Which stakeholders stand to benefit the most – and least – from Airbnb’s quest for a billion guests?

With last week’s rapid-fire announcements, Airbnb has joined the ranks of ‘companies that freak the industry out,’ such as Google. Just observe reactions to Google’s latest move in travel: Google is coming for us!

While this mass hysteria is usually overblown, there’s a similar reaction afoot when it comes to Airbnb. After the company announced its roadmap to one billion guest arrivals by 2028, the American Hotel and Lodging Association released this statement:

“Airbnb’s latest scheme is just further proof the company is trying to play in the hoteling space while evading industry regulations. If Airbnb wants to enter the hoteling business, then it needs to be regulated, taxed and subject to the same safety compliances and oversight that law-abiding hotel companies adhere to.“

The statement goes further, pointing to commercial operators that use Airbnb:

“The question that cities and neighborhoods should be asking – will these ‘Plus’ or ‘Boutique’ listings include commercial operators exploiting Airbnb’s platform to run illegal hoteling schemes that have fractured our communities, raised serious safety concerns and increased the price of rent while depleting affordable housing options?”

Surely, Airbnb is not a nefarious destructor of communities and as bad of an actor as the AHLA says…right? Or is it really that the AHLA’s job is to protect the interests of its members — and thus the direct and sustained pushback against all things Airbnb?

Who’s right and who’s wrong? Who should really be afraid of Airbnb’s quest to leverage its platform to book one billion guest arrivals by 2028? Let’s take a look at how this ongoing disruptive force may play out in travel for a variety of stakeholders.


Since the start, hotels have been the most vocal detractors of Airbnb. The knee-jerk reaction early on was a classic travel industry trope: that the pie was only so big, and Airbnb’s gain would be hotels’ loss. Well, this Pie Theory is just wrong. Travel continues to grow at around 4% a year, meaning that there’s always new market share up for grabs. The pie is expanding.

And there’s an argument to be made that Airbnb facilitates a different type of travel, making certain people more amenable to traveling. Or at least making it so that travelers can go on trips more often. If that’s the case, then these travelers could just as easily be convinced to stay at hotels — after all, Airbnb convinced them to stay at one of their listings. Couldn’t hotels market themselves to these travelers as well?

Beyond the argument against Airbnb as a direct competitor to hotels, there’s one clear advantage: an additional distribution channel puts downward pressure on commissons. If Airbnb manages to maintain its low commission rate as it expands supply (it’s not cheap to put market managers around the world), then hotels could see a significant shift in the economics of distribution.

This is a good thing for hotel owners, and if these savings are passed along, then hotel guests could also be quite happy with their hotel partners. And a happy guest is the first step towards a loyal guest, reinforcing the hotel’s competitive position with the traveler.


It’s clear that Airbnb can now be considered an OTA. Boutique hotels are already beginning to see their first bookings via the platform, thanks to the partnership with Siteminder. In his keynote address during the company’s 10th birthday celebration, Airbnb CEO laid out additional categories for accommodation beyond Shared Rooms, Private Rooms, and Whole Homes. Those new categories are Vacation Home, Boutique, B&B and Unique.

Airbnb expands hotel inventory.

The evolution of inventory sort is entirely due to the need to serve more travelers, and to connect them to the right accommodation for a specific trip. As travelers stay in hotels for some trips and vacation rentals for others, Airbnb must evolve to keep pace.

The additional categories not only further refine Airbnb’s inventory but also give the company new categories to approach for listing – like Airbnb’s Siteminder partnership, it’s all about expanding access to a variety of accommodation types as Airbnb pushes straight into a head-to-head battle with the now-legacy OTAs.

On the flip side, Airbnb has a massive demand engine that can power it to new heights. The ability to play hard against the massive established OTAs will be made much easier since the company has an in-build demand generator. Plus a very sticky brand, one that will be made more loyal by focusing on experiential brand positioning like Airbnb Concerts and other live events that further establish brand credibility.

So should OTAs be scared? Yes, absolutely. If there’s not consolidation in the cards (Expedia, ahem, Uber), then once Airbnb goes public, it will be an ever-more-formidable force. Flush with cash, the company could turn on an advertising spigot that rivals the Expedias and Pricelines of the world.

Right now, the company doesn’t need to spend as much on marketing as the OTAs, which means that it can get away with the lower commissions it’s promised. Between lower commissions and less money spent on advertising, Airbnb is poised to shake things up fast.

