Hotels Airbnb-branded apartment complex fuels opposition from hotel industry By Danny King / December 31, 2017 Share 1 -- A partnership between Airbnb and apartment developer Niido is preparing to open the first apartment complex specifically designed for tenants who want to sublease their units to short-term guests. The partnership, backed by up to $200 million in equity financing from real estate giant Brookfield Property Partners, signals Airbnb's most significant collaboration yet with the housing industry.The move is further fueling opposition from the hotel industry, which accuses Airbnb of facilitating illegal hotels.Airbnb's partnership with Niido, called Niido Powered by Airbnb, will make its debut in early 2018 with the opening of a 324-unit apartment complex in Kissimmee, Fla., near Orlando. On a conference call on Dec. 18, Airbnb and Niido executives said that the partnership plans to open three more apartment complexes by the end of the year.Chris Lehane, Airbnb's head of global policy and communications, remarked on the call that, in the past, "the housing industry was keeping its distance. Now, industry leaders are lined up to knock on the door as a potential partner."Niido CEO and co-founder Harvey Hernandez added, "We believe the combination is very powerful and look forward to building communities to enhance how people live, share and travel."Hernandez declined to say where the other three complexes will be located.Under the Airbnb/Niido initiative, tenants would enter into one-year leases and would be able to rent their units out for as many as 180 days a year. Under a revenue-sharing agreement with management, tenants receive 75% of the Airbnb-generated revenue and landlords receive 25%, according to Niido chief marketing officer and co-founder Cindy Diffenderfer. The monthly rents in the Florida complex will range from $1,300 to $2,000 for units ranging from one to three bedrooms. A Niido app will be integrated with Airbnb and will provide booking and management services as well as short-stay amenities such as keyless entry.Cornell School of Hotel Administration professor Chris Anderson said, "This is a move that many aspects of the industry can learn from as players slowly realize they need to treat Airbnb and other aspects of the sharing economy as partners rather than enemies as they become legitimized, legalized and taxed fairly."Still, the partnership comes at a time when the debate between Airbnb and the hotel industry has become more contentious. Airbnb has accused hotel operators and developers of unfairly benefiting from public subsidies. Meanwhile, hotel groups such as the American Hotel & Lodging Association (AHLA) continue to allege that Airbnb facilitates property owners' efforts to run de facto illegal hotels. In addition, public officials and advocacy groups in many of the world's most visited cities have accused Airbnb of helping exacerbate a shortage of affordable housing.AHLA spokeswoman Rosanna Maietta said last week, "With this new ploy, Airbnb has officially deserted the true home-sharing community in favor of commercial hosts who are negatively impacting communities across the country. This partnership should send chills down the spines of every city official across the country, as these types of short-term rental apartments will reduce current and future affordable housing inventory and increase rent for traditional renters in these markets, not to mention allow them to skirt even the most basic of safety, health and zoning regulations."Regardless, the housing industry could provide another lever of growth for Airbnb, which Lehane asserted was cash-flow positive last year (the privately held company doesn't release financial results) but which might be experiencing a slowdown in growth in the U.S. and Europe. Airbnb's 4 million-plus worldwide listings are more than triple those of Marriott International, the world's largest hotel company.Citing data it compiled with AlphaWise, Morgan Stanley estimated in November that 25% of U.S. and European travelers have used Airbnb in the past 12 months, compared with the 28% that Morgan Stanley had forecasted in 2016. That number rose three percentage points in 2016 after jumping eight percentage points in 2015.By working with Niido and partnering with apartment owners in locations near tourist attractions, Airbnb could create another avenue of demand, though, especially for traveling families."It's important to remember that accommodation is not the driver of this travel experience," said Jonathon Day, associate professor at Purdue University's School of Hospitality and Tourism Management, in reference to the Kissimmee project. "For many, if not most, the motivation to visit the destination is driven by Disney World and the other attractions in the region. Airbnb becomes a viable alternative to a hotel for many families."Whether such partnerships impact nearby hotel demand remains to be seen. Amid its continued growth, Airbnb has long argued that it largely caters to a contingent that would otherwise not stay in hotels. Lodging demand metrics bear out that claim, as U.S. hotel occupancy continues to hover near record levels. Through September, U.S. occupancy was up 0.4 percentage points from a year earlier, to 67.4%, according to STR.For either hotel companies touting their suites for family travel or timeshare operators, however, the impact of such Airbnb/housing partnerships may be a little clearer."Where would you rather house your family, a hotel or a nice apartment unit with much more space?" said Jan deRoos, HVS professor of hotel finance and real estate at the Cornell School of Hotel Administration. "Hotel companies should be worried."