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Airbnb's Deals With Three TMCs Threaten Hotels' Corporate Business

ANNAPOLIS, MD--Meanwhile some hotel REITs such as Chesapeake Lodging Trust are reporting a drop in corporate transient business for Q2.

By Erika Morphy | erikamorphy | | Updated on July 13, 2016
A Chesapeake Lodging Trust hotel A Chesapeake Lodging Trust hotel

ANNAPOLIS, MD–Hotels have been watching Airbnb move in on their leisure business with some concern over the years, all the while reassuring themselves that their corporate business — their major source of revenue — was safe from the sharing economy.

Yes, Airbnb has launched a business unit and some 50,000 companies have used the platform to make a booking, according to industry stats. But as a Morgan Stanley Global Insight report on Internet, Lodging, Leisure and Hotels published in November 2015 noted, traditional hotels were still safe:

Our survey shows that only 42% of Airbnb users are substituting away from traditional hotels. 36% switch from bed & breakfasts, 31% are using Airbnb rather than staying with friends and family, and ~20% are using Airbnb over vacation rentals. This, combined with the fact that only 7% of Airbnb users stay 1 night (vs 25% for traditional hotels), speaks to how Airbnb (for now) is primarily focused on non-hotel, leisure, longer-duration stays, rather than corporate single-night stays. We believe corporate travel will continue to be more difficult for Airbnb to penetrate given safety and privacy concerns holding back adoption, and the higher importance corporate travelers place on amenities (loyalty programs, business centers, restaurants, etc.).

Three Agreements

But the situation has suddenly pivoted. This week Airbnb announced it has signed agreements with three major travel management companies — American Express Global Business Travel (GBT), BCD Travel and Carlson Wagonlit Travel. Soon, Airbnb’s 2 million listings in 31 countries will be added to these companies’ corporate travel programs.

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