Image from TravelTechMedia on Medium

Unlike the way that Google risks cannibalizing the ad spend of its advertisers by introducing competing products, Airbnb is able to leverage a robust marketplace of passionate hosts and a different kind of community.

Even with the many professionally-managed listings, Airbnb has maintained a certain level of brand affinity as it has matured. The only brand that comes to mind with a similar fanbase is HotelTonight. Come to think of it, maybe Airbnb should buy HotelTonight…


Destinations should be absolutely thrilled about Airbnb’s ambitions. The company touted some stats that show its power in non-major markets:

Guest growth in emerging markets over the past year, per Airbnb.

One of the more compelling arguments against the fact that Airbnb siphons business away from hotels is how the percentage of guest arrivals in the Top 10 markets has shifted over time. In 2009, 88% of guest arrivals were in its Top 10 markets. By 2017, that figure had plummeted to only 14%, meaning that the guests are spreading far beyond traditional — and competitive — hotel markets.

Along that same vein, the number of markets with at least 100,000 guest arrivals was zero in 2009. That number expanded to 265 by 2017, showing that guest arrivals have spread much further afoot as the company matures. This has serious benefits for under-trafficked destinations that can benefit greatly from the additional tourism revenues.

Given that Airbnb can often scale without the need for additional high-impact tourism infrastructures, such as hotels and resorts, many of these destinations can enjoy incremental growth due to Airbnb’s global reach.

Of course, there is a dark side to this growth. As tourism increases, the pressure on destinations also grows. There is the need for shared infrastructure, such as sewers and utilities, to expand alongside tourism growth. The additional dollars into a destination also attracts for-profit professional operators that are outside the traditional definition of the home share economy.

All of these pressures can combine to challenge a tourism-dependent community to serve locals alongside the influx of visitors. And as supply is pulled off the long-term rental market, there are fewer housing options for locals who help make the community worth visiting in the first place.


Last but not least are the travelers. The actual customers that the industry was built to serve. It is without argument that greater access to accommodation inventory benefits everyone.

When it comes to a competitive environment that keeps prices in check and monopolies at bay, choice is usually better for the consumer while consolidation is generally worse. And one of the hassles of vacation rentals has long been the inability to search multiple accommodation types in one place. This gap was a driving force in Expedia’s purchase of HomeAway, for example.

If Airbnb sticks to its promise of lower commissions – often as low as three percent – there’s also the potential for hotels to pass along the savings to travelers. While there’s no guarantee to this, a lower commission structure could reasonably create some competitive pricing among hotels. It would also lead to economic pressures across the travel value chain – ultimately, this could mean a much better experience for travelers.

None of this is guaranteed. And of course, the journey has just begun. Airbnb ‘only booked’ around 100 million guest nights in 2017. So a tenfold increase in that number by 2028 is no small feat. There’s going to be a lot of feathers to ruffle, and, for better or worse, the travel industry may just never be the same again.

The writer’s travel and expenses were covered by Airbnb. Please read more about our ethics policy here

Photo by Ben White on Unsplash

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Nick Vivion

About the Writer :: Nick Vivion

Nick helps brands blog better at Ghost Works, a boutique blog management service. Nick was previously the Director of Content for tnooz, where he oversaw the editorial and commercial content as well as producing/hosting tnoozLIVE.



