Airbnb bets big on business travelers

Andrew Kitchell has a long history with Airbnb. A tech entrepreneur in San Francisco, Kitchell listed a couch in his apartment on the nascent site in 2009, when it was still called Air Bed and Breakfast. His was one of the first 100 properties to appear on the platform.

More than a decade later, with Airbnb having evolved into a multibillion-dollar international company that has reshaped lodging, Kitchell isn’t just a host, he’s a business partner—and a symbol of just how much Airbnb has changed, and seeks to change, on its road to an initial public offering (IPO). Kitchell’s company, Lyric, owns and operates upscale units in urban multifamily apartment buildings—what Lyric describes as “flexible accommodations for the modern traveler”—that are rented out on platforms such as Airbnb. In April, Lyric announced a $160 million financing round led by Airbnb, showing both the potential of the four-and-a-half-year-old lodging startup and Airbnb’s increasing focus on professional lodging and hosting for upscale and business travelers.

Courtesy Lyric

“We’ve seen the emergence of professionalization of brands within home sharing, which has led the real estate world to be comfortable with building rooms specifically for Airbnb inventory,” says Kitchell. “We tell developers that our guests look a lot like the residents you want to be in your units.”

Kitchell spins Lyric’s expansion as part of the emergence of “the next generation of short-term rentals.” They’re professionally managed and located in trendy neighborhoods, with equally trendy decor—local artwork on the walls, tastefully minimalist furniture, a pour-over coffee kit featuring locally roasted beans on the counter. Kitchell believes Lyric offers an experience so close to the quality of boutique hotels that business travelers and others feel welcome.

Airbnb has similar hopes. As the platform continues to expand, its recent moves, from acquiring an array of companies to experimenting with developers to design new inventory for short-term rentals, all appear geared toward frequent and business travelers.

Airbnb’s professional aspirations

Airbnb now has more than 6 million listings in 100,000 cities in 191 countries, a footprint the company argues creates billions of dollars in economic impact. As it inches toward a highly anticipated IPO now expected in 2020, Airbnb has increasingly shown an appetite for cornering the lucrative business travel market by supporting more professionalized service from owners who manage and operate multiple units in one or more cities.

This larger push includes working with travel managers to allow for more corporate bookings—more than half a million companies now book travel with Airbnb—to instituting Airbnb Plus, a category of pre-qualified rooms that undergo a 100-plus-point inspection for standard amenities such as a stocked kitchen, ironing boards, and a bathroom with toiletries, meant to appeal to more discriminating travelers. Since the program debuted last February, the company has added around 18,000 Airbnb Plus homes on the platform in more than 300 markets. The company also recently introduced a search setting on the site that would allow users to pre-filter options recommended for business travelers.

Part of this push reflects the changing realities of the lodging and hotel space, says Jan Freitag, senior VP for lodging insights at STR, a global consultancy focused on the hospitality industry.

Courtesy Airbnb

“This is sort of the convergence of all the different trends into one larger accommodations landscape,” he says. “The border between hotels, rental by owner, hostels, and microhotels are all fluid. Depending on the night and who you are, you may stay in the same type of room, and it may be sold to you as a different experience each time.”

Airbnb’s push to be all things to all travelers goes beyond just highlighting and upgrading existing inventory. Airbnb is also working with developers and companies like Lyric to expand available inventory, and recently invested in Luckey Homes, a French property management service (Paris is Airbnb’s top city market).

The startup has also been slowly growing its Powered by Airbnb initiative, which provides design advice to developers seeking to create purpose-built multifamily projects made for short-term rentals. In addition to a string of already-announced projects in Miami, Austin, and Nashville called Natiivo and Niido, the initiative also includes similar projects with a number of developers the company can’t yet discuss. A project with RXR Realty is seeking to utilize space in commercial buildings to add additional inventory in cities with more stringent short-term rental regulations such as New York (where restrictions on short-term rentals don’t apply to units in commercial buildings).

“We may not have the units we need in the destinations we need, so we may as well build them ourselves,” says Freitag of Airbnb’s dip into the world of development.

Workcations, group stays, and the shifting professional travel landscape

Airbnb’s renewed focus on business travel, a sector predicted to reach $1.6 trillion in revenue globally by 2020, comes during a time when the concept of business travel is evolving. Airbnb research has found that, whether due to a new generation of workers seeking more personalization and convenience, an overall shift in lodging preference since the introduction of short-term rentals, or the difficulty of disconnecting from the digital world (or afford child care), the personal and professional are increasingly blurring.

The corporate travel world is seeing more remote working, more group travel by teams who want to split a multi-room rental, and more “workcations,” when employees bookend their business trips with a few days of leisure travel. In addition, more parents have embraced the option of bringing their kids along for lengthy work trips.

This has all meant that business travelers are increasingly searching for nontraditional rooms with extra space, kitchens, or amenities like pools to keeps kids occupied and entertained. That plays into Airbnb’s strengths.

Business corridors and travel corridors in cities are blurring, creating a need for additional rooms in busy tourist centers in cities across the country.

“It’s about finding where people want to travel overall and making sure there’s supply there,” says an Airbnb spokesperson. “But that type of supply is serendipitously perfect for business travelers.”

The push for professionalization

Airbnb has actively been searching for more professional, full-time hosts to meet this demand. But as the hosting process becomes more of a business, it also moves further away from the company’s founding narrative, that of a friendly, low-key way to rent a spare bedroom and experience new people, places, and cultures.

The Friendly Buildings program, which offers a suite of software tools to help apartment owners get their rooms on Airbnb, offers a turnkey solution the company believes will be the biggest part of its business push, since it works for everyone from a small mom-and-pop manager of a three-flat in Chicago to large-scale owners with multiple apartment buildings. Owners can set boundaries and limits, such as how often rooms can be shared and if those checking in need to show IDs, and can make sure any short-term rental adheres to local regulations, as well as to the owner’s preferences. These kind of back-end changes to the site make it easier for professional owners to list and manage properties on the platform, according to Peter Scott, chief executive of Bluetent, a marketing agency for vacation-rental properties.

As he told the Information, rival sites such as HomeAway have a “head start” in helping pros get properties listed and take advantage of their platforms, but Airbnb is trying to catch up.

“It’s a pretty good prize fight shaping up between Airbnb, HomeAway, Expedia and Booking,” he said.

Airbnb expects the Friendly Building program to scale. The company sees the Powered by Airbnb program, which offers design advice and oversight for custom-built properties for sharing, as a “lighthouse project,” an experiment they won’t initially try to expand to every market.

Other peripheral investments by Airbnb signal other means of attracting business travelers. The company’s Experiences product, which offers tours and other local activities, now promotes itself as an option for corporate team building, suggesting that the company sees a market for Airbnb-booked corporate retreats. Last December, Airbnb invested in a funding round for The Wing, the female-focused coworking company, perhaps suggesting that it’s looking at ways to provide conference and workspace to executives on the go. (A previous partnership with WeWork didn’t pan out.)

Taken together, all these moves may add up to an Airbnb vision of corporate travel: high-end, standardized rooms, with enough volume to host large meetings or events when the need arises. All that’s missing is the loyalty reward systems of the big-name hotel chains. STR’s Freitag even thinks that one day, Airbnb will go that route. And why not? With Airbnb adding more and more parts of the traditional travel industry to its ecosystems of services and experiences, why not become as predictable, and perhaps profitable, as a weekly booking at a Marriott?

“For now, business travelers may not be using Airbnb enough to establish that ultimate loyalty,” he says. “But that’s today. All of this can change.”