We are living in the age of the great disruptors. As the sharing economy begins to take over our lives with ever present social media, peer to peer lending and Uber, the hospitality industry has been facing its own changes and challenges. The talk at all the major hotel conferences for the last two years has been of disruption to the hotel industry whether by greater digitalisation, online travel agents or from Airbnb. The rise of Airbnb has been nothing short of staggering. With 60million users, 2 million listings and 500,000 stays per night, it is now estimated that the company has a market value of $24billion. Quite simply, although it was set up only eight years ago, Airbnb has kicked the legs from under the hospitality industry.
A recent report by Colliers International suggests that for London, although the hotel sector is strong, the continued growth of Airbnb presents a tangible threat. Other data also provides an interesting insight as to why the demand of Airbnb continues to grow. The main reasons for using Airbnb are a cheaper price, location and an authentic experience. It reinforces the idea that travellers want to holiday like a local and feel part of the community. It is no surprise then that Airbnb challenges the end of the market that is particularly bland and doesn’t have a lot of value – what would typically be known as the 1 – 3* market.
The growth of Airbnb can also be measured in the rise of short let companies offering multiple Airbnb listings, new initiatives offering a super host or various services to guests and companies like Airplus offering a new platform to streamline booking and payment for corporate travel. Some hotel groups have acquired rivals such as Accor’s purchase of OneFineStay. Other independent hotels even list their rooms on Airbnb sites. Yet in the main the hotel industry’s reaction has been an aggressive one. Large hotel chains have argued that the Government has been unable to keep up with the rise of tech start-ups and must ensure they are subject to the same taxes, regulations and consumer protections as hotels.
The BHA has called for stricter controls on health and safety and security checks and has called on home exchange websites to take responsibility for ensuring that Airbnb providers properly conform with all necessary regulations. Some foreign cities such as Paris (Airbnb most popular city), have increased inspections of premises and introduced hefty fines for hosts who break the law. In Barcelona, hosts must be registered and comply with health and safety law and Berlin has allowed landlords to evict tenants subletting their apartments.
The UK courts have also been active and in September of this year, Iveta Nemcova a fashion designer received a ruling against her that she could not short-let her 1 bedroom flat in north London because the lease stated it was only to be used as ‘a private residence’. Increasingly then as a result of leaseholders’ complaints, freeholders and landlords are taking action to stop properties being used by Airbnb providers.
Against this fairly hostile backdrop we were asked to provide a collaboration agreement between Airbnb providers and the operator of an independent hotel – the Bermondsey Square hotel .This represents a positive shift by a forward thinking hotel manager about the ways in which a hotel can work with Airbnb. The contract we were asked to advise on involved the hotel providing certain key services such as cleaning, maintenance and front of house services in return for a fee. In essence the contract is a bespoke form of managing agents contract and is possibly the first of its kind to be used in the UK. As such, the agreement had to be succinct and user friendly while also being flexible and containing certain pre-requisites which the property owner or manager had to satisfy before the contract could go live.