Airbnb Scores in San Francisco

Airbnb’s multi-million-dollar investment in San Francisco lobbying paid off yesterday, as a proposal that would have curtailed its growth in the City by the Bay was defeated.

Airbnb spent $8 million to fight Proposition F, which would have limited the number of days people can rent out their apartments to 75 days a year, and put further limits on the home-sharing economy.

“Tonight, in a decisive victory for the middle class, voters stood up for working families’ right to share their homes and opposed an extreme, hotel industry-backed measure,” Airbnb said in a statement. “This victory was made possible by the 138,000 members of the Airbnb community who had conversations with over 105,000 voters and knocked on 285,000 doors. The effort showed that home sharing is both a community and a movement.”

What it means for agents
The meteoric growth of this latest upstart at the edges of the travel community is just nipping at the heels of the travel agents; those with whom TMR has spoken maintain that it is a small percentage of the already small percentage of their business interested in home and villa rentals.

Still, insiders say it is a company worth keeping an eye on.

Jay Campbell, co-founder of The Company Dime, which tracks business travel trends and technology in particular, notes that the question for travel agents is whether the company will allow third parties to book Airbnb rooms, and if so, whether it will pay commissions. But in the end, he suggests it’s time to start considering ways to work with them rather than against them.

“Obviously travel agents are going to urge their customers to go to suppliers that pay commissions,” Campbell said. 

And the Airbnb product is a far cry from the traditional hotel—at least for now. “It all depends on the traveler’s tolerance for change,” he said. “There’s no food in the middle of the night, no front desk to call if you lose your key, no soap and shampoo.”

Indeed, Campbell relates his own experience, where at the end of a stay in an Airbnb condo, he realized that a key was required to exit the building, but the agreement specified that he leave the key in the apartment before he departed. In the end he left the key on the kitchen table as directed, then went down to the garage and was forced to wait for someone to exit so he could slip under the door to get out.

“You are not dealing with hospitality industry professionals, and they don’t always think everything through,” he said.

In the corporate market, where companies are concerned with duty of care, safety is also a big issue. Many apartments have no smoke detectors, and many are in less-desirable neighborhoods.

Still, Campbell noted that it may only be a matter of time until the company pairs with known hotel brands. Smith Travel Research already has tweeted that it expects Airbnb to partner with BridgeStreet, a corporate housing company. And yesterday the company announced an alliance with American Express.

Travel agents should expect to see the company grow—and perhaps begin to think of ways to work with it, he said.

“They are voracious consumers of information, and they are learning. They show up at every conference and they have tons of money and lots of lobbyists. Should they be in your portfolio? I think so, if you are really trying to offer your clients every option.”

The numbers are huge, though
A recent report, “Airbnb and Impacts on the New York City Lodging Market and Economy,” commissioned by the Hotel Association of New York City, estimates the hotel industry lost $450 million in revenue from September 2014 to August 2015 because of competition with Airbnb.  That number will jump to about $800 million in 2018.

“You’d be lying if you said it didn’t impact your business,” said Kimberly Wilson Wetty, co-president of Valerie Wilson Travel in New York.

She said now more than ever, clients want the place they stay to have an authentic feel, which is part of Airbnb’s charm. However, agents can offer the same unique experience to their clients, with the added bonus of being personal.

“As people see those staggering numbers, supply is going to continue to rise,” said Seth Traum, partner at Vivaldi Partners Group, noting more people are going to want in on the action. “These services continue to take a piece of the hotel industry’s pie.”

Airbnb has been gaining a stronghold in the market since it launched in 2008, making up for 7.8% of overnight stays in New York this past year, according the report. Recently valued at $25.5 billion, the company operates in more than 190 countries and boasts over two million listings worldwide.

Still, “a one-on-one with an agent is a much more powerful thing,” Traum said, “and booking through Airbnb comes with a lot of uncertainty and variance, whereas with a hotel you have that immediate stamp of approval.” There is always someone there to help the traveler, whether it’s an agent over the phone or a hotel concierge.

Brendan McNamara, Debut Hotel Group’s SVP of marketing, communications, and product development in New York City, agreed, and said hotel guests are always looking for an experience that goes above and beyond.

Wilson Wetty also noted Airbnb’s lack of policies for safety, cleanliness, and customer service. The security that comes with booking through a reliable company is something both agents and the hotel industry can offer clients.

Agents can offer clients additional product that complements the experience, giving clients an alternative to the cookie-cutter options on booking sites like Airbnb, she said. 

Photo Courtesy: Tony