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  1. Colette Labis

    Here is a hoteliers perspective – what I find interesting in all of the recent conversation around this topic is that no one is considering how AirBnb impacts the timeshare vacation resort industry, which is abundant in markets like Orlando. The Vacation Rental (VR) websites (AirBnb, HomeAway, Flipkey, etc) take almost zero responsibility for who or what creates listings on their website and for what product. It’s complete anarchy! You used to have to be the property owner/timeshare owner/property manager/property developer in order to post a listing. Not anymore! It’s like the wild-west on these sites, which is very detrimental to the consumer. It’s the consumers who will always lose in the end when companies end up going to battle. Here is what is happening – Timeshare owners are allowed to rent out any deeded timeshare that they own to another person in order to recoup their costs, so we can’t stop the Timeshare owners from creating listings, nor can we train them on how to properly revenue manage their listing. They constantly undervalue their own product and leave money on the table, while also undercutting the resorts BAR rates and stealing market share from their own Developer (and no, legally there is not much that can be done here). Another issue is Wholesalers/Tour operators and their travel agents (using those wholesale agreements) are using B2B contracted net rates, that are meant solely for packaging with airfare, car rental and/or attraction tickets at a predetermined increased margin, are creating listings on the VR sites and significantly undercutting the hotels BAR rates by marking up those B2B rates only slightly, essentially playing the game that they play the best = volume. We affectionately refer to these listings as “illegal listings”. Regardless of these “illegal listings” not trying to match the resorts BAR rates and gain their profits this way (which wouldn’t make the resort entirely angry), they are outright violating the contract with the resort by selling directly to the consumer. But because it can be the whole “needle in a haystack” situation for the timeshare resort to deal with, it can get lost in the mix and the wholesalers will continue to steal share from the very resort that gave them rates to begin with. The wholesalers are infamous for turning things off and making things right when the resort asks them to, until the resort looks the other way for even a second and then they flip the switch right back on. Where the consumer loses in this scenario is when they try to check-in and the resort has determined that they were sold a room at the resort at an “illegal rate”. We have to either turn them away, or charge them the current BAR rate. And then there’s copyright infringement! In chasing down copyright infringement (using our photos without our permission), we discovered almost 400 “illegal listings” on AirBnb alone. Is that normal? I think not! And how about we go ahead and add the epic cherry on top – now these VR sites now want to play in the MetaSearch space with these “illegal listings” and post their illegal rates. You know, the same Meta sites that the OTA’s shop and use to hold the resorts accountable for rate parity! Are you kidding me?? It’s like playing a never ending game of whack-a-mole. The resort solves one problem and ten more pop up. It’s truly exhausting. When will AirBnb and HomeAway come to the table and help us solve this problem that’s entirely their responsibility!?!?!

    • Drew Meyers

      Some friends and I rented a timeshare in Chile on airbnb a couple years ago, and it was indeed a bit of a weird experience because we were basically doing it illegally.

      Sounds like an opportunity for a platform/service to play nice with timeshare buildings, and cut them into the process & revenue..

  2. Ginger Sullo

    Mean average conversion rate…not conversation rate on ABB….

  3. Ginger Sullo

    Does anyone know what the average conversation rate is, based on the boutique hotels via ABB’s SiteMinder partnership? Without names of the hotels…just the average. I think many would be interested. Also, if/when repeat rates are aggregated, specific to AirB&B travelers and the small hotels, the average and if higher/lower then OTA repeat rates based on same hotel?? And granted, realize there’s far less of a historical comparison. But trip types, etc. would be quite interesting.

  4. Kris Ullmer

    While hoteliers have recently realized that illegal hotels aka Airbnb listings are impacting their business, ground zero began 10 years ago for B&Bs. Why? Because the Airbnb host lodging model imitates B&Bs: home-stay, every place is unique, personal interaction with the host/innkeeper, concierge service to experience the area like a local, and lodging in areas not served by hotels. Oh yeah, Airbnb ‘borrowed’ the B&B name (does anyone really remember or care that it’s ‘airbed and breakfast’ … close enough) Are we “thrilled about Airbnb’s ambitions”? – not so much. While Airbnb promotes the “B&B experience” provided by their hosts, they do not promote what legally operating B&Bs do in order to provide that experience: comply with lodging & food licensing, zoning, insurance, and taxation (room, sales, income). Indeed, ‘unlicensed rentals’ have been called the ‘share economy’ – quite a misnomer since they evade the local taxes/regulations that support local services “As tourism increases, the pressure on destinations also grows. There is the need for shared infrastructure, such as sewers and utilities …”
    And, “last but not least are the travelers …a competitive environment that keeps prices in check” – with the costs to legally operate a lodging business, ‘competing’ against unlicensed rentals is not possible…and so these legitimate businesses disappear along with their community support thru taxation and fees.

    • dude

      Well stated. All those non-beneficial disruptions are true. The only saving grace I can point to is that BnBs where dying out 10 years ago anyway. Airbnb and millennials and the experience economy have made this unique style of shared accommodation trendy again.

  5. dude

    I guess the last line under the article says it all, “The writer’s travel and expenses were covered by Airbnb.”
    I really felt like I was reading Airbnb talking points in this article. Now I know why.
    I love Tnooz coverage. But have we entered the spin zone?

