Embrace Airbnb, Quest boss urges accom
The head of Australia’s largest serviced apartment group is urging the industry to embrace Airbnb.
Paul Constantinou, the chairman and founder of Quest Apartment Hotels, told The Australian Financial Review he was considering using the platform as a distribution channel because it offered significantly lower booking fees than online travel agents Booking.com and Expedia.
Mr Constantinou, who founded the 160-strong franchise group 31 years ago, was included on the recent Australia Day honour’s list for his services to tourism and accommodation.
“We should embrace Airbnb,” he told the AFR.
“We don’t currently use Airbnb, but we are considering it. Why not? It has much lower booking fees than the online travel agents and friends of mine within the industry are already using it.”
In a memo earlier this month, Airbnb revealed the site had experienced a 152 percent increase in boutique hotel and B&B listings globally in the space of a year.
Mr Constantinou did, though, question the platform’s ability to manage the behaviour of guests and minimise occupational health and safety risks – a concern when considering Quest’s primarily corporate market.
“We need to control who is coming through the platform. We don’t want people staying who are a bit too rowdy,” Mr Constantinou told the AFR.
He is not alone in extolling the benefits of Airbnb as an alternative distribution channel.
Former TFE Hotels boss Rachel Argaman previously declared she “loved” Airbnb, telling AccomNews last year: “I do believe OTA commissions are too high and need to reduce.
“The pressure which other successful distribution partners such as Airbnb places on more mainstream distribution partners is therefore very positive.”
General manager of Pyrmont’s Terminus Hotel, Belinda Clarke, told the audience at last July’s NoVacancy expo that Airbnb provides an effective booking channel for the property’s three distinct demographics – weekday commuters, weekend leisure guests and locals.
“There’s lots of apartment accommodation in the city so when locals have family to stay, there’s no room to host them. They come to us – people use us as a branch of their homes and we support that.”
Paul Fischmann, founder of boutique operator 8Hotels, collaborated with Airbnb on the Little Albion Guest House in Surry Hills acquired by Crystalbrook Collection last year.
“Airbnb charges only a few percentage points off revenue, rather than online operators’ 15 per cent,” he said.
Mr Constantinou said Quest had not felt any impact on its business from Airbnb, which he labelled a bigger competitor for Expedia and Booking.com then hoteliers.
“We’re going well. 2018 was a crazy year. It wasn’t normal. There’s still a lack of confidence in the corporate market, but business activity is improving and people are moving around. Both our occupancies and room rates are growing,” he told AFR.
The group opened a new 221-room hotel at Melbourne’s Docklands last week and some 18 properties are due to open between now and 2020. Quest is also planning a major expansion into the UK market.
Mr Constantinou said the group’s growth was occurring mainly on the city fringe and in suburban and regional locations, driven by decentralisation and “corporate migration” out of CBDs.
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As a small holiday complex in Broome, we have been listing on AirBNB for several years. This enables us to have a presence in the market, and we have found this to be a good strategy for attracting business that we might otherwise have missed.
As for the commission rates. While AirBNB only charge 3% commission, they strongly encourage properties to reduce their advertised rates by 10%, as the guests are charged a booking fee on top of the accommodation charge, which is approximately 10%. So we are in effect charged 13% for any AirBNB listings. Not a lot different to Booking.com and others.
Also, AirBNB has recently introduced a new all inclusive pricing model, where the guest is not charged a booking fee, and we are required to pay a 12% commission – rising to 15% in the near future. They have also recently implemented connections to several channel managers, so that we can have live rates and inventory.
So, AirBNB are no longer any cheaper on a commission basis, and appear to be positioning themselves as a direct competitor to Booking.com (who have recently started cutting into the AirBNB market by adding holiday rental properties as well as hotels).
I think it is a sound strategy for apartment complexes to list on AirBNB. However, this doesn’t address the other AirBNB issues, such as the lack of consistency of local councils and state government regulation between privately let houses (traditional AirBNB listings) and hotels and resorts. The difference in compliance costs is the main issue here and this really needs to be addressed through state legislation.
Well said Ross and it is now very apparent that Airbnb’s long term strategy covered 3 options:
1. Create the sharing economy model, by bypassing regulatory & compliance protocols and set up a platform for:
2. Entering the OTA market in case the Airbnb model became too difficult to navigate as it has been then:
3. Combine the two booking channels into their Business model going forward and become an OTA for both channels…..
Now they have two bites of the cherry but still have not complied with most regulatory processes and guidelines which remains questionable regarding the sharing economy, whose terminology is confusing to say the least.
Interestingly, the belief that the Airbnb commission is much lower that OTA’s is now no longer applicable and therefore aligns with OTA’s fee levels……perhaps there is commission war brewing?
Meanwhile if that was their long term game plan then one can say ‘well played’…….