Just In Time for an IPO — Airbnb’s Hotel Business Is Benefiting From Its House Party Ban

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Just in time for Airbnb’s roadshow for its pending initial public offering, Airbnb’s hotel business is getting a boost from its house party ban.

In a program that started from an initial focus in the U.S. and Canada, but has been expanded to the UK, France and Spain, Airbnb said Friday it is diverting customer searches for entire homes toward hotels and private rooms.

“This technology has blocked over 770,000 distinct reservation attempts in the U.S. and Canada,” Airbnb said.

Over the last few months, when Airbnb’s algorithms detected that a raucous — or even lethal — house party might be on the agenda, users have been advised online to “please try a hotel room instead” or “choose another place to stay.”

For example, we found this admonishment and link to “Search hotels on Airbnb.”

“Airbnb prevents reservations for entire homes when a pattern of factors (like location or reservation time) suggests the booking may be unsafe. This restriction is not related to the coronavirus. For resources on coronavirus , see airbnb.com/covid. Please try a hotel room instead.”

Airbnb announced in the spring when it was conducting a mass layoff because of the pandemic that it would be reducing its investments in its hotel business, including HotelTonight, which it acquired for around $400 million a year earlier.

Airbnb, though, raised about $2 billion in private equity funding, and its bookings  have recovered in the interim so it wouldn’t be surprising if Airbnb has resumed devoting resources to hotels.

Correcting a Competitive Disadvantage

Airbnb reportedly is trying to raise another $3 billion in an initial public offering. It could be attractive to potential investors if Airbnb can show that its hotel business, solidified by its acquisition of HotelTonight, is tracking upwards. Over the long term, a robust hotel business to complement short-term rentals, would place Airbnb in a more competitive position against rivals like Booking Holdings, Expedia Group, and Trip.com Group.

Airbnb is directing would-be whole-home bookers on its platform toward hotels in a variety of ways.

In fact, Airbnb on Friday issued An Update on Trust in which it cites its move toward “redirecting certain local reservations” away from entire homes and toward hotels and private rooms. Airbnb said it expanded this initiative to the UK, France and Spain from its initial U.S. and Canada focus.

In addition to overt messaging for consumers to “please try a hotel room instead,” Airbnb at is therefore not showing users entire homes when they are searching close to the stay date or for around five days or less.

For example, I’m not in the under-25 age range — which is the focus of Airbnb’s house party ban in the United States and Canada — but my searches for entire homes for eight or 10 people for a couple of nights in the next few weeks repeatedly directed me to listings for boutique hotels or private rooms instead of whole homes.

Back to Its Roots? Hmmm

In a related issue, individual hosts, as opposed to the big-name corporate hosts, have complained on Airbnb’s community forum that guests who are trying to book entire homes for less than five days aren’t seeing their listings.  That’s because Airbnb directs potential customers instead to hotel listings and other real estate plays like those from Sonder and Urbandoor, an extended stay platform that Airbnb acquired in 2019.

When Airbnb’s initial public offering registration statement becomes public, it wouldn’t be shocking to see its hotel business showing signs of life after initially being neglected because of the Covid downturn.

Photo Credit: Pictured is the Arlo Nomad, which lists rooms on Airbnb in Manhattan. Airbnb’s hotel business is benefiting from its house party ban. Arlo Nomad

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