Coming to Terms With Airbnb

A strange thing is happening in San Francisco. Large conferences are drawing record numbers of attendees, but they're not filling hotel rooms like they used to. "When you see your registered attendance being the same, if not growing, and yet your blocks aren't being met, something has drastically changed," says Eve Schmitt, CMP, senior manager of global meeting sourcing and vendor relations for software provider VMware in Palo Alto, Calif.

Schmitt's show, VMworld, attracted more than 22,000 software users and others to San Francisco in late August. While the final numbers haven't yet come in, she suspects there might be challenges with the room block. "In the past, attrition has never even been part of the discussion," she says, noting her group had either filled the block or exceeded it by a few percentage points. "Now I would not be surprised if we didn't reach 100 percent."

Although hard evidence of the cause has been difficult to pinpoint, a consensus is forming among industry professionals that it's the sharing economy -- in this case alternative lodging sites such as VRBO, FlipKey, Craig's List and, most significantly, the fast-growing Airbnb -- that are drawing attendees away from more traditional lodging offered by typical hotel room blocks.

While such sites have long attracted leisure guests, a growing number of business travelers and conference attendees are being lured by the promise of more space, a kitchen, the opportunity to "live like a local." Another draw is lower cost, particularly if several travelers stay together in an apartment or home.

And the phenomenon is hardly limited to San Francisco. Airbnb alone has 800,000 listings around the world, in more than 35,000 cities.


Unaccountable attendees

 "The alternative transient-lodging sector is already affecting meetings," says Rick Swig, president of RSBA & Associates, a San Francisco-based consultancy specializing in hotel asset management. "And I'm speculating," he admits, "because there's no hard evidence to this. It's all pioneer territory, and therefore without any metrics, no methods of measuring the impact." But Swig's conjecture -- like that of show organizers -- is based on an insider's observation and logic.

Swig works closely with San Francisco hoteliers, a number of which told him that while occupancy was solid during VMworld and other recent large conventions, they didn't feel the pressure in demand that they had for those shows in previous years. However, San Francisco Travel, the city's convention and visitors bureau, reported that the shows drew record attendance and the organizers were pleased. "And I scratch my head," he says, "and think, well, where the hell are those people staying?"

Anecdotal evidence points to Airbnb, which has close to 5,000 listings in San Francisco alone, the city in which it is based. Swig, VMware's Eve Schmitt and S.F. Travel have all discovered that many conference attendees have booked houses and apartments via the site. And that's left organizers, hoteliers and destination marketers wondering just how Airbnb -- and other such sites -- should fit into their future plans.

Targeted customers
Interestingly, Airbnb was first launched as an alternative lodging site for conference attendees. In 2007, the future founders of Airbnb opened their San Francisco home to attendees of a design conference because many local hotels were sold out.

While Airbnb "hasn't ironed out the details" of any kind of meetings and conventions strategy, notes spokesperson Marissa Coughlin, the company did launch a well-publicized initiative this summer to court business travelers and their companies. The site partnered to share booking data with expense platform provider Concur, and debuted a search portal for business travelers on its site. About 50 companies have since signed on with Airbnb.

"A number of companies told us that their employees were asking how they could stay on Airbnb when they were traveling for work," notes Lex Bayer, the lodging site's head of business development. "They were using Airbnb for their leisure travel and really enjoying the experience. The travel managers were looking for a variety of things, most notably visibility and tracking."

Companies partnering with Airbnb now know whether their travelers who book through the site are staying within travel policy guidelines, explains Bayer, and can more easily locate travelers should any emergencies arise.

While Bayer says they aren't focusing on meetings per se, Airbnb published a report in August touting its benefits for cities hosting big events. "As event organizers and destination managers bid for, win and host events, they should consider home sharing as a more economically, socially and environmentally sustainable approach to hosting," reads the report's introduction. "Airbnb has partnered with destinations of a variety of events over the years and looks forward to continuing to work with cities and organizers to help accommodate travelers."

The report extols the benefits of the sharing economy as a community-based model that leverages existing resources, as opposed to major infrastructure investments for projects that might not be required once the event is over. In the sharing-economy model, residents benefit directly. For instance, in its report Airbnb estimates that its London hosts brought in US$4 million during the 2012 Summer Olympics via the platform, and that much-needed lodging was provided near the Olympic venues, where few hotels existed. The report also details successes during the SXSW conference in Austin, Texas, and the 2014 World Cup in Brazil.


Nascent partnerships
Airbnb's partnerships to date, per Lex Bayer, have primarily consisted of the site creating a landing page for a big event as a way to market its own presence and accommodations in that location. Just how a more official partnership would work -- with either cities or individual conferences -- hasn't been publicly defined.

 

There is growing interest, however, particularly in the Bay Area. "We do talk about this a lot," says Laura Bell Way, global meetings manager for Autodesk in San Rafael, Calif., who notes that traveler inquiries about the sharing economy have become a hot topic in benchmarking sessions with managers from other technology companies in the region. "This is going to become an increasingly important topic over the next few years among our traveler and attendee bases," she says. "I don't have any answers, I just think we should be talking about it."

