Beyond leisure: About 10 percent of Airbnb's guests are business travelers, says Marc McCabe (pictured).
Airbnb, the seven-year-old online platform that's used all over the world to rent houses, apartments and even spare rooms, has been valued at more than $25 billion. Between the end of May and early September of this year, nearly 17 million people stayed at Airbnb properties worldwide -- that's 353 times the number of guests who used Airbnb in the summer months of 2010.
Throughout this astronomical growth period, the platform has retained its share of travel-adventure whimsy: Of the 17 million guests this summer, more than 10,000 stayed in tree houses, 12,000 chose yurts and almost 13,000 overnighted in castles. A fair number of travel managers and meeting professionals have questioned just how much this hospitality disruptor in the so-called sharing economy has to do with business.
Actually, quite a bit, says Marc McCabe, who heads the Airbnb for Business platform. About 10 percent of Airbnb guests are business travelers, he estimates, and corporations are eager to understand and manage that spend. Within 24 hours of announcing Airbnb's new global travel-management suite and dashboard for business travel in July, some 500 companies had signed up for the program, which offers central billing and, most importantly, data and visibility into traveler itineraries. The number of member companies now exceeds 1,000.
A study of expense reports appears to confirm Airbnb's growing influence in the business world. According to expense giant Concur, the number of Airbnb stays reported by clients increased fourfold last year alone. While Concur wouldn't divulge details, McCabe estimates Airbnb stays could account for 5 to 15 percent of lodging spend at a large enterprise, and as much as 25 to 30 percent at smaller businesses with 200 to 300 employees.
"It's obvious that business travelers are using us to a very high degree," notes McCabe, who says that realization led to the creation of Airbnb's business platform. "We just want to make sure that it isn't creating any issues for travel managers," he adds.
A head for business
According to McCabe, who shares his own San Francisco apartment via the platform, Airbnb is actively courting the business market. "We love having business travelers," he says. "They're a lot easier than leisure travelers. Leisure travelers have so many questions. Business travelers just want to know if the Wi-Fi is working."
The business-travel platform now offers integration with Concur expense reporting, as well as with risk-
management services from International SOS. Plans call for incorporating company-specific features for clients, such as the ability to highlight Airbnb hosts who work for the company, or to share employee reviews of properties across a company's traveler base.
A number of travel managers attending the Global Business Travel Association Convention in Orlando this past July admitted that their companies still have no official policy either endorsing or discouraging use of Airbnb. Still, if business travelers are using the platform regardless, managers have little to lose in signing up to receive reports. The corporate dashboard is free and sets up in minutes; employees simply need to opt in via their work email addresses. The ad agency TBWA\Chiat\Day, Google and technology supplier Twilio are among the many companies that have signed on.
The Latest Game Changer
Today's fascination with Airbnb and the sharing economy reminds San Francisco Travel president and CEO Joe D'Alessandro about the rise of Expedia and other online travel agencies in the early 2000s.
"There was a lot of concern about how they were changing the game, and how they were going to make things very different by disrupting the hospitality industry," he recalls. "Now, OTAs are considered part of the mainstream hospitality industry, and I think the same will happen with entities like Airbnb."
The fact that some small boutique hotels actually use Airbnb to list rooms underscores the idea that it is a distribution platform, not a lodging company. Just as planners have grappled with attendees going outside the block to book on Expedia and other OTAs, they're likely to see a growing number of rogue bookings on Airbnb.
Meeting attendees' needs
While Airbnb for Business offers visibility, that doesn't necessarily mean acceptance. Many corporations consider such bookings out-of-policy travel that takes volume away from preferred hotel suppliers. And, from a meetings perspective, attendees using Airbnb could jeopardize guaranteed room blocks.
Hotels, at least in the U.S., don't seem to be suffering from the competition just yet. Although studies last year revealed that Airbnb units could be partially responsible for stagnant rates in some cities, overall hotel demand is at record high levels, with room rates and occupancy continuing to surge.
