Executives from Airbnb and Expedia address key issues regarding their companies and the hotel industry.
HAMILTON, Bermuda—Executives from Airbnb and Expedia shared the stage during last month’s Caribbean Hotel Investment Conference & Operations Summit. Both shared some insights into their worlds of alternative accommodations and online travel agencies as well as how they intersect with the hotel industry.
Following are their responses to 10 key questions posed during a 30-minute joint interview (content edited for clarity and brevity):
First, their background:
- Shawn Sullivan, public policy, Caribbean & Latin America for Airbnb: “My job is basically to interface with governments and stakeholders throughout the Caribbean and Central America on the key issues that affect Airbnb, including regulations, taxes, standards and what not. I deal a lot with pretty much every government in the region, as well as hoteliers and others involved in the whole tourism and travel ecosystem. Airbnb is about 10 years old; we now have 4 million listings on our website and more than 250 million (customers) over that time. We anticipate that by 2025 we will have about a billion people on our platform.
- Hari Nair, global senior VP, Expedia Media Solutions: “I’ve been with Expedia for a long time. I have managed the hotel side of relationships for almost 12 years; then I moved to Chicago to run Orbitz, and now as of this year I head the media side of the business. Before joining Expedia, I was a hotelier from India. My background is food-and-beverage, so I’m definitely a foodie at heart. ... Across the Expedia portfolio brands, we have about 85 to 90 million people who visit on a monthly basis. You have customers, and you have advertisers. By advertisers, I mean destinations, hotels, airlines … those who want access to this audience—the consumers, who by coming to Expedia, have a very clear intent of travel. What we do, on a media standpoint, is match these groupings together.”
1. Is your company a friend or foe to the hotel industry?
Sullivan: “I think at the end of the day we are definitely competition. We want to get to the point where everyone feels as comfortable as they can be with us … that we are on level playing field, which is why we do work with governments to collect different taxes. We do work with governments on regulations. We do allow boutique hoteliers onto our platform, which is something new for us. We now have more than 15,000 boutique hotels around the world on Airbnb. What Airbnb is a reflection of is consumer demand. People more and more want local experiences, they want unique experiences, and they want to get to know the places that they’re traveling to. There’s nothing that says hotels can’t do the same thing—they just need to do it. So in a way, as a free-market person … I actually think competition is good, and it’s the consumer that will win when this all settles out.”
Nair: “The world is evolving … and we look at ourselves as a channel. When customers come to (Expedia), we are sending them to destinations, and we are sending them to your properties. We don’t kidnap and hijack and send them nowhere—we send them to your places. We look at ourselves as marketers …. Consumers—there are lots of them, who are very clear about wanting to go and stay with a certain brand—want a choice. … Our relationships with destinations and hotel companies, have been changing and evolving over time. We see ourselves as a technology company, and as result of that there are three key areas that hotel companies love to tap into: our data, our marketing platforms and our technology platforms.
2. Is it OK for the hotel, not Expedia, to “own” the customer?
Nair: “Absolutely. I’ll give you an example. A couple of months ago, we struck an agreement with (RLH Corporation). … Today you have (a) customer who comes to Expedia, can book a Red Lion on Expedia, and sign up for the Red Lion loyalty program on Expedia, and (then RLHC can) turn that customer over on to (Redlion.com)—no issues whatsoever. So it is a little painful when you think about our relationship because we see it very, very differently.”
3. What progress have your companies made in the Caribbean?
Sullivan: “I’ve been with Airbnb for about 14 months, and during that time I’ve signed 10 (memorandums of understanding) with governments which focus on aggregate data sharing, destination promotion, establishing stakeholder working groups—which can include hoteliers if they’re interested. Then we also sign tax agreements, and so far we’ve signed with Puerto Rico and the U.S. Virgin Islands. We have about five or six more tax agreements that we will be announcing over the next several months. We have some limitations in the types of taxes that we can collect, but that’s more mechanics. As a company, we decided several years ago that we wanted our hosts and our guests to pay their fair share. We want to be engaged; we want to be transparent; we want to be partners with destinations to kind of work through all these issues, in part because (they’re) not going away. … It’s important to bring all the stakeholders together and work through these issues.”
4. Hari, how big is data and artificial intelligence to your company?
Nair: “Very, very big. What we see is that voice is going to change how we look at things. By 2020, 50% of all searches are going to take place by voice. Now think about what that means. Today, we may go to a website; we may search for “Bermuda,” and there are probably 50 hotels that come up. But imagine a world in about 18 months where you are at your kitchen counter, you’re cutting onions, and you’re looking at Alexa and saying, ‘Alexa, show me the hotels in Bermuda.’ You may not have the time or the patience to listen to 50 options, so it will have to be concise and packed into two or three options (based on your preferences).”
5. Shawn, do you see Airbnb ever becoming more of an OTA or something similar to an OTA?
Sullivan: “In addition to the accommodation side business, we have launched something called trip service experiences, where we are basically curated tour guides. Once we work out the kinks and get that business fully operational … we would love to get to the point where we control somebody’s travel experience from point A to point Z.”
6. Will it include more than the boutique hotels that you have as part of your platform now?
Sullivan: “One of the challenges of Airbnb … is that one of the things that makes us unique is our host community and the people that book through us. We’ve scaled so rapidly in the last 10 years that we’re really focusing on how we maintain that kind of level of engagement and that sense of community amongst Airbnb hosts. So I don’t know if we will ever get to that point, but it’s something we talk about on a daily basis.”
7. Do you ever see a hotel company offering services like Airbnb? Are you guys preparing for that day that a hotel becomes a competitor?
Sullivan: “Sure, there are a number of hotels that are already moving into that space. Some of the companies that are (on stage during this conference) are buying smaller brands, boutique brands; and they are marketing that way. That goes to my earlier point about competition … that’s healthy, that’s good, and the companies that get that are the ones that will win. Ultimately we’re all here to respond to what the consumer wants.”
8. How does home sharing work into Expedia’s plans?
Nair: “We pay a lot of attention to the shared-economy space. HomeAway and VRBO (which are owned by Expedia) aren’t as large as Airbnb. Expedia as a portfolio is largely focused on the traditional hotel accommodation, so there is very little overlap between those sides of the business. The home-sharing business is about creating a marketplace—you have lots of customers who are coming to our website with intent, and we want to be able to show them all kinds of accommodation that is out there. So we’ve started to test (including) HomeAway and other listings into Expedia regular results that typically only had hotels. Now we are actually having shared-economy cultivations showing up in the results as well. It’s going to lead to some interesting learning and observations for us.”
9. Will Expedia ever become a “hotel brand” that includes brick and mortar?
Nair: “We’ve been asked that question very often, and it’s very tempting, but we stay away from it. I’ve been at Expedia for 15 years … (during which) we’ve had multiple conversations around that, but it’s not in our DNA.”
10. Life-and-safety issues are a big point of discussion when it comes to your platforms. How do you view that topic?
Sullivan: “For us, there are always challenges. We vet as best as we can through a number of different verification means—the home owner as well as the guest. There are always stories about x, y and z, which we would prefer not to have, but human nature being human nature, there are always people that are going to abuse the system. At Airbnb, we try to remove the bad actors from our platform. We’re getting better at it, we’re providing mechanisms for government, for neighbors who live next door to allow us to remove houses that are (trouble spots).”
Nair: “We do use customer reviews as a great way … (to) see whether or not the hotel is giving us (all) the information. It’s not just going to be safety and security, but also whether you’re being treated the right way or not.”