    • Nick Vivion

      Nick Vivion

      If you’d like to write a response to my analysis, I’d be happy to consider as a Viewpoint. I don’t think I was parroting any sort of Airbnb presser. The reality is that 3% commission for hotel bookings transforms the travel industry. Period. The economics will never be the same. The suggestion that I would write a positive view into Airbnb just because they flew me to SF, fed me, and gave me a bed for two nights is just dumb. Do you really think that’s what it takes to buy coverage? No way, DUDE! I don’t waive my ethics for a 2-day business trip away from my home. I write what I see, no matter who paid for the flight. If companies didn’t bring journalists to their events, we would have less insight into what they are up to, and thus provide inaccurate analysis and coverage. It’s just part of how it’s done — there are no guarantees for coverage, ever, by either myself or any of the other 150 journalists that were flown to SF. Seriously, though. Step up and write a fully-fleshed out response. I spent hours on mine, so perhaps you should as well. Email it to me directly: nick@tnooz.com. Otherwise, I respectfully disagree with you. I’ll respond in line to each of your comments.

      • dude

        Sorry. I will try to be less knee-jerky in my responses.
        I have to stand by my opinion that its disingenuous to mention Airbnb’s “low” or “lower” commissions three times in an article with no mention of a guest service fee that basically is a commission as well (12% every time I’ve calculated it) that aligns Airbnb’s overall take with the OTA industry average. Therefore it doesn’t change the economics of the industry much at all.

  6. dude

    OTA Commissions Example

    Hotel Room Rack Rate $100

    Hotel room sold on booking.com
    Price listed at $100. Guest pays $100+tax. $85 to hotel, tax to city, $15 to booking

    Hotel room (or equivalent unit) sold on Airbnb
    Price listed at $88. Guest pays $100 after $12 “reservation fee”. (tax? who knows).
    Host pays 3% to airbnb
    Guest pays 12% to airbnb
    City gets screwed (in most areas)

    Its the same 15% extracted. Where is this mythical airbnb disruptive low commission putting downward pressure on OTA commissions?

    • Nick Vivion

      Nick Vivion

      You are not understanding the way that Airbnb has explained its new hotel product. It’s not the same structure as its room/house business. That’s where this statement comes from. Also, some OTAs charge more than 15%, especially when you include other fees that can be charged to the smaller hotel groups with less pricing power due to their size. I’m not advocating for Airbnb here — lower commissions are lower commissions. And each hotel has its own contracts with OTAs, so these figures are quite opaque.

      • dude

        Thank you for your replies. Many good points on a complex topic.
        Are you saying Airbnb will be charging hotels a lower commission than its other listings?
        My statements and views come from personal experience owning lodges and vacation rentals. As a superhost with hundreds of airbnb stays, I’m intimately acquainted with the platform and its economics, as with the OTAs. Its a love hate relationship with Airbnb, like all OTAs. Airbnb is innovative in many ways. But I really don’t feel they have innovated AT ALL on the commission aspect. Its just shifted to the guest. 15% commission is 15% commission unless you specifically compare it to another number and give an example. My personal experience as a host has been its no different and I have to adjust Airbnb pricing down to account for the ‘service fee’ that adds to the guest’s total cost.

        Google is the wildcard as they could displace the OTAs in short order but would then surely risk monopoly regulation.
        In our area, most traditional lodgings report that Booking is taking 15% and Expedia has been negotiated down to 15% as well from upwards of 25% in the past. This doesn’t include voluntarily paying higher % for better placement.
        Airbnb is right there with them. It seems to be a % where the OTAs have plenty of money for marketing and profit and to keep erecting a paywall between guests and hosts.
        Most small traditional lodgings feel there is (unspoken?) collusion between Google, and OTAs. Or it may just be the natural evolution of unregulated capitalism at work on the internet.

  7. dude

    OMG Nick! Two articles in one week saying that Airbnb has lower commissions than OTAs without qualifying that statement in ANY way? I don’t see how Airbnb which earns 15+% of every booking is any different than an OTA taking 15% commission. You can call an Apple an Orange, but its still a COMMISSION!

    Just because Airbnb hides the fee so that both sides are confused doesn’t mean it doesn’t shift a supply/demand curve. Guests think the “reservation fee” goes to the host. Hosts don’t see the reservation fee. And Airbnb has skirted collecting taxes as long as it can get away with it. This mean Airbnb units are cheaper than hotels for guests (no taxes paid).

