New study suggests 90% of Airbnb sales come from leisure travelers. Is Business Travel Ready the next frontier for hosting, or a bust?
Hotels’ stronghold over peak-season prices has been shattered by the rise of Airbnb and its burgeoning accommodations capacity. But there’s one hotel-goer that short-term rental hosts have yet to capture: the business traveler.
The platform attracts more leisure travelers than business travelers, who still prefer to stay in hotels, especially high-end ones. Nationally, 90% of all Airbnb sales come from vacationers, according to a new study by two Carnegie Mellon University professors.
Could this signal an opportunity for Airbnb hosts to tackle the business travel segment? Most are not ready for the challenge, according to the study published in April.
“Business travelers require more specific types of facilities, and they probably find it inconvenient to live with a host,” said Hui Li, co-author of the study and assistant professor of marketing at CMU.
Hosts renting out entire places with hotel-like services and amenities are more popular among business travelers, Li says. But study found one-quarter of the Airbnb units in the eight cities surveyed, including Chicago and Los Angeles, don’t even provide Wi-Fi.
Airbnb’s efforts to boost business travel
Business travelers require more specific types of facilities, and they probably find it inconvenient to live with a host.Hui Li, Assistant Professor of Marketing, Carnegie Mellon University
Airbnb has helped recover more than one-third of tourism demand lost to higher hotel prices in peak season, according to the study, which focused on Airbnb’s impact on hotel pricing. Airbnb attempted to expand its reach by launching its Business Travel Ready program in 2015.
The business travel program makes up 15% of total bookings, a ratio that Airbnb hopes will reach 30% by 2020.
The short-term rental platform outlines requirements for listings to qualify as “business travel ready” to optimize the check-in experience including property type, number of reviews, amenities and flexible guest cancellation policy.
Hosts of accredited business listings cannot cancel bookings a week prior to arrival, while normal hosts have the right to do it at their own expense, Li notes.
Airbnb partnered with WeWork in October 2017 to provide amenities commonly found in hotel business centers to lure more working travelers.
Operating more like hotels and using professional third-party services might give Airbnb hosts an extra advantage by cutting costs and boosting efficiency, the study also suggests.
When host costs are down, hotels suffer. According to the study, hotel profitability can decrease by 25% when the cost of hosting is 80% of the current value. High-end hotels are especially vulnerable to lower hosting costs.
- How to join Airbnb’s Business Travel Ready Program
- See how business travelers compare hotels and Airbnbs
- Forbes: Is Airbnb doing a good job to attract business travelers?
- Side-by-side comparison chart between hotels and Airbnbs