Despite fierce competition and regulatory hurdles, home-sharing firm Airbnb believes that Asia holds the key to growth as it moves beyond its usual target group of vacationers in search of unique and cheap accommodation.
The US firm, which has upended the short-term housing and hotel industry, has its eyes set on business travellers, in particular those from Asia Pacific who have been making more bookings on the online service, said Airbnb’s global head of business travel David Holyoke at a media briefing in Singapore on Tuesday (Sep 12).
Airbnb first rolled out a search feature for business travellers in 2015. The feature allows users, who have registered and verified their work email addresses with Airbnb, to browse and rent apartments that are “business travel ready”.
These apartments typically fulfill a set of requirements such as having its entire space for rent, a laptop-ready workspace, Wi-Fi, 24-hour check-in, as well as various amenities like a hairdryer and iron.
At the moment, business travellers make up 15 per cent of Airbnb’s overall bookings and Mr Holyoke believes that could grow to 30 per cent by 2020, with the Asia Pacific region being the main growth driver.
While the Asian market now accounts for just 12 per cent of all corporate bookings, it is the company’s fastest growing market. According to figures from Airbnb, corporate travel bookings in Asia Pacific grew five times between 2016 and 2017, outpacing the global average of 4.3 times over the same period.
With the rapid pace of growth, Mr Holyoke expects corporate bookings in Asia Pacific to be “on equal footing or ahead” of other markets such as the Americas, as well as the Europe, the Middle East and Africa (EMEA), by 2020.
“Growth here is obviously outpacing a lot of the other markets in the world so we are very committed and we will continue to invest very heavily,” he said.
Within the region, bright spots include China, Japan, South Korea, India and Australia. In particular, the Chinese and Japanese market stand out for Airbnb given that they combine to account for 75 per cent of the region’s total business travel spending.
According to Mr Holyoke, demand for Airbnb’s unique accommodation options come from the millennials’ preference for mixing business with leisure, well as new models of working which include freelancing.
More than half of Asia’s business travellers see overseas work trips as a perk and are twice as likely to extend their trips to include a weekend, with an average of six days.
“We’re seeing more and more business travellers looking for unique accommodations that match the lifestyles, similar to the authentic experiences that come from leisure travel,” said Mr Holyoke.
“But there are also other cases, such as folks who return to the same city and want a different experience in a different neighbourhood or project-based work that involve relocation around the world,” he added.
Cost savings is also a factor as Airbnb listings are around 49 per cent cheaper than average daily hotel rates in key cities, such as Seoul, Tokyo and Melbourne.
At the moment, more than 250,000 companies have signed up for its business travel programme, with more than one-fifth being Asia-based firms. These include Australia’s biggest listed travel agent Flight Centre, as well as Hyundai Motor and Culture Convenience Club (CCC) from Japan.
For CCC, a Tokyo-based video rental shop and bookstore chain, the use of Airbnb means “more options to choose from, especially during peak travel seasons”.
“Employees also find it fun and imaginative when it comes to selecting their listings … For our travel managers, it is easy to manage bookings through the customised dashboard which allows visibility into all employees’ past, present and future trips,” said CCC’s head of human resources Toshio Matsuura.
NAVIGATING REGULATORY HURDLES IN ASIA
Since its debut in 2008, Airbnb has shaken up the market for travel accommodation and its rise has not been without controversy. In parts of Asia, regulatory hurdles remain for the San Francisco-based start-up.
Mr Holyoke said Airbnb continues to “demonstrate a desire and commitment to work with local authorities” and operate “within the confines of how cities and countries embrace home-sharing”.
In Singapore, where the use of private property for accommodation of less than six months was legislated as illegal in February, Airbnb will focus on outbound business travellers as it continues “working with the Singapore Government to legitimise home-sharing in this market”.
It is also focused on outbound travellers in China – one of its key growth markets – but will have more leeway in others, such as Japan, after the government in June passed a law allowing owners to rent out properties on a short-term basis.
Despite the varying regulatory hurdles, Airbnb remains upbeat on the opportunities in the region.
“If you look at the overall business travel spending, Asia Pacific is about 40 per cent of a US$1.2 trillion industry so there’s a lot of upside,” said Mr Holyoke, citing figures from US-based trade group Global Business Travel Association.
“For business travellers right now, we are really focused on outbound within the region. Overtime, we’ll want to put more focus on the domestic market but right now, we have enough opportunities in the outbound travel market,” he told Channel NewsAsia.