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Can Airbnb Impact Business Travel Behavior?

Lucas Cobb

Why the cost may ultimately tip the scales.

Less than a year ago, Airbnb made a somewhat quiet entry onto the business travel stage. Airbnb’s initial announcement surfaced with minimal fanfare and its inroads to date have been subtle. But don’t let that fool you; we believe Airbnb has its sights set on a much larger role in the business travel segment.

For starters, how does the “home sharing-economy” for business travel compare to the success in the transportation industry?

According to The Gazette, “Last month, Uber accounted for 47 percent of all rides expensed by employees whose companies use Certify, the second-largest provider of travel and expense management software in North America. In March 2014, Uber accounted for only 15 percent, according to a study by Certify released on April 7. Over that period, the amount spent on traditional taxis, limousines, and airport shuttles fell from 85 percent to 52 percent of expensed rides.”

On the leisure side, our MMGY 2015 Portrait of American Travelers® study supports this trend, showing that 10% of leisure travelers have used Uber or Lyft in the past year. This doubles to 21% when isolating millennials from the other generations. I think it’s safe to say if you use a service like this at all, you’d probably use it for all trip types. So, as ride sharing is catching on, especially with the 18-35 crowd, is it safe to assume that home sharing would be as well?

So as car-sharing seems to be catching on for business users it’s also gaining traction on the leisure side. Does the same hold true for lodging?

When travelers in the 2015 Portrait of American Travelers® study were asked if they had used Homeaway or Airbnb over the last year to rent accommodations, 7% of the entire study said yes – jumping up to 15% among millennials. These numbers trail car-sharing slightly, but again, the traction is there. So why would business travelers choose Airbnb over a traditional provider?

Here’s the pitch from Airbnb: travelers seek experiences that can redefine the business trip, whether looking for convenient proximity to meetings, a space that makes after-work feel like vacation, a gourmet kitchen for cooking with colleagues, comfortable meeting space for off-sites, easy access to running trails or beaches, larger homes for family companions or group getaways, or a homier neighborhood feel for extended stays or relocations.

These points make sense, however, in our research, 8 in 10 millennials who rented accommodations like this cited affordability as the primary reason (81% strongly or somewhat agree that “these accommodations are generally more affordable”). cited similar findings: “Rocketrip, a travel management platform that tracks expenses and motivates employees to cut costs by sharing the savings with them, recently found that booking through Airbnb, instead of hotels, saved 41 percent, or an average of $102 per night.”

Adoption and growth among the millennial generation seems to be the fuel on which the sharing economy will run. And though Airbnb may not see the same level of adoption for travel lodging as Uber or Lyft currently, they do seem to be on the same trajectory.

Based on these data points, it’s clear that among both sets of traveler types that cost is a substantial driver of adoption. As long as the product experience continues to deliver as well there could be a substantial shift in ‘share’ between hotels and vacation rental in a few short years. The staunch business-oriented hotel brands are going to start feeling the impact before long, especially as corporate travel policies loosen to embrace these alternatives as a means of cutting expenses.

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