Airbnb officially opens up platform to hotel distribution

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Silverspoon's picture
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For the full article

"In a signal Airbnb has the online travel agencies in its sights, the company says it will charge a service fee for hotels and accommodation providers in the region of 3% to 5% - much lower, it claims, than that of OTAs which can charge as much as 30%. Airbnb will also not require hosts to sign contracts, and it will manage all payments and transactions."

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TheBeachHouse's picture
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Silverspoon wrote:

For the full article

"In a signal Airbnb has the online travel agencies in its sights, the company says it will charge a service fee for hotels and accommodation providers in the region of 3% to 5% - much lower, it claims, than that of OTAs which can charge as much as 30%. Airbnb will also not require hosts to sign contracts, and it will manage all payments and transactions."

I like managing my own payments and transactions.   

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Silverspoon's picture
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We are fighting to maintain our own brand that has taken us 29 years to establish.  I know we are considered to be way behind the current practices for B+Bs but there is simply no way we will use an OTA. We are so "old fashioned", going it alone, no OTAs, that we are an anomaly here on this group.  But, I have looked at it from every angle and just can't see diluting our brand by jumping in with the myriad of other lodging choices in our area.  So no airbnb for us.  

Basil Fawlty's picture
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Yeah, I'm with you - except - in our area of West Puget Sound (Kitsap County) airbnb is putting us out of business.  With 167 local "hosts" we have seen a nearly 50% drop in our own website bookings.  We have nothing - and I mean nothing - in March, April, etc. going forward.  We also can rent out our entire guest quarters as a vacation rental since it has its own kitchen and the vacation rental bookings from airbnb and VRBO is saving our bacon.  Sad but unfortunately true. 

 

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Generic's picture
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It's all about the float. People don't realize how much money can be made just on the float. Amex for example has about $2.8B in outstanding TC, that costs them 0% and they can earn interest on.

 

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notAgrandma's picture
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You nailed it! This is something I've thought about with every Airbnb reservation. They charge the guest as soon as the reservation is booked, but I don't get paid until they leave. Sometimes there's been as much as a month between collection & payment. 

I don't mind that Airbnb collects payment bc it weeds out the bad cc and only charges me 2% per transaction (for now, anyway). I think the guests are charged around 12%. This is why there are "horror stories" of guests trying to avoid the fee by directly paying the "host" via bank transfer, then the scammer runs off with their money. Aww, my heart goes out to them!

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Generic's picture
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Did you see https://venturebeat.com/2018/02/07/airbnb-reportedly-built-an-internal-hedge-fund-that-makes-5-million-per-month/ of course what they don't mention is that the hedge fund manager, just walked away. So their supposed earnings of $93 million last year was actually only $33 million, the rest was made by the fund manager, who just LEFT. 

So basically, about 65% of their profit is actually being made from the float.... all those transactions and hardly a profit... and they are taking 14% on each transaction.

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why do you think boo k in have changed to offer pay when you book and give us the money when they stay - fricking billions in money they hold and make interest off for nothing - yup that's a no brainer

Morticia's picture
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So does this mean they are not just trying to help the little guy pay the mortgage? Will they require hotels signing up to actually BE legitimate hotels or will they accept listings from someone who just bought an apartment building and evicted everyone?

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PhineasSwann's picture
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Commenter in the story breaks it down: Air is no different than an OTA - they're getting 15% out of the transaction. Right now, they take 12% from the booker and 3% from the host. As hosts become more dependent, rest assured more and more and eventually all of that 15% will fall to the hosts/B&Bs. 

My money quote from the comments section: "But we have to remember, they [AirBnB] got were they were by enabling hosts to skirt TOT tax collection, safety regulations, and local codes and bullying cities when confronted. The same way Uber and Lyft have done by ignoring regulations and renaming taxi service as "ride sharing". When these companies get near monopoly/duopoly size (Google, Uber, Amazon, Priceline, Expedia) they can bully suppliers or workers around, and lower wages and raise commissions and fees. Thankfully book direct messaging is taking hold in consumers minds!"

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notAgrandma's picture
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Airbnb has started collecting & remitting taxes in a lot of states. I think this is in an effort to "legitimize" their business. This also eliminates a huge amount of leverage hotel & B&B organizations could have had with state & local lawmakers to enact regulations. In my city & state, the B&B owners were emphasizing that Airbnb cost millions in lost tax revenue. Now the millions of dollars in tax revenue lost is suddenly forgiven because Airbnb started collecting taxes after 10 years of dodging it! 

I'm not sure if Air will shift the entire 12% from the guest to the host. I mean, they're getting 15% no matter who pays it. If anything, they'll keep the 12% guest fee and increase the host fee to match! Air needs its host base to remain high and has to encourage hosts to continue to be their free resource & work force. Now that Air is worth over $30 billion, do they really need to have an incentive to encourage guests to book? They're already getting millions customers while charging them a 12% fee.

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11/21/2017

So "accommodation providers" may mean B&B's get charged higher fees and I'm wondering if that means people renting out rooms would see no change in their fees?

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