Airbnb’s foray into business travel is taking the hotel industry by storm—but how far will it change the landscape of hospitality?
By Mira Soyza
Its inception happened when roommates, Brian Chesky and Joe Gebbia, who couldn’t pay their rent decided to take advantage of an international design conference that was taking place in town that weekend. Seeing that the hotels were all sold out, they decided to turn their San Francisco loft’s living room into a bed and breakfast. They hosted three visitors that weekend— air mattresses were laid out in the living area for the guests to sleep on and homemade breakfast was served in the morning—and made more than USD1,000. Their bed and breakfast became an instant hit.
In 2008, the third co-founder, Nathan Blecharczyk who is a Harvard graduate and a technical architect completed the team. They started a website that provides listings of those with space or room to let for conferences attendees who are looking for alternative accommodation—and thus the first official website www.airbnb. com was born.
In its early years, its focus was in areas where high-profile events were held, and where hotels were scarce and there was little to no availability of alternative lodging. Today, their services have expanded to a variety of property types including homes and apartments, private rooms, castles, manors, tree houses, igloos, private islands–in short anywhere liveable. Airbnb became the go-to site for wanderlust and budget travellers.
Business unusual
With over 1,500,000 listings in 34,000 cities and 190 countries— its brand slowly seeped into the general public’s consciousness to the extent that it has become mainstream now. Companies and businesses started to notice. In an era where corporate expense budgets have been slashed, private accommodations offered by Airbnb are a cheaper alternative and offer a refreshing change from the cookie cutter four or five-star business hotel rooms. Hence, the start of the corporate shift to the site.
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To cater to the corporate demand, Airbnb launched a sister site called Business Travel on Airbnb. Its cost effectiveness and convenience lured many business travellers and soon enough the lodging service had up to 250 companies registered with them.
Due to overwhelming response, the trio decided to revamp Airbnb for Business by introducing more sophisticated features such as a central billing system, and a dashboard for human resources representatives and travel managers to track their employees’ spending. The site has so far attracted big names such as SoundCloud, Salesforce.com, Google and Vox Media.
Caoimhe Keogan, VP People of SoundCloud sees Airbnb as a means to facilitate and increase interaction between their international offices. “As a global company with offices in Berlin, San Francisco, New York, and London, we expect many of our employees to book business trips in 2015, and Airbnb’s new solution provides us with a great set of tools. Having this type of added visibility into past, present, and f uture trips allows us to improve our employee experience while they are traveling.”
Putting up a group of employees in a hotel on an extended business stay such as a week-long seminar can be very costly for a company. A more budget friendly approach would be renting out a large home or villa that could house the entire team. Staying in a hotel for a long period of time can be a mind-numbing experience too, so finding a real home in an interesting location helps employees feel energised, and stay that way for as long as their stay.
Staying under one roof can also forge a bond between colleagues and promote an exchange of ideas. If you’re looking to inspire your team, offsite lodgings are great for brainstorming retreats and to get the creative juices flowing.
Companies can also employ Airbnb services to put up new hires that are relocating from another city or country. The recruit can choose to stay in their desired neighbourhood, and take the time to explore nook and crannies that they would not have otherwise stumbled upon on their own— an authentic experience that a five-star hotel couldn’t provide. Meanwhile, companies that are looking to spread their wings and expand to another city can set up a temporary office that doubles as an accommodation while looking for the perfect office space.
Although these lodgings could not provide the kind of pampering and luxury a five-star hotel could, the promise of comfort is certainly appealing. Many business travellers have snuggled up with the idea of living in a homely environment instead of a traditional hotel and are flocking to Airbnb—this has ruffled some feathers in the hospitality industry.
According to sources, since its penetration into the business travel market, the company’s valuation has gone up to USD10 billion which places its value above long-established international hotel chains such as InterContinental Hotel, Hilton Hotel and Hyatt Hotel.
In the US, Airbnb has greatly changed the landscape of hospitality and possibly the future of hotels. The World Property Journal reported that as of the second quarter of this year, there are 27,000 of Airbnb units in New York City, of which 55% are entire home/apartment type of Airbnb that is giving hotels fierce competition.
And surprisingly, the pricing isn’t the driving factor behind the success of this alternative lodging service. The average hotel room rate across the boroughs (Brooklyn, Manhattan, Queens and Staten Island) is UDS289, while Airbnb units that are directly competing with the traditional hotel rooms cost USD256. Places in Staten Island that offer more high-end units charge more than USD1,000 per night.
If this continues, the hotel industry could be in some serious trouble. But can it put an end to decades of hospitality legacy? I guess we’ll have to wait and see.
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