After years of focusing on short-term home/apartment rentals, Airbnb is reportedly entering the hotel business.
The company is adding independent hotels to its platform in a bid to spark growth, the Financial Times (FT) reported Saturday (April 18).
According to the report, Airbnb has begun a pilot program in cities such as New York, Los Angeles, Paris and Madrid that lets users pick from a range of boutique hotels along with the company’s traditional private home listings.
The company hopes to recruit to its network by competing with the fees charged by travel searches like Expedia and Booking.com.
Jesse Stein, who became Airbnb’s first head of hotels in January, told the FT the company was offering a “very competitive commission structure … relative to the other players in the space.”
The report added that offering hotel stays will help Airbnb court business travelers, who typically prefer the predictability and perks that come from these establishments, rather than private homes. Global business travel spending reached $1.6 trillion last year, the FT added, citing data from the Global Business Travel Association.
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Entering the hotel business will also help cover losses associated with the growing move in some cities — such as New York — to place restrictions on short-term listings.
Bernstein analyst Richard Clarke said Airbnb would face sharp competition in its effort to break into a market dominated by Booking.com and Expedia, which permit users to select from a wide variety of options.
He also pointed to pressure from investors to “add more things that they can sell to customers,” especially as Airbnb’s core offering of short-term rentals faced restrictions.
The FT added that Airbnb CEO Brian Chesky had said at a conference in September that he was “not happy” with the company’s level of growth and planned “to layer on many businesses” to expand faster.
Airbnb’s other recent service expansions include the addition of a private car service, announced last month in partnership with with transportation company Welcome Pickups, and the expansion of its “Reserve Now, Pay Later” program on a global scale.
In other travel news, PYMNTS spoke last month with David Arons, senior director of travel product strategy at Capital One Business, who said he is witnessing a wide-range reassessment of how business owners approach travel and work-life balance.
“We’re definitely seeing a shift away from the typical pure road warrior mindset where personal and business travel used to be separate,” he said. “Business owners have shown a [growing] interest in integrating personal and business travel for more work-life balance.”
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