The pros and cons of listing indie hotels on Airbnb
 
The pros and cons of listing indie hotels on Airbnb
23 MAY 2018 1:32 PM

Airbnb has opened up its platform to boutique hotels, which is an opportunity for some to reach a new segment of traveler. But the experience of one property that lists on the platform indicates that hoteliers should prepare for a different kind of booking experience with Airbnb.

REPORT FROM THE U.S.—Long viewed as an adversary of the hotel industry, Airbnb is now offering a spot on its platform for boutique hotels. Offered at a relatively low cost compared to other channels—like online travel agencies—sources said there are clear reasons why working with Airbnb is advantageous, but there are challenges as well.

Daniel Cauley, revenue manager at The Guesthouse Hotel in Chicago, said the property has been listed on Airbnb for years. That is in large part because the property has transformed considerably over the years, transitioning from vacation rental properties with a small hotel attached to entirely a hotel. He said the property started on more traditional vacation rental platforms before moving on to Airbnb.

Listing on the alternative-accommodations site has “been pretty successful,” he said, but that revenue “is more of a supplement than a driving factor.”

“It’s an inexpensive way to get bookings versus Booking.com or Expedia or other players,” he said. “And it has a pretty strong following among the people who use Airbnb, but I still view it as a niche market. A lot of people are just not going to book (a hotel) on Airbnb.”

He said about 5% to 7% of the Guesthouse Hotel’s business comes through Airbnb.

A growing platform
Airbnb officials announced in February plans to open up the platform to different offerings, including boutique hotels, along with the addition of a new high-end tier with more hotel-like amenities. The changes were made in part to offer travelers more options, but were also a recognition of the fact the Airbnb marketplace was already diverse and perhaps not well organized.

“Over the years, the types of properties on the platform have become increasingly diverse, from treehouses to boutique hotels, but it’s still only possible to navigate by three property types—shared space, private room and entire homes,” reads the news release announcing the change. “This makes it hard for hosts to stand out, and guests can’t always find what they’re looking for.”

Four new property types offered on the site now include “vacation home, unique space, B&B and boutique,” the last of which is where hotels would likely fall.

Robert Cole, senior research analyst for Phocuswright and founder of RockCheetah, said Airbnb executives are “very, very smart” to open up the platform to hotels. He said the lower commission structure is appealing, but the platform would work best for the right kinds of properties.

It’s great if “you can provide the appropriate, unique, localized experience that’s not necessarily high touch,” Cole said.

While Airbnb usage is commonly associated with younger and more adventurous travelers, the latest edition of STR’s Consumer Travel Insights study notes the platform is growing to reach “a broader audience both geographically and demographically.” The study notes this is a harbinger of a sea change in hospitality. (STR is Hotel News Now’s parent company.)

“As the platform continues to grow and evolve—a recent change has seen new search categories added to enable easier navigation to hotel and B&B listings—there is an increasing need for accommodation providers to build stronger and more personal relationships with their customers,” the study reads.

The pros and cons
Cauley said he still believes Airbnb isn’t a great platform for most hotels, so he doesn’t expect the lower commission structure to quickly turn it into a new version of the existing OTAs.

One of the biggest challenges in listing on Airbnb is the huge amount of competition on the platform due to the fact that it is “relatively easy to list,” which makes it “hard to stand out,” Cauley said. He noted this problem is exacerbated if a property lists a significant amount of rooms on the platform because each room has to be listed as a separate unit.

“There is a lot of inventory out there,” he said. “Not all of it is comparable, but it’s hard for customers to see the distinction.”

He also said working on Airbnb comes with significant operational challenges, since the platform doesn’t integrate with a property management system in the same way OTAs do. He said each booking has to be taken off of Airbnb manually and logged into the property’s PMS.

Managing rate on the platform also comes with challenges because part of the reason Airbnb’s commission structure is lower than OTAs is guests end up paying a fee on their end. Due to that, Cauley said the hotel does “tend to offer better rates on Airbnb than we would otherwise.” He said the platform is less-actively rate managed than OTAs.

“As things tend to fill out, we will go in and change prices,” he said. “But it may be the last one we change.”

With all that said, Cauley said his hotel will continue to use Airbnb and expects to do so when a new property opens in Austin.

As the hotel presence on the platform grows, there should be tweaks that make it more friendly to hotel properties, Cauley said. He noted that he’s fine with being one of the few hotels on the platform for the time being, though.

“I hope other hotels stay off it, but that’s probably not going to happen,” he said. “If they’re going to put more on it, then I’d want it to be easier to manage.”

4 Comments

  • Max Starkov, Founder & Director, HEBS Digital May 23, 2018 3:21 PM Reply

    Interesting article - we see similar results for our hotel clients using Airbnb. I see 3 main issues Airbnb needs to resolve before becoming a viable hotel booking player:

    * Hotel Tech: Airbnb has not even begun to understand the complexity of hospitality technology, consisting of many moving parts: old legacy systems that are barely functioning, co-existing with ultra-modern, next gen apps and promising AI and blockchain implementations. Where do you start? Deep integrations/two-way APIs are needed with legacy systems like PMS, CRS, Hotel Switches, GDS and Channel Managers in order to build real-time hotel inventory availability and pricing connectivity with hotel chains, mid-size and smaller brands, independents. Just building an OTA-type CRS with RMS, digital and video content and personalization capabilities, fully interfaced with the numerous legacy systems in travel, would cost Airbnb billions of dollars and take many long years to develop.

    * Inventory Management: Manual inventory/pricing uploads and management? Who has time for this in 2018? Unless Airbnb invests in APIs with PMS, CRS and Channel Managers and creates inventory management efficiencies similar the OTAs, it would not be able to attract a meaningful number of hotels to use its platform.

    * Travelers embracing Airbnb as a hotel booking site: When people want to book a hotel, Airbnb typically does not come to mind. We have clients on Airbnb that report they are getting occasional bookings from this site. The main reason for this is that consumers do not go to Airbnb to book hotels but to find and book unique private apartments and houses at a reasonable price. TripAdvisor learned the hard way with its Instant Booking feature the truth about entrenched travel consumer purchase behavior. Instant Booking was a major flop since consumers simply did not accept TripAdvisor as a hotel booking channel. Overall, travel consumers will not be easily accepting Airbnb as a hotel booking channel and hoteliers should not expect an avalanche of bookings through this channel.


  • Rohan Patel May 25, 2018 8:32 AM Reply

    What if Airbnb exclusive lists hotel only. That might be threat to OTA down the road

  • Rohan Patel May 25, 2018 8:32 AM Reply

    What if Airbnb exclusive lists hotel only. That might be threat to OTA down the road

  • Colin May 25, 2018 8:53 AM Reply

    Airbnb guests vs hotel guests are very challenging. Airbnb is a race to the bottom in pricing and is not viable for most properties in the end. And of course Airbnb is listing hotels. In many major markets, much of the accomodations they previous listed were declared illegal as they should have been. So big surprise they are embracing “ legal” accomodations.

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