Often, Airbnb is a convenient option when hotel rooms are scarce. For meetings, "room blocks still are generally very well used," claims Marc McCabe. Yet 8 percent of respondents to an M&C survey of 89 planners said they have reduced designated room blocks in at least some instances to account for guests using Airbnb and similar home-sharing services.
Planner Eve Schmitt, CMP, says room blocks in San Francisco have shrunk, even while attendee numbers have not. Until recently, Schmitt served as senior manager of global meeting sourcing and vendor relations for Palo Alto, Calif.-based software provider
VMware, which organizes the mammoth annual VMworld exhibition in San Francisco. The August/September 2015 show drew a record 23,000 attendees.
After last year's show, Schmitt speculated that Airbnb and its ilk might have contributed to the room block filling at a slower pace. She even considered reducing the room block for 2015 as a result of Airbnb's growing popularity.
But the blocks have gotten smaller, she says, not by her doing, but because hotels are choosing to limit the rooms they're offering citywide groups. In San Francisco, group business isn't as desirable as it once was. "Business and leisure bookings can now demand a higher rate," Schmitt says, "and the hotels are looking into committing more inventory to these demographics rather than large citywides. With so many corporate headquarters moving into the city's downtown corridor, the business traveler is the preferred guest. Thus, compression of demand outweighing inventory, as well as high rates, have pushed delegates in cities like San Francisco to look at alternative options."
Other Bay Area tech giants are seeing similar trends. "Our travelers use Airbnb when it provides inventory that they can't find elsewhere," says Rita Visser, director of global travel for Oracle in Redwood City. Visser researched her travelers' use of sharing-economy suppliers to prepare for a panel discussion at the Global Business Travel Association Convention in July. "Many have become comfortable using the tool for their personal travel, and then when we can't provide them with the inventory for their business trips, they have to find it somewhere else," she says.
While Oracle doesn't yet have a policy in place regarding Airbnb, says Visser, she usually sees the logic in her travelers' choices -- such as for South by Southwest in Austin, Texas, "when attendees were paying $600 for a Hampton Inn," she notes. "Airbnb was a logical choice for them."
Moving to the mainstream
Last month, Airbnb got a lot closer to being an officially accepted lodging option for conventions. On Sept. 3, global meetings management company Experient, a division of Twinsburg, Ohio-based Maritz Travel Co., began collaborating with Airbnb to offer it as a housing option to its clients.
"We help to manage roughly 50 citywide events a year," says Experient's Scott Durkin, vice president of partner development. "Some of the destinations we go into have significant compression issues," he notes, citing high-demand cities such as Chicago, New Orleans, Orlando and San Francisco. "When blocks fill up, we need to have additional options. Instead of trying to find more rooms, we can immediately put up a link to Airbnb.
"There's a flow-through process for that," Durkin adds, "so we have the ability to report on the activity and determine how many attendees from a specific association are utilizing Airbnb."
The ability to gather attendee data from Airbnb is a huge step toward legitimizing the platform for planners, but Durkin stresses that Airbnb isn't replacing hotels. "The last thing we want is to create issues with committed contracts with the hotel chains," he says. "So we have to be very cautious and smart in making sure that we manage the existing contracts, and then we make available alternative options for booking rooms once we've completely filled up our blocks and met our commitments to the hotel chains and the city."
Experient hasn't yet received any pushback from hoteliers, Durkin adds. "It's a seller's market right now, so hotels understand that we need to provide accommodations for our customers. Our first step in securing any citywide is to always go through our hotel partners. And we'll continue to do that."
Even so, Durkin says demand for Airbnb will drive the nature of the integration: "As we see the success of the relationship unfold, we'll look at additional options, which could potentially lead to them being at the front of the process as well."
Airbnb declined to comment on whether other such arrangements are in the works. "There is nothing specific I can share right now," says a company spokesperson.
But official or not, Airbnb links have been showing up on conference registration sites. According to M&C's survey, 16 percent of respondents have included it as a housing option or are considering doing so. A link to Airbnb appeared on the U.S. Travel Association's recent ESTO conference site and was mentioned online as an option for the massive Salesforce Dreamforce event. On a smaller scale, companies that have embraced Airbnb for Business, such as Google and Box, have been using Airbnb properties for corporate offsites and retreats.
