Hotels on Airbnb: What this Means for Short-Term Rental Hosts

From: Hotels on Airbnb Are Here: What This Means for Short-Term Rental Managers

If you logged onto Airbnb recently, you may have noticed a shift. Airbnb has recently completed its third major business launch this year—the integration of hotels onto its platform. This means that when a potential guest searches for accommodations, they can now book your beautifully curated short-term rental (STR) or a hotel with a front desk, all in one place.

For short-term rental hosts and managers, understanding this new competitive landscape is crucial. Here is an analysis of what hotels look like on Airbnb, how the platform compares to Booking.com, and the implications for your business.

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1. Seamless Integration: How Hotels Appear on Airbnb

Airbnb has been normalizing the concept of mixed inventory, similar to how Booking.com has operated for years.

• No Obvious Banners: Upon arriving at the Airbnb homepage, you won't see special banners or announcements about hotels. Hotels are not listed as a separate category initially.

• Woven into Inventory: Hotels are integrated into existing search results and curated carousels, appearing side-by-side with STRs. For example, a carousel titled "Popular homes in Porto" may include a listing with the title "hotel in Porto".

• Beyond the Pilot Cities: Although Airbnb officially launched its hotel pilot in New York, Los Angeles, and Madrid, hotel supply is clearly being added in other locations like Porto and Paris.

• The Nudge: When a user searches for a short, quick trip (like a weekend trip for a small group), the search results page—which initially shows only STRs—may prompt the user to "explore hotels". If the user clicks, this automatically selects a newly added hotel filter. The search results interface for hotels is otherwise exactly the same as for STRs.

2. Beneath the Surface: Key Differences in the Hotel Experience

While the visual interface (UI) is nearly identical—featuring image carousels, ratings, and maps—key distinctions exist, particularly in the booking process and backend operations.

• Room Choice: The major UI difference is that hotel listings provide a variety of room options to choose from, which is typical for hotels.

• Cancellation Policy Variations: Hotel cancellation policies often differ significantly from standard STR policies. While Airbnb allows STR guests to cancel within 24 hours of booking for any reason (if the booking date is more than 7 days away), hotel listings often present non-refundable prices instantly. To gain a refundable option, the price will typically be different.

• Payment Flexibility: Airbnb is expanding payment flexibility. This includes options like paying in three payments with Klarna in Europe, and the global rollout of "Reserve now, pay later," which allows booking without upfront payment until a certain date. Airbnb has also introduced part payment in Brazil.

• AI-Generated Descriptions: Interestingly, Airbnb uses AI differently depending on the listing type. Hotels feature an AI-generated brief description placed right beneath the photo carousel. This AI summary, which provides a high-level overview of the property (e.g., "Stay in an art deco icon..."), is not present on standard STR listings, which rely only on the description provided by the host. This suggests a difference in how hotel listings are managed in the back end.

3. Comparison to Booking.com: Convergence and Personalization

Airbnb is borrowing from the Booking.com playbook as it enters a market Booking.com has long dominated.

• Mixed Inventory Standard: Booking.com has always woven hotels and alternative accommodations into the same ecosystem. On Booking.com, users can distinguish between property types based on the rating display: hotels use a star rating, while home and apartment-like properties use yellow squares.

• Brand Identity: Booking.com starts its homepage experience by reinforcing its brand status before showing curated options, whereas Airbnb assumes user familiarity and immediately provides customized stay options. This is because people tend to associate Airbnb specifically with homes (giving it a firm category identity), while Booking.com is seen as category agnostic.

• AI Personalization: Both platforms are leveraging AI heavily to drive personalization. If a traveler historically books hotels, they will begin seeing more hotel results in their search. Conversely, if a user prefers alternative accommodations, Booking.com will surface more STRs. The goal for both is conversion, regardless of the accommodation category.

4. Why Airbnb is Making This Move

Airbnb's decision to add hotels is strategic, addressing several market and regulatory challenges:

a. More Choices and Capturing Demand: Adding hotels provides guests with more options, keeping them within the "Airbnb universe" even if an STR isn't what they need. This is critical in regions like Europe, where customers are looking for choice and where Booking.com holds a stronghold.

b. Regulatory Hedge: Hotels help Airbnb manage risk in major cities around the world where regulations are becoming highly restrictive toward STRs.

c. Market Capture: Hotels can fill gaps in urban markets where Airbnb lacks sufficient STR supply or help capture increased demand during large events, leading to demand spikes.

d. Pricing Competition: The mixed inventory drives competition, forcing STRs to compete neck and neck on pricing and value alongside hotels.

5. Implications for Short-Term Rental Hosts: The Need for Differentiation

For STR managers, hotels are no longer a hypothetical comparison; they are now part of your direct competitive set on the same platform.

• Shifting Visibility: The Airbnb algorithm will adapt, favoring listings that convert reliably, have high review scores, and offer clear value based on guest intent (e.g., family travel, solo business travel).

• Differentiation is Key: Your best defense is not to focus on cost cutting but on differentiation.

    ◦ Hotels often win on predictability, convenience, and last-minute availability.

    ◦ Short-term rentals must emphasize their unique strengths: availability of space, amenities, unique character, and suitability for larger groups or family travel.

The lines between the two accommodation types continue to blur, making it essential for STR hosts to ensure their unique value proposition is clearly visible in their listings.

See more from Thibault Massey at www.rentalscaleup.com.