VMware's Eve Schmitt agrees. "It's another evolution that we as show organizers have to be willing to work with and embrace," she says. And while Schmitt believes the trend will spread, at the moment it is shows like hers that are feeling the most significant effects: conferences in cities like San Francisco, with high hotel occupancy and room rates, and that cater to a young, tech-savvy, international demographic.

John Reyes, executive vice president and chief sales officer of the convention sales and services division of San Francisco Travel, says the bureau welcomes the surging interest in Airbnb among attendees. "We're embracing it. We're seeing it as an effective alternative for sleeping rooms."

From Reyes' perspective, the additional accommodations are a boon for the room-strapped city. "It allows us the flexibility to add additional, nontraditional rooms to the formula," he says. "What we want to make sure is that when a citywide convention comes to San Francisco, they get the rooms they need, they get their attendance and we're able to adapt to how their attendees want to book rooms."

Crucial to his acceptance, admits Reyes, is the fact that Airbnb has agreed to begin paying occupancy taxes in San Francisco this month, a significant revenue stream for the convention bureau. Airbnb has reached a similar agreement with local authorities in Portland, Ore. But the taxes paid by Airbnb and its hosts -- or the lack thereof -- remains a controversial topic in many cities.

"For us," says Reyes, "it was really important to create a level playing field for them and the hotels offering accommodation. It's a critical component."

Potential obstacles
Meeting organizers could face a number of challenges when it comes to embracing the sharing economy, says Rick Swig. "If a meeting planner is trying to coordinate a block through one of these alternative lodging sites, that's going to be pretty difficult," he points out. "It's really an uncontrollable and ad hoc availability of inventory." Airbnb, for instance, holds no sway over its hosts in terms of availability and price of accommodations.

What's more, services like Airbnb's are in legal limbo in many cities. At press time, San Francisco city supervisors were discussing legislation that would essentially legalize Airbnb but place restrictions on the number of days per year a host's accommodations could be rented out.

Duty-of-care issues are another concern, points out Bruce McIndoe, CEO of risk management consultancy iJET International, based in Annapolis, Md. "A hotel has certain responsibilities around the safety and security of the guest," he points out. "But you have no idea what someone's walking into when they stay at a private residence that somebody is renting out." For example, the home might have overloaded electrical systems and could be lacking a fire extinguisher, smoke detectors or carbon monoxide detectors. "Plus, you don't have any idea what the security of the building or the neighborhood is like," McIndoe says, noting that some people seek out alternative lodging sites specifically to stay in neighborhoods that are off the beaten path.

Seasoned Airbnb guests might understand that they're taking on some risks by booking outside of the block, in a neighborhood that might be removed from host hotels. But if a conference officially partners with the site, other attendees might not be so savvy.

"If a show promotes Airbnb, then I think they start to take on some of the liability if something happens to an attendee," says McIndoe. "It provides the perfect opening for someone to sue the organizer because they pointed them toward a site like Airbnb. Whereas if they're in the hotel, there is legal recourse if the hotel fails to meet safety and security standards -- especially fire safety, which is a big one."

Measuring the unmeasurable
Until alternative lodging sites take note of whether guests are in town to attend a meeting or event, it will be difficult for planners to fully embrace them. "It's going to drive meeting planners crazy, especially for citywides," says Rick Swig. "They're going to wonder how they can identify their impact in a city when their attendees are not staying in measurable locations."

Theoretically, Airbnb could track this. For its new business travel program, employees of participating companies are given a specific tracking code to use when they book on the site. Seemingly, Airbnb could create similar meeting codes, or possibly add a question field to the reservation form. "It's not out of the realm of possibility," admits Airbnb's Lex Bayer. "It's just not something that we've done. Meetings haven't been an area of focus for us."

John Reyes of San Francisco Travel believes that will change soon enough, though. "They're a technology company, and I think they're going to help us track this," he says. Reyes wants to ensure that meeting organizers get credit for any rooms their attendees pick up. "I think what we're doing is expanding the definition of room block to be traditional plus nontraditional," he posits. "At least in San Francisco, that's the direction in which we're heading."


Next steps
Eve Schmitt doesn't yet know how she will account for alternative lodging demand for next year's VMworld event, but she realizes she might have to adjust the way she views the hotel room block. "We used to approach the hotels and say, 'Give us the maximum number of rooms that you can,' because there's been that kind of demand. But now I don't know that we'll be looking for the maximum. We might go back and take a look at the final pickup for 2014, and maybe we'll decrease it by a certain percentage, knowing that the Airbnb trend might increase.

"The effect is really just now hitting us and the conferences of the busy fall season," adds Schmitt, who sits on the Corporate Social Responsibility Committee for the Professional Convention Management Association along with other senior-level planners. She says the topic will be discussed among her colleagues at PCMA's next Convening Leaders conference, to be held in January 2015.

Meanwhile, given the fast-changing technology and much-debated legal status of sites like Airbnb, many meeting planners can only watch and wait.

Says consultant Rick Swig, "Anybody who's trying to read the crystal ball is in denial that their crystal ball is broken, just like mine. Because it's impossible to know what will happen. It's evolving so quickly."