Disrupting the taxi world
Just as Airbnb has been a disrupting force on the lodging front, companies like Uber and Lyft are reshaping the traditional models for ground transportation.
"Five years ago, we had a problem in this city," says San Francisco Travel president/CEO Joe D'Alessandro. "It was very hard to get a taxi. A lot of groups would be standing in a hotel lobby at 5 or 6 p.m., waiting for an hour to get a ride. All of a sudden that problem is gone."
Uber and Lyft complement Airbnb, particularly in a city like San Francisco, which works with Airbnb to help market neighborhoods that don't have hotels. Plentiful, prompt, affordable ground transportation is crucial when travelers are dispersed beyond hotel zones.
But the business model of the young companies is contentious, in part because drivers -- who are an integral part of the "sharing economy" experience -- aren't considered employees, which makes it virtually impossible for taxis and car-
service companies to compete.
"In America, you're required to give employees benefits," notes Scott Solombrino, president and CEO of the Dav El Transportation Network. "The fact they don't not only is un-American, it also gives them a 40 percent advantage over those of us who do."
Leveling the playing field
As is the case with many companies of the sharing economy, questions about the legality of Airbnb's model and controversies surrounding the collection of related tax revenue are erupting in a number of cities around the world, even as more destinations welcome these new businesses.
"Things have changed a lot in the past year," points out Joe D'Alessandro, president and CEO of San Francisco Travel, which recently announced a marketing partnership with Airbnb. "They are collecting room tax, they have insurance for guests and they follow a lot of business practices so that they are legally permitted to operate here. Once that happened, and once the playing field was leveled with the hotel community, we decided that they are, in fact, a part of the hospitality industry and that they provide a service some of our customers want."
Although the San Francisco partnership is, to date, the only official agreement Airbnb has in place with a destination marketing organization, the company is gradually settling legal matters and addressing concerns in other destinations. San Francisco and Portland, Ore., were the first cities in which Airbnb began collecting tourist taxes. Last month, Airbnb agreed to collect tourist tax in Paris, its largest market. Similar agreements were inked in Amsterdam, Netherlands, and in Chicago; Malibu, Calif.; Philadelphia; San Diego; San Jose, Calif.; and Washington, D.C.
While San Francisco Travel is collaborating with locally grown Airbnb, D'Alessandro notes that most of the platform's business is leisure-related, and his organization isn't looking to push meetings in that direction. "We'll work with planners to do whatever they want to do," he says, as is the case with any client requests. "If they want to get some medicinal marijuana, we'll make sure that they know where to get it. That's our role, to make sure planners get the connections and the information they need when they're doing an event in San Francisco. We're trying to meet customer demand; we're not creating the demand."
Questioning corporate policy
Even as business use of Airbnb is becoming more accepted -- or at least more prevalent -- meeting and travel managers fret over duty-of-care concerns. "Our number-one job and function is to make sure our travelers are safe," says Oracle's Rita Visser.
The fact that Airbnb is a means of distributing lodging, rather than an owner or manager of said lodging, still raises important questions. "If our hotel person is vetting a hotel, she knows and understands fire safety and all of that stuff," Visser notes. "Hyatt, for instance, can tell us about every hotel of theirs that's in our program. There's a standard service level that we might expect from a Hyatt House, a Hyatt Place or a full-service Hyatt. But when we create a relationship with Airbnb, we're creating a relationship with a technology provider that's simply pushing us product. There isn't a level of continuity there."
Nor would integrating Airbnb into the travel program be an easy undertaking, adds Visser, given the number of questions it could raise. For instance, in at least one case she found that multiple Oracle travelers were sharing the same unit. "Is that a human-resources concern?" she asks. "Do we have to create a policy around people sharing rooms? Do we have to create a policy around people just getting a space in a house instead of a whole house or apartment? It isn't a quick fix. We're always going to have our travelers' backs as Oracle employees, but I have to try to do what I can to mitigate any risk."