In case you hadn’t already heard, there’s a massive Airbnb revolt in the making.
Over the years, the sharing giant became so popular that hosts struck up their own Facebook groups to compare notes, ideas and even frustrations. With tourism in bloom, the groups reached five, or even six figure heights in readership.
But as covid-19 swept across the land, forcing cancellations en masse, hosts because increasingly frustrated by the response, or lack thereof from Airbnb, and a clear direction for the future emerged.
It’s important to consider first just how wonderful Airbnb has been, for the most part, before taking it down. Overnight, hosts gained a wildly popular search platform with millions of fans, allowing them to turn excess space, or a second home into a bonafide second, or even primary income.
I, for one, have benefited from Airbnb in my travels massively, and can’t imagine a world without it, or at least something similar. The arguments for and against are never ending, and for side reading, I recommend this deeper piece before we lose focus.
Airbnb grew into something no one could ever have fully imagined, even exceeding those corny investment presentation decks of just how big and booming a business could grow, in the best of circumstances.
With founder dreams of becoming liquid billionaires and appeasing wall street IPO hawkers came fees and restrictions which created an unfriendly environment for hosts, and a frustrating level of extra costs for guests.
Just about everyone’s searched for a place on the sharing economy platform and seen $150 a night and thought “great”, only to then see it’s actually more like $300 by the time you add in cleaning fees, taxes, Airbnb’s massive booking fee and other considerations.
When you start to strip out some of those elements, there’s huge room for price drops within the travel accommodation market, because Airbnb eats from both sides. It’s precisely why hosts are planning a revolution in direct booking, or low fee platforms owned and run by hosts.
For travelers, it could be great news.
Take a recent booking I made for Los Angeles, which advertised $261 per night, for a five night stay, where Airbnb claimed a princely $203 booking fee. It’s not until the booking page that a prospective guest sees that $261 per night is actually $378 per night after taxes and fees for a total of $1841.
Hosts enjoy virtually no benefit from that Airbnb booking fee, which in this $203 instance averages out to a price increase of $40 per night alone. Of course, Airbnb takes a percentage off the host as well, which eats into their initial $261 per night charges.
Imagine a world where hosts could start fresh, creating smaller, better platforms without those vanity fees.
In the short term, you don’t even need to imagine. Whereas hotels must protect shareholder value and revenue management for property owners and beyond, sharing economy hosts like those on Airbnb are more interested in simply covering the mortgage. Until travel rebounds, they’ll be more nimble in creating value and compelling deals to get people on property.
In my booking example alone, where Airbnb takes up to 20% from the host, and charges me $203 to make the sale, it could drop the net room rate down to $208 per night ($261 minus Airbnb’s 20% cut), for a total of five nights, and drop the $203 booking charge from the final tally too.
State taxes on this reservation still added $201, and cleaning fee added $130, but you’d be looking at an all in comparable cost of $1371, instead of $1841.That’s a $500 price drop, and it’s precisely why this trend could take off with support from hosts and guests alike.
A major question about “how” here involves visibility, and for most hosts, they’ll never fully leave Airbnb, they’ll just seek outside opportunities wherever possible.
Airbnb provides a large scale, plug and play audience the size of which is hardly matched by anyone. Going it alone would mean fewer eyeballs than before, but for some who’ve been in the business long enough to earn repeat guests, a network to build out from already exists.
Leaving the listing on Airbnb keeps a flow of visitors coming in, but branching into direct booking websites and new channels will allow hosts greater control of their inventory, and better pricing for guests.
Lodgify is one of the many tech based solutions looking to empower hosts to take control of pricing and opportunities across platforms. The online software enables guests to set pricing across the major current players like Airbnb and Booking.com, but helps create a robust e-commerce platform for direct booking, so that hosts can offer better pricing and perks for direct bookers.
Ultimately, brewing competition is great news for hosts and guests alike. Lower fees often translate to lower prices, and with opportunities to maintain visibility, hosts don’t miss out on key eyeballs. They’ll just look to keep them in their own booking channels after that first purchase…