Airbnb, originally a short-term rental listings platform, may become a direct threat to hotels, according to some asset managers and chain executives.
The alarm was heightened when the San Francisco startup said it had signed 500 companies within one day of opening its travel management tool to businesses worldwide — bringing its total client list to more than 1,000 companies, such as Google, TBWA, and Salesforce.
The revamped tool will expand over time to let Airbnb share information with companies on length of stay, dates and location so that travel managers can track their corporate travelers and integrate reports into their systems.
Business traveler sub-brand?
As Tnooz was first to report, Airbnb has also quietly started a pilot for listings exclusively for business travelers. The trial could be a prelude to a sub-brand of listings within Airbnb, one industry insider told Tnooz on the condition of anonymity.
The startup might set a criteria of business traveler amenities, such as an ironing board or high-speed Internet access, and give a branded mark of approval to properties that met those criteria and that also have received a certain threshold of positive reviews from corporate travelers specifically.
Last month, Airbnb also hired away the CFO of Blackstone, a financial services firm that owns many hotel chains, among other businesses. That hiring move shows that the startup is serious about building out the business travel market, executives said.
“Structural threat”
Mark Carrier, president of B.F. Saul Company Hospitality Group (which owns many business-class hotels), said at the recent Revenue Strategy Summit in Washington DC:
“I’m warming to the idea that Airbnb is a structural threat to our industry in a way that perhaps many of us don’t realize….
They intend to go after our seed corn. our midweek profitability for hotels….
If you think Airbnb has the ability to turn up, on a dime, inventory that can dwarf of growth rates of new hotels in a way that can be dynamic, it concerns me greatly.
I go to the math. We have 5 million hotel rooms in the States. We grow roughly 2 to 3 percent max annually….
My worry is about the potential for Airbnb to generate inventory that responds dynamically to demand in peak periods. That would knock the edge off hotels’ ability to drive profitable RevPAR.
When supply and demand balance gets out of line, we see oftentimes a diminution of profitability….”
Beyond taxes
The threat goes beyond the fight worldwide over whether it should collect taxes on its stays.
Mark Morrison, vice president of corporate strategy for Hilton Worldwide, acknowledged at RSS that Airbnb has a cost advantage relative to hotels that won’t disappear even if it resolves its ongoing issues with states and municipalities about sales tax and lodging and occupancy fees — which can account for as much as 18% of a differential between its prices and hotel prices.
For instance, a private residence advertising on Airbnb can pay lower private water, gas, and electricity rates than a licensed B&B or hotel that has to pay commercial rates.
The tax issue may be resolved by 2020 in most US municipalities, said industry experts. Accommodations booked through hosts on Airbnb will be charged taxes in some cities in programs that could be imitated nationwide.
The tax issue is slowly being settled worldwide, too. For example Airbnb agreed yesterday to add a tourist tax on rentals 0.83 euros ($0.95) per person per day in Paris, its most popular city — with about 50,000 listings — as of 1 October 1.
Read full article at: Tnooz
