We’ve all heard the story. In 2007, Brian Chesky and Joe Gebbia were short of cash. To find the money to pay the rent of their apartment in San Francisco, they advertised to host a guest at their apartment at a time a convention was taking place in their city, launching a website under the concept of ‘Airbed & Breakfast’. They booked 3 guests who each paid $80 per night. Having paid their rent, they were left with an intriguing business idea. Fourteen years later, Airbnb is a public company valued at over $100 billion, home to nearly 6 million listings, over 4 million hosts, and active in over 220 countries and regions.
Their millions of listings are now composed of homes, condominiums, treehouses, tent cabins, castles and so much more. In fact, Airbnb differentiates itself from other OTAs (online travel agencies) by offering a greater variety and experiences of stays.
As Airbnb took off and began to disrupt the hospitality industry, however, it earned the ridicule and the ire of the hotel industry with its offering of cheaper, more convenient, and a greater variety of accommodation. Soon, however, they went from being at loggerheads to embracing each other’s model. Big hotel chains jumped on the bandwagon and in 2018 Airbnb opened its doors to hotels hosting on its platform. By March 2019, Airbnb even acquired HotelTonight, an OTA focused on last-minute bookings at discounted rates.
While big brands in the hotel business have attempted to capitalize on the Airbnb model by mirroring their offerings by adapting existing chains or creating new ones, Airbnb in fact offers a great platform for smaller hoteliers. Here are some things you should know:
When Airbnb first opened its platform to hotels, it only allowed boutique hotels and Bed & Breakfasts. Since then it has become more accepting and now welcomes a variety of hotel offerings. These include:
Airbnb is as known for its offerings as it is sought by guests for its OTA booking experience. Guests can search by destination, explore experiences, and filter by relevant categories such as ‘pets allowed’ and ‘unique stays’. Its fantastic user experience makes it the go-to place for many travelers when they start planning their next trip. And because it fosters brand loyalty to the platform, many travelers return to the platform when booking their subsequent trips. As hotels continue to recognize its value and partner with the platform, they are finding Airbnb accounting for increasing numbers of bookings.
It may have increased the types of hotels allowed on the platform but Airbnb still excludes big brands and mass-market chains. So while in theory, a hotel is in competition against the wide variety of listings on the platform, for the most part, it is only competing against those with similar offerings in that location, and never against the chain hotel that can easily squeeze them out of the running by offering a better price point.
With Airbnb becoming the preferred method of booking accommodation for millions of users around the world, it opens up a world of new market segments that hotels would not have been able to access before. These include people looking for longer stays but not expecting to have their sheets changed every single day, family or friend groups who want to enjoy both shared spaces and the privacy of their own rooms, creatives looking for the lack of distraction that a hotel environment offers, international business travelers, etc.
Unlike the fees charged by big travel agents like Expedia and Booking.com, which can be as high as 15-30%, Airbnb only charges hosts, including hoteliers, a commission of 3-5%, calculated based on the total rental amount. The caveat is that guests are also charged service fees, which can go up to 14.2%. With the introduction of the host-only fee option, Airbnb now aims to steer hosts to have the entire service fee deducted from them and for guests to not have to pay additional fees, in keeping with traditional hotel fee structures as well as OTAs like Booking.com. The Airbnb host-only fee typically ranges from 14 to 16%, which is not as high as 30% but similar to the 15% mark.
Because Airbnb does not impose a long-term contract on hotels, independent hoteliers have full discretion to decide when their inventory appears on Airbnb. This means hoteliers can choose to list their rooms on Airbnb during the off-season when its guests are harder to come by and block out the dates when a popular event is taking place in their location. Hotels are also free to list their inventory on other platforms like Booking.com alongside Airbnb. The platform however does expect hotels to sign a rate parity agreement, agreeing not to offer lower rates on other platforms or through direct booking.
Hotels are allowed to pick from a range of cancellation policies with the exception of stays 28 days or longer in which case the Long Term policy is applied automatically. Airbnb’s cancellation policies include:
Super Strict 60 Days - 50% refund of nightly rate and cleaning fee if canceled at least 60 days before check-in. Service fee not refunded
Super Strict 30 days – 50% refund of nightly rate and cleaning fee if canceled at least 30 days before check-in. Service fee not refunded
Strict - Free cancellation for 48 hours, as long as the guest cancels at least 14 days before check-in
Moderate - Free cancellation until 5 days before check-in
Flexible – Free cancellation until 24 hours before check-in
Long Term - applied automatically to stays exceeding 27 nights
Time is calculated from the time registered in the confirmation email.
Airbnb offers hotels a number of significant advantages when listing on its platform, but to achieve real success on Airbnb, hotels need to make sure they can manage their property and channels seamlessly. Hostaway offers a comprehensive channel manager and property management system in one, so you don’t have to subscribe to two separate vacation rental software systems. Easy to use, it allows hotels to manage inquiries, multiple bookings, distribution channels, and staff in one place. It also comes equipped with a reservation manager, booking engine, payments processing, communications management, analytics and so much more. And because Hostway configures the software to individual needs, it is personalized to your business. (Read more on why Hostaway is the best choice of software for hoteliers.)