Orange County Register
12/19/15

Now Coming to Airbnb, the Local Hotel
By Lily Leung

http://www.ocregister.com/articles/airbnb-696869-hotel-hotels.html

Airbnb, synonymous with strangers renting rooms to other strangers, is attracting a new kind of host: small-scale hotels and motels trying to hawk their rooms.

The trend – visible in large metro areas, including New York City, Los Angeles and to some extent in Orange County – may seem counterintuitive. After all, hotels compete with Airbnb hosts for travelers.

But the strategy makes financial sense.

Airbnb charges hosts a 3 percent fee for every completed booking. That’s much less than the fees at Expedia and Priceline, traditional online travel companies that market and fill a bulk number of rooms for hotels in exchange for commissions. Such websites typically charge hotels up to 25 percent, according to Fast Company.

What’s more, small-hotel operators view Airbnb, which claims it has served more than 60 million guests worldwide, as just another means of bringing in customers.

“It’s smart opening up channels to do business (and) to get reservations you’re normally not getting,” said Alan X. Reay, president of Irvine-based Atlas Hospitality Group.

The operators of Nomads Hotel, a seven-room establishment in San Clemente, hopped onto the Airbnb bandwagon in May, roughly a month after opening.

The surf-inspired hotel attracts an array of guests, including Australian backpackers and young families. Guests can expect to spend $39 a night for a bed in a shared dorm room and up to $199 for one of its more luxury-style rooms.

“We’re trying to market our hotel in any way possible,” said Sean Rowland, one of the co-owners.

Rowland and co-owners Jeff and Renee Gourley have found Airbnb and Hotel Tonight, a website that offers guests discounted rates for last-minute bookings, to be the most effective short-term rental sites they’ve used thus far. They’re contemplating listing their rooms on Hotels.com as well.

“Airbnb is just another piece of the puzzle for us,” said Rowland.

In Orange County, at least one other small-hotel business, Patriots Boutique Motel in San Clemente, markets on Airbnb. For $109, users can rent an “Ocean View Suite w/ Private Patio” at the hotel. The owner declined to be interviewed.

Reay, of Atlas, said it makes sense for such boutique-style hotels to enter the Airbnb space, which is geared toward the experience-seeking millennial crowd.

Airbnb officials have made it clear they’re fine with hotels using the website as long as they are upfront about who they are.

Douglas Quinby, a hospitality analyst at Phocuswright, says Airbnb has never been exclusively for homeowners and renters offering up their spare bedrooms.

Also taking advantage of Airbnb’s wide reach are traditional landlords renting out multiple units, which has stirred up issues recently in Los Angeles, and bed and breakfast operators.

In Orange County, you see a healthy supply of timeshares among listings, especially around Disneyland and in beach areas.

A two-bed, two-bath listing at Marriott’s Newport Coast Villas is going for $325 a night. A timeshare at Worldmark Dolphins Cove in Anaheim, a Wyndham property that sleeps six, is commanding $210 a night.

Similar to competitor HomeAway, “Airbnb is going after that vacation-rental content,” Quinby said.

Should we expect the traditional hotel chains like Marriott and Hyatt to follow suit?

Probably not.

“I’d be very surprised if we were to go on Airbnb next week and see 30,000 Marriott (rooms) around the world listed in competition right next to Joe’s extra bedroom,” Quinby said.

Still, there’s no question the top hotel corporations see Airbnb, which has a nearly $26 billion valuation, as competition.

“I think there’s a real business for sure, a growing business for sure,” Chris Nassetta, president and CEO of Hilton Worldwide Holdings, told investors over the summer. “But what is really at its core is a leisure-value-adventure sort of need that it’s fulfilling.”