Airbnb blazes on and Ryanair on the rise
With the room rentals business booming, package holidays declining and shifting consumer behaviour, travel distribution gets more interesting by the day. Sally White reports
Be afraid, be very afraid! For those in the room rental business this seems to be the message. Such is Airbnb’s dominance that for it money for expansion is no issue. It has tied up another yet another mega funding, this time $850 million taking its estimated value to around $30 billion. That makes it bigger than the largest hotel group, Hilton Worldwide.
Airbnb is still focused on growth and overcoming regulatory challenges, Jeff Jordan, the Andreessen Horowitz partner on the board told Bloomberg last month.
By contrast, just last week two European Airbnb rivals have been forced to merge for financial strength. The problem is not consumer demand, but local regulators who are moving to control or cap usage of home sharing platforms.
Just last week two European Airbnb rivals have been forced to merge for financial strength
Only big beasts – such as Ryanair – sound confident of making new forays into this space.
The two European Airbnb rivals are a Rocket Internet investment, Wimdu, and 9flats, which recently moved from Germany to Singapore. While they claim to have 500,000 rooms in 140 countries between them, making them Europe’s largest platform, this is dwarfed by Airbnb’s two million listings across the world.
No financial details have been given, but 9flats' CEO, Roman Bach is named as the new head of the joint company. He says in the press statement: “I’m excited about joining forces with Wimdu to create one of the largest businesses within the online accommodation industry. The combined company will enable us to create an even stronger value proposition for our guests and hosts, while simultaneously accelerating growth and improving long-term profitability.”
Both Wimdu and 9flats were founded around five years ago, and the former was heralded as a potential star. It won €90 million in an investment round co-led by Rocket Internet, the Berlin incubator, and Kinnevik of Sweden. 9flats has raised less, at around €10 million. However, recently there has been press speculation that they have burned through their fundings.
Curbs on European home-sharing platforms have been growing as local residents demonstrate against the sites, which they say are causing housing shortages. Berlin has introduced regulation which imposes fines on Berliners who rent out more than half of their property on a short-term basis without a permit. In Barcelona, CityLab reported a few months ago, Airbnb and HomeAway were hit with €60,000 fines for advertising apartments that did not possess the permit the city now requires.
In the UK, which has been offering tax breaks to site users, there is now a swing the other way. A landlords group, The Residential Landlords Association wants London mayor Sadiq Khan and the government to ensure that those advertising lets of longer than 90 days have permission. Rental magazine, Letting Agent Today, says that: “there is also concern as to how many social and private tenants are subletting in contravention of their tenancy agreements.”
The British Hospitality Association, which represents hotels, has expressed concern that landlords were gaining an uncompetitive advantage thanks to Airbnb, which helped them circumvent tax, food, health and safety regulations.
The European head of Airbnb has hit back at claims that the home-letting service is driving up rents and worsening London’s housing crisis. Managing director Olivier Gremillon told London’s The Evening Standard last month that: “There have been a few studies done by academics which said no, it doesn’t really increase the price of housing.”
Use of UK rental sites has risen by 112% over the last three years, according to website traffic monitoring group Hitwise.
Meanwhile, Ryanair has this month been steadily pushing out its new accommodation platform, Ryanair Rooms. The platform is based on metasearch rather than acting as a single source of hotel and rental products. Ryanair is offering a combination of brands that enable passengers to get an initial view of options for any city.
First in to the Ryanair Rooms service are Hotels.com and Hotelopia. Passengers are shown ‘from’ prices for both brands. Ryanair plans to offer more providers and aims to include room rentals. Ryanair’s Michael O’Leary recently explained the thinking behind the strategy. Sales of traditional package holidays have declined, he said, and what people are doing now, with so much readily available in terms of low-price fares and services, is to go online and book their own!
As marketing chief, Kenny Jacobs told The Independent: “We see this as a natural progression towards Ryanair.com becoming the Amazon of air travel.”