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
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
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."