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Will Airbnb impact traditional meeting room blocks?

by Adrian Segar

airbnb growth tweetBrian Chesky, 32, is the founder and CEO of Airbnb, “a community marketplace for people to list, discover, and book unique accommodations around the world” that was founded in 2008 and, in just six years is expected to become the world’s largest hotelier.

Recently there have been a number of interesting articles—e.g. The Hotelier’s Invisible EnemyInstead Of Paying $500/Night To Stay At A Courtyard, I Booked This $150/Night Airbnb Room In San Francisco, and How Airbnb Is Crushing Traditional Hotel Brands—that discuss from various perspectives how Airbnb is starting to impact the hotel industry. So, how will the meteoric growth of Airbnb affect the traditional room block model that the meeting industry has used for many years?

Perhaps the most informative answer to this question to date comes from a study published in December 2013: The Rise of the Sharing Economy: Estimating the Impact of Airbnb on the Hotel Industry by G Zervas, D Proserpio, and J Byers, at the Boston University School of Management <pdf, free download>. The research looked at data collected from Texas hotels between 2008 and 2013 and found that:

  • Every 1 percent increase in the number of Airbnb bookings led to a .05 percent decrease in hotel revenue;
  • The impact of Airbnb falls disproportionately on hotels with little or no conference space; and
  • Luxury and upscale hotels in Texas were not significantly impacted by the arrival of Airbnb.

At first sight, this doesn’t look too bad for the meetings industry, unless you’re booking room blocks in midprice or value hotels. But I think there are some factors that this excellent study of the past doesn’t include when we attempt to predict the future.

Airbnb is still relatively unknown and is growing incredibly quickly
Airbnb’s growth is commonly described as “hockey-stick” (think Al Gore’s An Inconvenient Truth). Check out the company’s online interactive annual report for details. Airbnb had booked 5 million cumulative nights by February 2012; by June, it had doubled that to 10 million. A year ago I knew nothing about Airbnb and never considered staying anywhere but a hotel or traditional B&B when I traveled. Having trouble finding conventional accommodation for a trip that met my needs, I joined Airbnb in September 2013, along with 5 million other people that year. Since then I have already used the service four times. What happens as we pass the early adopter stage and move into a world where it’s easy and normal to stay in/rent out residential accommodations for short periods?

Might meeting attendees start sharing Airbnb accommodations?
I just returned from PCMA Convening Leaders in Boston. I have a local apartment, so I commuted and didn’t stay in the room block but the conference offered block rooms from $175 – $209 per night single/double occupancy. A quick browse of Airbnb turned up several small attractive two-bedroom apartments within a few blocks at $170 per night (for two occupants, $150 for one) with kitchen, internet, and a washer & dryer. While there’s no way that Airbnb can currently match the quantity of hotel rooms available around the Hynes Convention Center, the offerings I found were extremely competitive on price alone, and included amenities that are not available for free or at all in most hotels. And given that two employees could stay in separate bedrooms in one of these Airbnb properties, the cost savings become even more attractive.

Airbnb offers rooming options that are often not available via traditional accommodations
The four Airbnb reservations I’ve made since joining the service have all been in San Francisco. My younger daughter lives within a few blocks of Golden Gate Park, and there are only two bed and breakfasts (and no hotels) in her area. Both B&B’s were booked when we wanted to be there, but an Airbnb search turned up many options for staying close to her apartment. Since we didn’t want to share a home with others we searched Airbnb for self-contained apartments and found two nearby that matched our requirements. If room blocks sell out I believe that the variety of Airbnb choices close to a meeting venue provide an attractive backup. And if room prices are seen as too high, Airbnb makes it easy to search for nearby cost-effective alternatives.

Airbnb makes it easy to look for just what you need
I have a personal story here. Last month, my younger daughter was crossing the street at a crosswalk in San Francisco when she was hit by a car, breaking both her legs. (Luckily she suffered no other injuries and should eventually be fine.) After surgery and rehab she could not return to her apartment right away, as it is, like many San Francisco accommodations, only accessible via a steep flight of steps. We faced an immediate problem of finding her somewhere to stay that was handicap accessible in central San Francisco, close to friends that could assist her, for about six weeks until she could weight-bear and get around on crutches.

