, mostly from guests, in the form of fees, which seems excessively off the mark.

After this story posted, travel industry veteran Drew Patterson tweeted that Airbnb revenue was only 13 percent of gross bookings in 2021.

Might also mention his math is wrong on margins / take rate. In 2021, ABNB did $6B revenue on $46B gross booking (13%) vs. his claim of 25%.

— Drew Patterson (@drewpats) August 29, 2022

One of the silliest things Huber tweets is, “All it takes is folks putting a little link to their software in the Google listing. Management co manages that directly. Way more revenue to owner and less cost to guests.”

Alas, graveyards full of startup companies from Palo Alto to Madrid and Mexico City are testimony to the fact that you can’t merely put a link on a Google business listing, and expect millions upon millions of customers to discover it, and then use it. It takes a mammoth amount of resources to attract direct bookings and for a vacation rental business to build their own brands.

Hey, direct bookings would be mostly great for hosts and, to a lesser extent, guests, but how can property owners and managers attract them?

If you look at the global hotel industry, it has done an admirable job over the last few years, spending huge sums in advertising to urge customers to book directly on their own websites, where they have the lowest rates, instead of using online travel agencies.

Hotels have made significant strides in this regard in attracting direct bookings, but the vast majority of them still rely on online travel agencies to attract price-conscious consumers who care little about whether they are staying in a Marriott or a Sofitel.

Hotel direct bookings haven’t killed Expedia or Booking.com. Travel, it is often said, isn’t a zero-sum game. There is ample room for multiple winners.

Property owners use Airbnb for a reason: Airbnb has a great brand, and attracts legions of guests who start searching for places to stay on Airbnb instead of beginning their trip-planning on Google.

How does the host with one or a handful of properties compete with that kind of market power?

Direct Bookings Have Risks, Too

And although guests can avoid Airbnb’s fees by booking direct with the host, they run the risk of having no one to turn to if the host or property turn out to be a nightmare. Whether or not they work as well as advertised, Airbnb has some insurance protections in place for both hosts and guests.

Airbnb critics will be quick to say that Airbnb’s customer service for guests can be challenging, but it’s often better than dealing with hosts who have no brand or track record to stand behind them.

On the question of Google “killing” Airbnb, the latter has for the past couple of years been able to grow while keeping the percentage of the revenue it spends on marketing — and Google — relatively low and stable.

In fact, Google’s travel vertical has a vacation rentals feature, and it hasn’t really distinguished itself or put much of a dent in Airbnb’s growth precisely because Airbnb, and other big vacation rental brands, have shunned offering their homes and apartments through Google vacation rentals. So Google is hardly usurping Airbnb on that front.

Google has certainly damaged the businesses of innumerable travel companies because of its near-monopoly in search and the way it preferences its own travel advertising features. Curiously, although most of the far-out theories about Google taking over the travel industry tend to say that Google will transition from an advertising to a booking platform and would become an online travel agency — a switch that Google has shown little appetite for — Huber isn’t even making that argument.

Instead, he’s arguing that Google will serve as a listing platform, and build advertising around it, and that hosts, with an assist perhaps from property managers, would see direct bookings flow like lava down a hillside because these offers are inherently the best and cheapest deals for both hosts and guests.

Both Google and Airbnb Face Headwinds

Google killing Airbnb begs the question of which of the two has momentum versus the other. Both face big antitrust or regulatory challenges, and it’s hard to choose which one has the more daunting obstacles.

A little deeper into his twitter thread, Huber retreats a bit from his Google killing Airbnb opener, and pleads for “nuance.”

“Of course Airbnb will always have users,” he tweeted. “But over time many guests will go on google, find a vacation rental in an ideal location, click through to that website & book w/o paying hundreds in fees. 20 yrs from now ABNB will be a glorified lead generator.”

When it comes to predicting the future of companies two decades from now, I’ll pass on that one, considering it is difficult to look even two or three years ahead to see what the business world would look like.

So, alas, in Huber’s view, his talk of Airbnb’s death was apparently bombast.

When a twitter user tells Huber he downplayed the importance of factors like trust and reliability when considering direct bookings versus reservations through Airbnb, Huber retreats a bit further, tweeting:

“I think there will be an increased number of guests going directly. You can do all of those things without giving a huge chunk to Airbnb.”

Finally, that’s something we can agree with: There are many hosts doing everything they can to generate direct bookings, and they’ll likely have a degree of success. But I don’t believe “Google will kill Airbnb,” or that Airbnb will close shop anytime soon.

Note: This story has been updated to include additional information on Airbnb’s take rate. It also clarified Google’s role in the travel industry.

A lot of hotel guests are dissatisfied with customer service and costs, according to study released on Wednesday by JD Power, a market research firm.

