Rather than duking it out for market share as might be expected, Airbnb and traditional hotels are both enjoying banner years in the United States. Airbnb recently wrapped up $1.5 billion in new funding at a $25.2 billion valuation while hotels have reported all-time highs in occupancy, average daily room rates, and the money made off each room. This probably seems a little weird. How could a startup and the industry it was ostensibly established to disrupt both be thriving?
I wrote about that apparent contradiction earlier this month, but to quickly recap, one reason is that Airbnb and hotels aren’t necessarily competing for the same people. The former tends to appeal to casual leisure travelers, like a group of friends planning a Europe trip, while hotels rely heavily on guests traveling for business, like a McKinsey consultant working out of Austin, Texas, for a few weeks. To the extent that traditional hotels have had a sort of moat between their market and Airbnb’s, it’s because of that business-travel category. For Airbnb, standardizing rooms, amenities, and availability in a way that appeals to corporate clients is a lot trickier than convincing users to rent out their spare room and futon.
That’s why hotels might be a tad worried about Airbnb’s revamped “Airbnb for Business” platform, which debuted Monday. Airbnb for Business features a central billing system and a dashboard that helps companies track how much their employees are spending. The company is also planning to launch a marketing campaign for the new business product, according to Bloomberg.
As things stand, some 250 companies use Airbnb, Bloomberg reports. Those business rentals make up about 10 percent of Airbnb’s stays, on par with figures from a year earlier. Airbnb probably is still a ways from convincing that McKinsey consultant to use its offerings, but it’s won business from Google, Salesforce, SoundCloud, and Vox Media, among others. “Corporate travel is a big part of the travel pie; it’s worth a lot of money,” Nathan Blecharczyk, Airbnb’s co-founder and chief technology officer, tells Bloomberg. That Airbnb is thinking like that is sure to give hotels pause—and put a damper on their otherwise great year.