This month, short-term rental marketplace Airbnb told investors on an earnings call that their revenue increased 11% year over year, but that it also saw “some signs of slowing demand from U.S. guests,” CNBC reported.
The company, founded in San Francisco in 2008, has become one of the largest online marketplaces for short and long-term rental properties in various countries, with other giants like Booking.com and VRBO also taking up large portions of the market share.
On these marketplaces, hosts generally pay a flat percentage (typically 3%) for every booking they receive back to the platform, while guests’ service fee usually averages 14%. However, Bloomberg reported there has been a growing movement of property owners moving away from marketplaces and trying to attract direct sales via their own websites.
New startups are sprouting up to help hosts facilitate guest management and sales, and one such company based in San Francisco says that there are clues within the earnings call that could point to more opportunities in the space for these types of startups.
On August 6, Airbnb CEO Brian Chesky told call attendees that in October, the company will be unveiling “essentially a co-hosting marketplace,” which would pair hosts with properties but that don’t have the time to manage guests with a surrogate host that could do it for them.
For Amirali Mohajer, co-host and CEO of San Francisco-based hostAI, an artificial intelligence (AI) platform that services vacation rental managers and helps them grow their direct booking business, this is a sign that the hosting role is becoming more professionalized.
He told StartupBeat that Chesky’s comment helps further validate “our thesis on increasing professionalization of the [short term rental] industry. It’s increasingly difficult to compete as a side-gig.”
While a number of companies exist that have created property management software, such as Guesty which helps rental owners manage operations, according to Mohajer, one of the biggest challenges still facing short term rental (STR) owners who’re decoupling from platforms is the marketing of their rental properties.
He said that customers of his have told him stories of spending thousands of dollars on building websites and running digital advertising campaigns to try to funnel new sales. His solution trains its AI on customers’ property listings to help them with everything necessary for a successful digital storefront, from content creation and SEO, to landing pages, to lead capture and email marketing.
His ultimate aim is to upend the short-term rental industry to put more money in the pockets of rental owners while also saving consumers money, but he understands this could take some time — perhaps a decade.
A few things Airbnb’s founder mentioned on the earnings call did interest Mohajer.
For one, Chesky’s mention of “slowing demand from U.S. guests.” Mohajer sees this as an opportunity, a potential tailwind for direct bookings. He said that, “price conscious consumers are more likely to look for better prices. And direct is cheaper.”
As the professionalization of STRs evolves, in the short term, Mohajer sees tools like his helping to complement the success and solve the challenges that hosts face on traditional marketplaces.
“It’s not necessarily about replacing all the OTA bookings,” he said. “It’s about adding to them by getting ahead of the competition and winning more market share. In some instances, it makes sense to shift sales from third parties to direct, especially during high seasons when demand outstrips supply, making it less economical to pay third-party distributors.”
The aim is to provide hosts with more options to keep hard earned money from their properties.
“For example, a leading STR brand in [Washington D.C.] grew their direct booking contribution from 6% to 12% with our hostDistro automated advertising product,” he said. “A luxury brand in Florida saw their direct revenue contribution soar from 25% to 55% within two months.”
If you’ve ever searched Airbnb or Booking.com for lodging in a specific place, only to call the hotel or property owner directly, or search their website for a better deal, then you may already be where Mohajer and other startup founders feel the industry is heading.
The STRs that are staying ahead of this trend, according to Mohajer, are really heavily investing in making their properties more discoverable online by consumers.
In the future, the founder believes that AI travel agents will play a more significant role in guest bookings, and this will impact how properties are found by customers. “One thing that AI agents have plenty more of is attention span. And that’s generally an equalizing force for the mid and long tail brands in hospitality,” Mohajer said.