A survey of 34,407 hotel guests for stays between May 2021 and May 2022 found a higher level of complaints than the previous comparable period.

Many consumers appear to be irritated about costs and fees, room cleanliness, and staffing. The results come against a backdrop of a hotel sector struggling to handle the post-pandemic surge in demand during a labor crisis.

Key takeaways involve the interplay of cost and quality in consumers’ minds:

• “The single biggest factor driving this year’s 8-point decline in overall satisfaction is hotel cost and fees.”
• Guest satisfaction with budget and “upper-midscale” properties fell 11 points, the largest decline in years.
• “Another factor driving the decline is satisfaction with guest rooms, which suggests that hotel guests are feeling like they are paying more, but not getting more in return.”
• “While hotels still get relatively high satisfaction scores for guest room cleanliness, scores for décor and furnishings, in-room amenities and quality of bathrooms decline from a year ago.”

Much of the attention regarding the euro’s historic fall has focused on Americans getting cheaper vacations in Europe — and the converse for EU residents — but the euro’s reaching parity with the U.S. dollar obviously has business consequences too — and Booking Holdings will likely have to deal with a material adverse impact.

In a research note Wednesday, Jake Fuller of BTIG wrote that he expects an “11 point headwind” to Booking’s growth in bookings in second quarter results and through the rest of 2022 because of volatility in the euro and British pound.

BTIG estimated that Booking Holdings generates about 55 percent of its bookings in Europe. The company doesn’t break out the percentage. “Within Europe, we assume an 85-15 split between the euro and British pound,” the note said.

Booking Holdings’ exposure to the euro “is likely material, should impact the 3Q guide, and does not appear to be reflected in consensus numbers for the year,” the research note added.

Geography has played a major role in how various online travel agencies fared during the pandemic.

Expedia Group benefited throughout much of the pandemic when the U.S. domestic travel market boomed, particularly for stays in vacation rentals.

On the other hand, Booking Holdings suffered because Europe was slower to rid itself of lockdowns than the U.S., and now Booking has to cope with the euro falling to a low it hasn’t seen in two decades.

From a variety of reports, Booking Holdings appeared to be gaining market share in June, but the euro crisis could blunt some of the progress.

Accor’s board said on Tuesday the company wants to simplify its organizational structure to create two business units. The move, which raises questions about possible divestitures, has been sent to employee representative bodies for their approval.

The two business units would be an “economy, midscale, and premium” division for 4,816 hotels representing brands such as ibis, Novotel, Mercure, Swissôtel, Mövenpick, and Pullman. It will have four regional headquarters based in Paris, Sao Paulo, Singapore, and Shanghai.

Another division would be for “luxury and lifestyle.” It would get four brand collections that together have 488 hotels: Raffles & Orient Express, Fairmont, Sofitel & MGallery, and Ennismore.

“By evolving from a generalist to a multi-specialist model, our aim is to further improve Accor’s appeal in the eyes of talents, owners, partners, and investors,” Sébastien Bazin, the group’s chairman and CEO, said in a statement that didn’t mention any cost savings.

Cue the inevitable questions about whether this planned restructuring makes it easier for Accor to spin off a part of its company to an acquiring investor.

“We would also expect this makes a break-up more likely longer-term, where different owners may be different in the varying merits of the two divisions,” wrote the research analysts at Bernstein in a flash note to clients.

Analysts at Bernstein also note: “It makes sense that the two divisions will have different long-term models (franchise vs managed), different target owners (“mom & pop” vs sovereign wealth funds), and different customers (international vs domestic).”

Pity the executives at Swissôtel, though. They must be asking themselves, “Why aren’t we luxurious enough?”

In a move that was no surprise, the board also endorsed the renewal of the contract of Bazin as the group’s chairman and CEO.

Aimbridge Hospitality, the largest U.S. company dedicated to running hotels on its own and on behalf of owners, said on Wednesday it had signed an exclusive contract with Amadeus, the Madrid-based travel tech giant, to provide business intelligence tools across its organization.

“The market conditions we face as a business today continue to evolve at a more rapid pace than we’ve previously experienced,” said Andrew Rubinacci, EVP Commercial & Revenue Strategy, Aimbridge Hospitality, in a statement. “Having access to our portfolio performance enables us to make more effective revenue decisions down to the individual property level and aid in strategic decision making.”

Aimbridge has more than 1,500 hotels across the U.S. and in 23 countries and will use Amadeus’s software to monitor performance, enhance forecasts, and track market shifts. It will use Amadeus’s tools, which include Demand360, Agency360, and RevenueStrategy360. Some of these tools were first acquired by Amadeus through its acquisition of TravelClick several years ago. Amadeus has since refined and integrated the software.