Airbnb launched in 2008 and seven years later, has more than 1.5 million listings in 34,000 cities and 190 countries. No longer a trend, the brand now bears the moniker of major industry disruptor as it serves more than 60 million guests worldwide.
From college students renting out dorm rooms to small-scale hotels and motels, Airbnb is the best bang-for-the-buck marketing tool in decades. Airbnb charges hosts a 3 percent fee for every completed booking, way less than Expedia and Priceline that charge hotels up to 25 percent.
“The commission is so much more attractive,” said Stephan Westman, a hotel industry consultant who has listed hotel rooms on Airbnb, reports Fast Company. “Any hotel that needs to fill rooms, I don’t understand why they wouldn’t need to use it as one of their marketing arms.”
From boutique-style hotels geared toward millennials to traditional landlords renting multiple units (causing issues recently in Los Angeles) and old-school bed-and-breakfasts, Airbnb is upending spend-the-night-while-traveling behavior.
Fast Company reports that Eduardo, a student living in a New York City dorm room, listed an extra bed for $80 per night in a space “about 150 sq. ft. with ample closet space” and has made about $400 so far. Tuition costs have risen by 46 percent between 2001 and 2012, and Eduardo’s quite small dorm room costs him almost $9,000 per school year.
However, when Fast Company called his campus’ housing department, they said it was not permissible. “I don’t even know which reason to start with…If you’re not signing paperwork to make the sublet legal, you’re an illegal tenant.”
Pushing back against criticism of hurting the housing market, Airbnb denies being a ringleader for illegal rentals and announced last month it would start collecting hotel taxes, sharing anonymized data and asking hosts to verify they’re renting their primary residence rather than additional properties owned solely for rental purposes.
Airbnb calls it a “Community Compact” and shared the number of New York City’s 59,242 active listings posted by hosts renting out more “entire home” properties beyond their own residence. From November 2014 until November 2015, nearly 75 percent of revenue earned by active hosts in New York City came from people who have only one or two rental listings on the platform, reports The New York Times.
Expedia CFO Mark Okerstrom said, “We should take it seriously, and I think at the same time, we look at what Airbnb is doing, and we look at that as a potentially attractive opportunity for us,” reports Skift. Expedia last month acquired Airbnb’s direct competitor HomeAway for $3.9 billion.
New York State Attorney General Eric Schneiderman said that 72 percent of New York City’s Airbnb rentals are illegal, so state legislators are preparing a bill to prohibit hosts from advertising illegal units and those in violation of a 2010 hotel state law that bars the renting out of units for less than 30 days could face fines of up to $7,500 per violation.
New York would be the first state to enact such a law. An Airbnb spokesman countered: “We should be working on some common-sense changes that help middle-class families who share the home in which they live and depend on Airbnb to pay the bills,” according to the New York Daily News.
Like it or not, the Airbnb model offers valuable lessons for traditional hoteliers suggests Tnooz, including personalizing offerings, better communication via social media and building loyalty.
“The communication involved in an Airbnb transaction goes a long way to building loyalty with the Airbnb brand,” notes Tnooz. “There is no hotel name, yet Airbnb aficionados are loyal to the system, to the ‘community’ and what it represents—individual travelers looking for an individual experience. Airbnb resonates with the curious, inquisitive traveller and the company is growing at a pace never seen before. Hoteliers can ill afford to look the other way.”
