October 13, 2017
Is Airbnb Picking Winners, Or Making Them?
Rumors had it for quite a while that Airbnb’s experiment in property management, Sonoma Select, had been a resounding success. That this should be true was not surprising. As a company, Airbnb has proven itself second to none in identifying and providing the sort of unique accommodations and experiences travelers desire. What was more odd about the experiment was the lack of an encore. If it was so successful, why was the experiment not soon followed by a more aggressive roll out of the program?
The answer is no doubt complicated, and speculating from the outside-in has its risks, but two reasons jump out:
Airbnb being responsible for actual management is anathema to the company’s ethos, and the entire “sharing economy” concept. Peer-to-peer it began, and so it shall remain.
Being on the hook for on-the-ground operations is far more complicated than running an online travel booking site. Why would Airbnb willingly enter this far more difficult and complex business when it already has a thriving online platform?
The latest moves from the company seem to suggest that they have now found a way to marry the best of both worlds. On one hand Airbnb is able to leverage its vast amounts of data and knowledge about guest preferences (i.e., what actually makes money), and on the other hand, Airbnb is able to maintain its distance without literally or figuratively getting its hands dirty.
The new program, inevitably called Airbnb Select, provides travelers with a more curated, a more branded stay and experience. The recent purchase of Luxury Retreats while to date the most notable move in this direction, was not the first from the company, and with Airbnb Select, it will clearly not be the last.
Like hotel companies that have brands under them that vary from The Ritz-Carlton to Courtyard by Marriott, Airbnb appears to be moving in the same direction of tiering. Now, it is worth noting that Airbnb is not itself necessarily a first mover when it comes to providing a branded short term rental experiences from start to finish. Companies like Turnkey, Vacasa, Oasis and Wyndham are all controlling the guests experience from start to finish today via professionally managed properties. In fact, hotels are even getting in the game, most recently with Hyatt’s investment and partnership with Oasis. All of that being said, Airbnb’s brand is powerful, and so any move it makes in this arena is worth watching.
The truly interesting part about the program, however, is the suggestion that the company itself will invest in getting certain homes up to par. Such a move is more akin to luxury travel clubs like Inspirato than booking sites like usual Airbnb competitors Expedia and Booking.com, and it is an interesting one. By essentially picking the “winners” on the platform, and then putting its knowledge and its money where its mouth is to ensure those homes actually “win” in practice, does Airbnb risk alienating those not chosen? What will this do to its feel good community vibe? Will they stay loyal to the company the gave them their first opportunity in the space, or will their eyes wander elsewhere?
All of this is still to be seen, but the march of Airbnb towards becoming the dominant brand in travel accommodation appears unabated, and in many ways, barely contested at this stage.