When most people think “Airbnb,” they think of a short-term rental (STR) lodging arrangement where homeowners rent space in their homes to one or maybe two parties at once. Often catered to vacationers, it’s thought to be an informal, mom-and-pop service.
At least that’s how Airbnb started.
But an increasing number of companies have formalized a model that combines Airbnb booking arrangements with the basic structure of an average hotel—so-called “Airbnb hotels.” Airbnb itself is building some of these hotels, while other companies manage buildings under this format, often using Airbnb to manage bookings. In doing so, they blend not just the Airbnb and hotel format, but short-term, medium-term, and long-term leasing into one building. STRs already face harsh regulations, and it remains to be seen whether this hybrid model will, too.
Airriva is an example in this genre. It is a Columbus-based chain that buys hotel licenses for its properties, but rents rooms out on Airbnb, VRBO, and its own site. Airriva operates in Ohio, Kentucky, Michigan, Missouri, and Texas, and is planning to enter Florida. I recently visited the hotel they are opening in Cleveland, still under construction. Inside a historic warehouse, it will have a restaurant, courtyard bar, and dozens of furnished rooms that are bigger than a standard hotel room.
Airriva also partners with large-scale property owners, such as Kansas City’s City Club, to broaden its reach. Other notable Airbnb hotel companies include Sonder and Blueground. The appeal to consumers is that, by letting them book through third parties, and check into and maintain their own units, they will not have to pay the higher prices involved with a large hotel staff. Another perk is that these hotels are not supposed to feel like hotels; they have common areas that foster a community feel.
Interestingly, Airbnb itself is getting in on the act of running hotels. Under its “Natiivo” brand, it has partnered with developers to open ones in Miami, Orlando, Nashville, and Austin. The buildings’ units are about 2/3rds condos, 1/3rd hotel, and all units can be sublet on Airbnb. The Miami project describes itself as providing “a one-of-a-kind ownership experience with the luxuries, services, and amenities of a hotel — with the added flexibility to list on any homeshare platform as desired.”
These platforms are redefining hotels into an STR/LTR hybrid. They serve a broader clientele than tourists; last year, I wrote for Catalyst about how the STR market is shifting towards those who need longer stays than most hotels provide, but shorter than most leases—meaning temp workers, college students, traveling nurses, etc. In Cleveland, Airriva’s property is located near the Cleveland Clinic, making it ideal for patients and temporary medical staff. When Cleveland saw an influx of medical workers due to COVID, Airriva was there to house them.
Airbnb hotels are thus disrupting traditional hotels. Research from Boston University finds that both budget and high-end hotels have lost revenue per available room while Airbnb has gained in that metric.
“In 2016 alone, this 2.5% decrease in RevPAR amounted to $5.8 million in revenue lost by hotels to Airbnb…As a whole, Airbnb’s accommodated demand made up nearly 3% of all traditional hotel demand in Q12016.”
The hotel industry has supported harsher regulations on STRs. The American Hotel & Lodging Association, for example, has worked to push cities to pass strict rules that would effectively ban the service. In 2020, the industry backed federal legislation that would have made the provider liable for violations of local laws by hosts.
Now, however, a growing number of conventional hotels use the Airbnb platform to facilitate bookings. Many are independent, bed-and-breakfast hotels that lack the large internal booking systems used by hotel chains.
One solution Airbnb hotels have is that, by acquiring hotel licenses, they can reduce the legal ambiguity of their properties. Cities can be more permissive by loosening this licensure process and ending zoning rules that restrict where hotels can be built. That would help foster this interesting new real estate genre, that blends so many different housing needs.
Source: Catalyst Independent
