There are a lot of ways in which we are grateful to Airbnb.
In the first nine months last year, the company spent $771.9 million on marketing, which is a shade more than we did, continuing to raise the profile of apartment stays for the good of the whole sector.
Since Airbnb launched in 2007, it has brought home-sharing to the world. What had once been a niche area is now fully in the mainstream with the platform reaching 6.6 million active listings as of March 31 last year.
Airbnb's name is one of the most-recognized brands in the world and is so much part of the vernacular that it is now noun and verb. It claims to have had more than 1 billion guest arrivals. It operates in more than 220 countries. Airbnb had, at the time of writing, a market capitalization of $72.78 billion.
Compare this with the world’s largest hotel company, Marriott International, whose market cap was at $55.36 billion on the same day.
So yes, we are grateful to Airbnb.
But the platform is changing.
It launched its European business during Mipim in Cannes, France, seeing an opportunity to undercut rate in what was a crowded hotel market. Now it is finding that its own rates are increasing. For the fourth quarter, average daily rate increased 5% on the year, excluding the impact of foreign exchange. A study by NerdWallet last year found it was more expensive than hotels for solo travelers and couples, as well as for those on short stays.
City centers around the world are starting to restrict the platform and its rivals and are limiting supply, which is pushing up rate.
Airbnb itself is also looking to the higher end.
No more staying in a spare room with the host’s clothes tucked under the bed and the cat wandering in to sleep on your head. Companies including Marriott and Accor have found that the home-sharing numbers only stack up when they involve luxury stays. Marriott treats its offering largely as a lure for loyalty members rather than a revenue generator.
Ever since it acquired Luxury Retreats in 2017, Airbnb has been building its higher-rated portfolio, with palazzos in Tuscany, beachfront homes in Barbados and the villa from The White Lotus. As many others who operate at this end will tell you, supply starts to become an issue when you are dealing with second homes owned by millionaires and billionaires because they don’t need the money and they don’t share.
We, of course, welcome competition on all fronts. The hotel industry and serviced-apartment sector have learned a lot from Airbnb in terms of making guests comfortable with the concept and offering what, in some cases, is a personalized, warm welcome. But what does this move into the luxury segment mean for those of us already in it?
As a luxury serviced apartments provider, we operate eight Cheval Residences and one Cheval Maison in London, three Cheval Residences in Edinburgh and one Cheval Maison in Dubai, with more than 800 unique and varied apartments to choose from, all the way from open plan one-bedroom layouts to grand penthouses.
We recognize luxury design. The Cheval Edinburgh Grand was originally a hotel in the early 1800s but was purchased by the National Bank of Scotland in 1825. It remained a bank for almost 200 years until its renovation, the vault now housing a fully equipped gym. Art Deco styling features throughout the property, perhaps most strikingly in the Hawksmoor restaurant.
And there is no doubt, looking at Airbnb’s inventory, that it, too, has its fair share of spectacular properties on its books.
But that is what they are. Properties on its books. As a platform, it has no say over the delivery of the stay itself. Many of the villas, palazzos and castles on offer come with additional services — housekeeping, childcare, the occasional chef — but these are delivered by the homeowner or by the separate company they have hired to manage their property, of which hundreds have sprung up.
There is no telling from one property to another what the standard of stay will be and whether it will be a truly luxurious experience in terms of service, not just surroundings.
One of the truths the sector has learned during the pandemic is that luxury is not a tangible product.
You can have a luxurious experience on safari in a tent. Luxury is about the relationship you have with the guest, about anticipating the demands of their stay, about being there when they want you, but still being on hand when they don’t. Luxury is something constantly evolving, and it means something different to every guest.
We have been operating for 40 years, and we are still perfecting our approach to luxury. The past few years have seen technology step in to help us deliver what guests want, and of course, we continue to lean on and support our teams. It is all about our colleagues who help make those connections to the local community, which are now so valued by travelers.
The leisure market has always been important to us, and as knowledge of the serviced-apartment sector grows, we offer much more than the typical home-sharing, giving us an important edge. We bring with us years of hospitality and years of consistency, so that when you book with us, quality and service are guaranteed, not just a hope.
So, we’re looking forward to seeing what Airbnb does next.
Let’s see if they pick up any other traits from the serviced-apartment sector.
Daniel Johansson is director of development and acquisitions at Cheval Collection.
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