If You Can’t Beat ‘Em, Join ‘Em: How Hotels are Integrating with Airbnb

  • September 10, 2018

This is part of an ongoing series on hospitality financing by Sundip Patel, CEO, AVANA Capital.

  Airbnb has rocked the hotel industry in recent years—and it shows no signs of slowing down. Earlier this month, the home-sharing platform announced a new service, called “Airbnb Plus,” that aggregates higher-end accommodations as a way of competing with more traditional hotels. “Every Airbnb Plus home is one-of-a-kind, thoughtfully designed, and equipped with a standard set of amenities – whether you’re in a private room or have the entire place to yourself,” reads the Airbnb Plus website. “All Airbnb Plus homes are visited to ensure comfort, consistency, and design. They are checked for 100-plus things guests told us they love, from must-have amenities to art on the walls.” All Airbnb Plus homes must have a 4.8 out of 5.0-star rating to participate. Airbnb’s evolving business model certainly presents a threat to the hotel industry. In the wake of growing competition, some hoteliers have led a charge against Airbnb at the local level. Some of these efforts have been highly successful, particularly in cities where the hotel industry has strong lobbying power. For example, in Anaheim, California where the hotel industry is critically important to the local economy because the city is home to Disneyland, lobbyists put forth a full-force effort to ban short-term rentals. The city obliged, Airbnb sued, but hoteliers reigned supreme. Anaheim banned all short-term vacation rentals effective February 2018. Elsewhere, though, hotels have realized: if you can’t beat ‘em, might as well join ‘em! Indeed, there’s a growing trend for hotels to be designed for and/or integrated with the Airbnb platform. Boutique hotels and B&Bs have realized for some time now that Airbnb is a great way to fill vacant rooms. Unlike Expedia, Priceline or other booking services that charge hotels anywhere from a 10% to 25% fee per transaction, Airbnb only charges the host a 3% fee – quite the bargain! As of August of last year, Airbnb had listings for 15,000 boutique hotels on its platform. To capitalize on this opportunity, Airbnb recently partnered with SiteFinder, the leading cloud platform for hotels to attract and book guests across the globe. Through this partnership, hotels can easily connect their existing management system to Airbnb’s booking platform, providing real-time updates about pricing and availability. “In an increasingly-complex and competitive world, SiteMinder’s partnership with Airbnb offers a new opportunity for boutique hotels and bed and breakfasts to engage the growing number of travelers who seek exceptional hospitality and an authentic local experience,” says Mike Ford, Managing Director and Founder of Site Minder. “We are delighted to provide an innovative technology solution that now makes it easy for these small accommodation providers to reach the millions of customers who use Airbnb every day, and get time back to provide memorable experiences for guests.”

Pros and Cons to Integrating with Airbnb

There are certainly benefits for hotels willing to partner with Airbnb. Compared to with the stringency of OTAs, listing on Airbnb generally offers the operator more flexibility in terms of pricing, minimum night stays, and ability to communicate with guests. For instance, Airbnb encourages hosts to interact with their guests. The platform makes it easy to inquire as to guest preferences and needs before the guests arrives, which leads to an overall better guest experience. There are downsides, though. For instance, listing a hotel on Airbnb usually requires the operator to create an individual listing for each and every single room instead of general room type. Managing a calendar for multiple rooms becomes much more complicated on Airbnb than would otherwise be the case for hoteliers. Depending on the city in which you operate, you might also be required to collect hotel and other taxes directly when listing rooms on Airbnb—a hurdle that can be overcome with practice, but a hurdle nonetheless for less sophisticated operators.

Co-Branding: An Alternative Solution

It’s easy for a brand to become defined as either a hotel or an Airbnb. There’s a lot of overlap between the two, especially with so many small hotels listing their rooms on Airbnb nowadays. Some hotels are taking a more creative approach, one that’s less delineated between the two. The Unbound Collection by Hyatt is a perfect example. The Unbound Collection is a curated list of “stays,” which are really just boutique hotels that are co-branded with Hyatt. The Driskill in Austin is one example, as is Coco Palms in Hawaii. Both hotels advertise and operate independently, but are marketed as “by Hyatt”. This provides some assurance that the hotels, though independent, will be of Hyatt-level quality. In exchange, the hotels share a percentage of their revenue with Hyatt. Co-branding can benefit Airbnb, too, especially in cities where new regulations have made it more challenging for individuals and investors to list their units as short-term vacation rentals. In these markets, co-branding can help Airbnb gain a foothold and capture at least a small slice of hotel demand and revenues.

Moving Forward

There’s no denying that the growing popularity of Airbnb has hotel operators on high alert. But it’s important to put this in perspective: A recent report from STR shows that Airbnb’s share of market demand and revenues in the $199 billion hotel industry is just 4% and 3%, respectively. In other words, Airbnb has a long way to go before overthrowing the traditional hotel titans. The hotel industry will continue to evolve in the years to come, particularly as people seek out more immersive travel experiences. Small, boutique hotels will be poised to capitalize on those looking for more unique accommodations. We suspect brands that are open to integrating with Airbnb will be best positioned to succeed in this ever-changing marketplace.