    Speaking of economic equilibrium, just because the industry grows at 4% doesn’t mean the “Pie Theory” is wrong.
    Hotel ADR has been flat worldwide for years.
    Is it possible that Airbnb played a role in depressing prices? Hmmm…

    • dude

      If an industry demand grows by 4% a year and supply doesn’t increase, prices should rise.
      Airbnb increased supply, which causes downward price pressure. If Trump’s trade war and isolationism depresses travel, what happens with all this new lodging inventory? Prices collapse, hotel real estate prices collapse, real estate used for airbnb collapses. The rich snap up RE at bargain prices again, and those at the bottom left gigging it for the scraps! hooray

      • Nick Vivion

        Nick Vivion

        Supply and demand in hospitality do not always move in such a simplistic fashion. There are other factors at work: individual market dynamics, taxation, regulation, cost of capital, and ownership structure. There are other factors that mean that an increase in hotel supply does not always reduce prices. For example, when an owner is investing in hard assets to reduce taxation in other areas of their business. Also, while travel might drop in one region due to the political climate, it simply moves to other regions. This is a fluid thing. You’re also assuming that this is “new” inventory. Where does that assumption come from? In my view, this is a new distribution channel for hotels that already distribute on other channels. **This is just a new channel NOT new inventory**

    • Nick Vivion

      Nick Vivion

      I’m not sure that you’ve ever used Airbnb before. How does it hide the fee? I just searched on the site I see a clearly marked “service fee” that has “This helps us run our platform and offer services like 24/7 support on your trip” pop-up on hover. So that’s not an accurate statement. If a guest thinks that goes to the host, it’s pretty obvious that it doesn’t. And regarding taxes, that landscape has shifted as well. The company is paying taxes in many places. Listen, I’m not advocating either for or against OTAs or other companies. I simply call out the things that I think are compelling, no matter which company does them. That’s it! The pie theory is the lamest perspective in travel. It leads to catty behavior, an industry that doesn’t work together, and a feeling of panic that someone is always eating your lunch. I don’t subscribe to it whatsoever. Isn’t is possible, Dude, that hotel ADR is static because that’s the value that the traveler sees in a hotel room? Should ADR always be growing? Or perhaps there’s been supply growth at the lower end of the market (which there has) that evens out any growth in ADR? Also, how do you reconcile the fact that the average occupancy rate peaked at 65.6 percent in 2015 after rising consistently since 2009? It’s dropped a bit since then, but the reality is that hotels were enjoying the highest occupancy, even if ADR was fairly static. I also don’t think its accurate to broad-brush saying that Airbnb units are cheaper than hotels! There are many categories of hotels……if you have an ax to grind, how about you reveal yourself, step out from behind that anonymous email address, and write an ACTUAL response using your ACTUAL name. I’m willing to be vulnerable and place my perspectives and analysis out in the public for readers like you. Yes, this is my job. But at least I’m transparent. I’d like to know more about where you work, who you work for, and your perspectives as a professional. Then we can really have a productive conversation out in the open, like grown-ups. Don’t hide behind the anon comment shield.

      • dude

        How does Airbnb hide the fee?
        This is subtle and complex.
        For a lodging manager setting airbnb rates manually. There is some complex math to achieve parity or competitive price vs. booking direct. If my rate is $100 direct. I have to add tax to the airbnb rate. Then I have to add the 3% fee. Then I have to consider that the guest will be charged an unknown amount to me (6-12%). So its no small task when setting rates for many differently priced units. Then I have to compare what else is comparably priced nearby. Its basically fuzzy math to guess what a guest will pay. Also, when a guest is messaging and asking about pricing. Its almost impossible to quote them pricing unless you send them an live “offer” (which you might not want to do)..
        I said ‘hide’, maybe ‘makes opaque’ is a better description.
        I have initiated a survey of my airbnb guests to see how many of them have an idea about the percent they pay on the service fee. While I agree with you that ‘service fee’ is there in plain site. That doesn’t mean guests are aware of it. I’m not even saying airbnb is doing anything deliberate here. It may just be where they landed with the evolution of their platform.
        The argument can also be made that the caliber of airbnb guests are a notch above OTA guests. This is an interesting point nobody talks about. Its self selecting and slowly the bad apples are weeded out by the review system and customers getting banned.

        Triptease did a similar analysis here with slightly different assumptions than mine. But their conclusion is similar. I would hardly call airbnb’s pricing structure disruptive to OTAs if the amount they extract from the transaction only differs by 2-4%.


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