While this market-disrupting channel may have been a contentious subject amongst accommodation managers in the past, the industry has now come full circle with many seeing the platform as a great opportunity. So what are the benefits and features of Airbnb that make property managers so eager to get their apartment style vacation rentals, holiday homes and B&B’s listed on the platform? In this blog we’ll answer all your burning questions including how does the Airbnb commission rate compare and their platform standards.
Airbnb’s rise to popularity over the past 10 years has been a mammoth one, with the effect it has had on Australia’s tourism industry undeniable. In the 2015-2016 financial year alone, the platform hosted 2.1 million guests over 3.7 million nights in Australia, reportedly contributing $1.6 billion to our economy (i). 150 million loyal travellers book through the platform worldwide for more reasons than just to find a cheap holiday alternative. The corporate band (Airbnb for Work) now has over 700,000 companies engaged (ii) and the introduction of Airbnb Plus earlier this year has seen a definitive uptake in the number of ‘luxury’ bookings being made.
Irrespective of your past views and/or feelings towards the platform’s unconventional structure, it would be irresponsible not to consider whether the channel may add value to your property’s distribution mix. The channel’s reach and impact is now undeniably prevalent and is one of the key features of Airbnb that poses a great opportunity for many accommodation businesses to increase their distribution reach.
Airbnb’s commission is inarguably the lowest available when compared to other distribution channels and is one of the key features of Airbnb that you should consider. It’s well known that the traditional online travel agents often charge anywhere between 15-30% commission on your bookings, Airbnb however has a unique pricing structure. The platform charges its clients a service fee which it clearly separates out from the hotel price, allowing them to charge the hotel a much lower commission of 3-5%.
To give you an idea of what the lower Airbnb commission charges might mean to you, we did a little algebra….
If you convert just 15% of your current OTA bookings to Airbnb bookings, your average cost of acquisition would decrease by 12.4%!
(Assuming your other channels charge 17% commission on average)
Perhaps the most criticised characteristic of the traditional online travel agents is the price parity clauses they enforce on accommodation providers, preventing properties from offering a lower price than that which is available through their channel. While there is hope that the Australian Competition and Consumer Commission (ACCC) will eventually abolish these requirements in line with other European nations (iii) there may still be quite a lengthy wait before this result is reached.
Another of the features of Airbnb is that unlike other channels, it does not contractually bind accommodation managers to providing them with the cheapest price available. In fact, the platform’s service fee can actually vary booking to booking, so there is no way such requirements could be forced onto properties at any time in the future.
While the features of Airbnb are impressive and the benefits of listing your property on the platform are favourable, it is important to remember that some properties may not meet the platform’s standards. Airbnb has strict requirements to ensure its properties meet the expectations of its guests who are looking for unique and personalised experiences.
Airbnb’s focus on individualised offerings is also why the platform does not sell generic room types, but instead specific room/apartment numbers (i.e. a guest books room 42 expecting to stay in room 42, not whichever room of the same type that you happen to have vacant throughout their stay).
Hopefully we’ve given you some insight into why Airbnb can provide such a great opportunity for your property. From the lower Airbnb commission rate to not enforcing price parity, there are some great reasons for you to consider including it in your distribution mix.
Considering the platform’s requirements, it is vastly easier to connect your property to Airbnb through a channel manager. HiRUM is extremely proud to be one of very few providers to offer a real-time connection between Airbnb and our HiSITE Channel Manager.
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