Dive Brief:
- Airbnb, the home-sharing service with more than 3 million listings worldwide, is planning to offer a rental service for mansions, penthouses and mega-homes sought by wealthy travelers. The company will test the luxury service in some markets at the end of the year, according to unnamed sources cited by Bloomberg News. If the tests are successful, the service will be rolled out more widely.
- Reportedly known internally as “Airbnb Lux,” the high-end service follows Airbnb’s acquisition earlier this year of Luxury Retreats, a Canadian company that had listed more than 4,000 villas and vacation homes. Airbnb doesn’t feature those listings as a separate section on its website yet.
- Airbnb Select, which requires hosts to maintain consistent standards for their lodgings, is now also being tested. The company requires the properties to be inspected to confirm they offer a consistent level of high-quality service.
Dive Insight:
Airbnb has revolutionized lodging bookings for millions of travelers seeking either a lower-cost alternative to hotels or an experience that feels more genuine than a prepackaged tour. By creating tiered services, the company can earn better profits by catering to wealthier clients. Airbnb earns a percentage of the cost of each booking, which means it could boost sales with higher-cost lodging. With this new feature, the company is beginning to segment its offerings similar to the way that hotel chains have different brands, price levels and service tiers.
Offering higher-end rentals also positions Airbnb to sell more expensive tourism services. Last year, the company began offering luxury experiences like truffle tastings, mushroom hunting and guided tours from local experts. The company is also working on a flight-booking tool that would compete with similar services like Expedia and Priceline.
Airbnb's new program is an example of how competition is heating up in the online travel space. Airbnb is increasingly a threat to online travel agents like Expedia and Priceline as it rolls out new services while Google continues to add booking options for flights and hotels. Mobile is an important part of the picture, with 85% of mobile users leveraging their devices to book travel activities with luxury travelers more likely to book on mobile than the general population.
The privately held company is valued at about $31 billion, based on its last round of investor fundraising. Like ride-sharing pioneer Uber and its competitors, Airbnb needs to demonstrate a path to profitability in order to boost its value and possibly prepare for an initial public offering.
Meanwhile, Airbnb has boosted travel to rural areas, defying its association with cheap lodging alternatives in major cities, according to Fortune. The median annual earning for rural hosts was $6,776, compared with the $6,674 median for urban hosts, according to a report released by Airbnb. The number of hosts in rural areas of the U.S. grew by 1,800% since 2012, significantly faster growth than those in urban communities. Rural hosts collectively earned a total of $494 million by renting out their homes to strangers in the past year.