Short-term rental agents were unable or unwilling to return our calls. Hotels had a few handicap accessible rooms but provided nowhere for her to cook any meals. Craigslist, besides being a potential source of sketchy room listings, presented us with the daunting prospect of calling every potential lister to find out whether the accommodation was accessible.

Airbnb allowed us to quickly search for handicap accessible accommodations for our daughter. Based on the detailed listings and customer reviews we were able to pick several possibilities and send messages to the owners asking about access, door widths, etc. As a result we were able to find two three-week rentals that fit our unusual criteria. Without Airbnb I’m not sure what we would have done.

Quirkiness can be compelling
Yes, there are many meeting attendees who want the predictability of a bland hotel room. But the boutique hotel sector is one of the fastest growing, an indication, perhaps that quirky Airbnb accommodations are an attractive alternative for an increasing number of business travelers who enjoy something a little different from the average cookie-cutter places to stay. Airbnb, which offers everything from a couch in a room in someone’s home to modernist architecture, green buildings, and castles has something for everyone.

Conclusion
Clearly I’m a fan of Airbnb. Signing up for the service was reassuringly thorough; the verification process required social media logins—either Facebook or LinkedIn—plus offline proof of ID, a driver’s license or passport (digital scanning included in the Airbnb app) and took about 30 minutes. (If you’re still concerned about staying at a listed property, you can choose those that have enough satisfied user reviews to reassure you.)

As meeting designer who is occasionally given responsibility for attendee accommodations, I fully understand the reasons for room blocks and will continue to use them myself whenever possible. The question remains whether more meeting attendees will, like me, join the Airbnb bandwagon and add it to their list of alternatives to the room block. Only time will tell, but my gut feeling is that over the next five to ten years Airbnb will noticeably reduce the demand for in block housing, creating a significant impact on how we’ll need to plan our meeting accommodations.

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  • Carey

    Adrian – Best wishes for your daughter! Yikes!
    Maybe I’m in the minority. I can’t get around the “ick-factor” of staying in somebody else’s home. Hotels are bad enough! Maybe it’s my fragrance allergy leading the way. Anyway, thank you for such a good evaluation of Airbnb’s current and future effect on room blocks.

    Carey
    (Anne) Carey, CMP
    Meeting & Event Professional
    Chicago

    • http://www.conferencesthatwork.com/ Adrian Segar

      Thanks Anne. Perhaps I should add that many Airbnb offerings are self-contained apartments that no one but guests ever stay in. With a good cleaning service (which we’ve always had so far) the places we’ve chosen are just as clean as a hotel room. But sure, there will always be people who prefer the convenience and predictability of a hotel room and I can’t fault them for that. It’s nice to have choices!

  • http://about.me/alissahurley Alissa Hurley

    I am a fan of Airbnb! It has helped me with cost-effective accommodation in Manhattan as well as San Francisco and Austin when there were no hotel rooms to be found due to city-wide conventions. My first experience was in 2011 when Airbnb was incenting Austin residents to offer their spare rooms or apartments to SXSW attendees. I had a spare room in someone’s apartment and my host was as apprehensive as I was to this new experience. I actually ended up with the entire apartment (as she stayed at her boyfriend’s place most of the time), walking distance to the conference venues and even a ride to the train station after the conference.

    • http://www.conferencesthatwork.com/ Adrian Segar

      Alissa, your experience is typical and shows the kind of flexibility and interesting possibilities that will be attractive to many conference goers.

    • QStoss

      Hey Alissa – Fancy stumbling on your comment here ;)

  • Maura Gast

    The challenge for organizers as they need to negotiate for meeting SPACE will become an insufficient room block to justify the desired booking priority, or rebates for transportation, or all the other negotiations that become part of the art of the deal. For those of us on the CVB side, we’re even more conflicted. The philosophical side of the equation says that every visitor that comes to the conference is valued – and perhaps the less they (have to) spend on a hotel room, the more they will have to spend on other experiences in the destination, which becomes a win-win for more businesses in the community. The fighting-for-our-funding-every-day side of the equation knows that these stays are currently hotel-tax-exempt, and thus eating away further at a bottom line already in limbo.

    • http://www.conferencesthatwork.com/ Adrian Segar

      Beautifully expressed Maura. There are no easy answers. But change is inevitable and we need to adjust and respond proactively rather than burying our heads in the sand, hoping that these tough conflicts will somehow go away.

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