Airbnb seeks to lure more hotels with new fee structure

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Airbnb is changing its fee structure for hosts in an effort to encourage more hotels on to the platform as it seeks to compete with the likes of Expedia and Booking.com.

The hosting platform, which launched in 2008 as a way for those with spare rooms or homes to rent them to guests, will introduce a new fee structure for professional hospitality businesses listing with them after June 4 that eliminates any fee being passed on to guests.

Instead of its traditional set up whereby hosts pay a 3 per cent fee and guests up to 20 per cent of the nightly charge, independent hotels and hospitality companies will pay a “host-only” fee of between 14 and 20 per cent with no charge going to the guest.

The change comes as Airbnb positions itself as an end-to-end travel provider, selling services such as flights and car bookings via third party providers as well as experiences, ahead of a rumoured initial public offering.

At its most recent fundraising round in 2017, Airbnb was valued at $31bn.

In March, the company said it had agreed to buy hotel booking site HotelTonight for an undisclosed sum. A month later, it invested $100m in the fast-growing Indian hotel start up, Oyo.

Having a dual-fee structure is seen by many as an attempt to compete with Booking.com and other online travel providers, which do not charge fees to consumers.

Its owner Booking Holdings said it has never charged customers fees and that hotels listed on its platform pay a commission only after Booking pays them revenue.

As Airbnb encroaches further into the traditional hotel industry, hotel operators are increasingly looking at diversifying their own portfolios.

Marriott took a step into Airbnb’s market in April, when it launched its own home rental service. Accor also made a move into home-sharing with the 2016 acquisition of Onefinestay, the UK-based luxury home rentals site, in a deal worth up to €148m.

Vicki Stern, a leisure analyst at Barclays, said that Airbnb had not succeeded in penetrating as much into the hotel market as the industry originally feared, until now.

“We see a risk for hoteliers in the next downturn coming from Airbnb, with hosts less sophisticated than hoteliers when it comes to holding prices and the risk of greater supply,” she said.

“Separately, there is also some increased risk to hotels with Airbnb now potentially showing hotel inventory side by side with home rentals given the often significant price gap,” Ms Stern added.

Pam Rigben, a private Airbnb host in the UK who advises fellow hosts through her consultancy The Airbnb Start Up Company, said that the US company had recently increased its booking fees to guests on the private rental side.

Guests were previously charged 12 per cent of the nightly fee but now can be charged up to 20 per cent.

She added that bookings were “significantly down” this year, which could be attributed both to the fee change and to Brexit.

Airbnb declined to comment.

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June 4, 2019 at 12:44PM