VERTICAL TRENDS
Image: GetYourGuide
Travel Journeying beyond Airbnb
L
ike all disruptive innovators, Airbnb was an anomaly. Who would have thought, a decade ago, that sleeping in people’s spare rooms could pose a significant challenge to well-established hotel brands? Last year brought movement in the accommodations sector, particularly with new brands building on Airbnb ‘as a platform’. Lyric, Sonder, Domio, Blueground and Stay Alfred are among those repurposing apartments, especially in new developments. For consumers, they provide a hybrid between the amenities of a hotel and the more spacious, often cheaper rooms on Airbnb. Property developers, until recently skeptical of Airbnb, have
embraced the new providers, drawn by the prospect of renting out several units, or even entire properties, at once. Regulatory risks abound as cities deal with ‘wild hotels’ and neighbours complain of the noise and disruption of constant guest turnover. However, consumer reviews are often enthusiastic and we believe that all of Airbnb’s active markets will see continued professionalisation of its merchant base. European competitors, such as Cosi in Berlin, have attracted seed funding, while US-based Sonder has expanded to several European locations. From an investor’s perspective, the core concern is fixed-term rental costs and fluctuating revenue per available
room in an industry highly sensitive to economic cycles. Arguably these businesses are more price-flexible than hotels, but nevertheless capitalisation will be a competitive advantage in a downturn. We are also seeing the rise of ‘alternative accommodations as a managed service’, in which the new brand is merely the operator, while risk (and upside) is pushed to the property owner. This mimics standard operating models in hotels and may be the winning formula eventually. Another significant development in accommodations was the rise (and subsequent fall from grace) of Oyo Rooms in India. Perhaps the most hyped brand in travel globally in 2019, Oyo positions itself
15
