default logo

Home-sharing apps are testing alliances with hotel booking rivals

The line between traditional hotel listings and home sharing is blurring as specialists in one area branch out into others. It’s a development closely watched by a hospitality industry already squeezed by digital newcomers from Airbnb to Expedia.

Airbnb made its latest foray into online travel agent (OTA) and hotelier territory last month with the roughly $200 million acquisition of Luxury Retreats, a Canadian company specializing in high-end villas.

According to people briefed on the talks, the San Francisco-based group has also had tentative discussions with some global OTAs, such as Expedia’s majority-owned German hotel search site Trivago, about including Airbnb homes in their plans. search lists. But people add that these talks are unlikely to lead to partnerships, at least in the short term.

Also in February, Expedia announced it had begun closer integration with HomeAway, the online vacation rental marketplace it acquired for $3.9 billion in 2015. About 20,000 HomeAway properties are to be listed on the site. Expedia’s main page, displaying house rentals next to hotel rooms in the search engine.

Dara Khosrowshahi, chief executive of Expedia, said it was doing a “test and learn” basis to determine whether customers are happy to be offered the mix of traditional hotels and vacation rentals in the same list of search results.

“If the tests are going incredibly well, you can imagine you have an accelerated onboarding,” says Sarah Gavin, vice president of global communications at Expedia.

Priceline is trying to grab a bigger slice of the growing roommate market through its Booking.com site, best known for its hotel room listings. Its inventory of vacation rentals has nearly doubled in the past eight months to about 625,000, according to data from AllTheRooms, a lodging search engine. People close to the company’s management said Priceline is considering stepping up the marketing of these private home and villa offerings.

Hoteliers try to respond to such movements. Sebastien Bazin, chief executive of French hotel group Accor, said 30% of its business would come from revenue sources other than hotel rooms within five years.

One of the ways it plans to do this is to expand offerings on Onefinestay, the premium home-rental site it acquired for around 150 million euros last year. “Accor should get into the travel space, which doesn’t just mean being a supplier of hotels,” Bazin says.

Other major hotel companies are considering their options. “Airbnb is a booking site, that’s not what we do – we provide safe, secure and guaranteed quality experiences under brand names,” said Richard Solomons, chief executive of InterContinental Hotels Group. “Our company could easily move [into providing home rentals]but it’s about finding the right supply in the right places.

Although Airbnb has built its brand by being different from traditional travel companies – co-founder Brian Chesky often expresses his contempt for “mass tourism” – it plans to expand into areas that will compete with them even more directly. . The company has already added guided tours and plans to eventually add flight booking, car rental and concierge services.

But analysts say the US group is under pressure to increase its customer base to justify its $30 billion valuation. While the majority of Airbnb listings are for private homes, more than 33,000 hotel rooms are also now listed on the site, a threefold increase from the middle of last year.

“You’ve actually seen the industries start to merge,” says Joseph DiTomaso, CEO of AllTheRooms. Accommodation has “consolidated, from couch to castle,” he adds, referring to the different types of accommodation now available on the same platform.

Airbnb, Expedia, and Priceline are each trying to make booking a roommate more like staying at a hotel with “Instant Book,” a feature that lets guests immediately confirm a room, rather than booking a room. wait for the host to approve the guest’s visit.

Airbnb has heavily promoted its Instant Book feature over the past year. About 1.25m of the site’s rooms, or about a third of its inventory, can now be booked instantly. Priceline has always insisted that its private rentals, like its hotel rooms, can be booked instantly.

Expedia pushed a similar change at HomeAway – to the dismay of some hosts. About half of HomeAway’s 2 million listings are now available to book instantly.

Originally, HomeAway was a classified ad site: after seeing an ad, travelers could call the owners to book, then pay in person. The transition to a web-focused platform has been painful at times, and HomeAway co-founder Brian Sharples stepped down as CEO last September.

“If you have instant book, the product starts to look a lot more like an online travel agency. The more instant book listings, the more it allows [online travel agencies] to plug into their system,” says DiTomaso.

Hotel groups are shaken by the invasive strategies of digital groups. In September, Morgan Stanley said it expected the US hospitality industry to enter a cyclical downturn. Bank analysts said U.S. revenue per available room – the industry’s preferred measure of sales – has been slowing since 2014 and expect it to turn negative in 2018.

Morgan Stanley says the pressure on hotel groups is exacerbated by Airbnb and HomeAway, which are flooding the market with alternative accommodations and reducing hotel occupancy rates.

Douglas Quinby, vice president of research at Phocuswright, an analyst group, says growing competition is benefiting, however. “For travelers, it’s good. They have more options and this puts downward pressure on prices.