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Airbnb has lost its soul - Accorhotels CEO

22 Feb 2018 by Tom Otley
Airbnb Experiences - yoga

Accorhotels CEO Sebastien Bazin may have paid Airbnb the ultimate compliment by buying competitor OneFineStay to enter the sharing market as a competitor, but he believes Airbnb has big problems, and isn’t shy of pointing them out.

In wide-ranging comments on the day that Accorhotels revealed its results, Bazin was very complimentary about Airbnb, and the different ways it had expanded its business, but nevertheless forensic in the way he analysed the issues it is now facing.

The timing of his commeents was coincidental with Airbnb’s announcement, the following day, about Airbnb using its technology platform to sell hotels rooms, but all the more relevant in hindsight. What Bazin said was that Airbnb’s move into other businessess such as Airbnb Experiences was a response to its “big dilemma”, namely, finding a way to an IPO.

According to Bazin, Airbnb is engaged in a search for new businesses to diversify away from its core business.

“They raised an enormous amount of money with a very high valuation and they promised to do a big IPO of the company,” said Bazin. “What they didn’t see was that they have so much market share in the capital cities that all of a sudden mayors went against them, and each one of those mayors in cities like Barcelona, New York, Paris, each of them have a different legislation.”

The challenge of the legislation is its uncertainty and diversity, he pointed out.

“Its 30 days here, 90 days here. The fine in Barcelona if you go beyond 31 days is €600,000; in Paris it’s €25,000. In New York, there’s a 30-day minimum stay. All of which makes it very difficult to do an IPO of Airbnb when you don’t know what the consequences of that legislation.”

According to Bazin:

“This is why Airbnb is moving into new business – Airbnb Experiences, Airbnb Trips, Airbnb as a platform for other business [the  subsequent announcement of the distribution of hotel rooms], because they want to diversify away from legislative trouble. And they’re right. And what they may do with a hotel platform actually doesn’t disrupt me. It disrupts the OTAs. Google hotel access is disrupting Trip Advisor. The largest recommendation site today is Google, which is why Trip Advisor’s market cap went from 13 billion to seven billion. So if Airbnb is good at distributing hotels, it might be a way of diversifying its business, but that’s why it’s doing it.”

Nevertheless, Bazin downplayed the effect of Airbnb. Using the analogy of Uber in Paris, he said that after Uber had “demolished” the traditional taxi market in Paris, “in the last 12 months taxis in Paris are rebounding, because they lowered prices with a better service and the market was shifting back their way”.

In the same way Bazin declared that Airbnb had “impacted” Accor in 2016, less in 2017 and less in 2018. His belief was that Airbnb had “lost its soul”, becoming “volume driven, not emotion driven.”

“It’s something you see with these trendy sexy brands. They work extremely well for four, five, six years, but then they have to actually adapt to a new business model.

“They were rock solid when the soul of the business was all about ‘You are meeting a local. He will leave you a bottle of wine, you are recommended to go to a restaurant next door, his name is Patrick, he has a great pizza’. Now two thirds of Airbnb say it’s a host room, but there’s no host room and there’s no host, it’s a serviced apartment. No wine, no host. They lost their soul. They were volume driven but not emotion driven.”

accorhotels.com, onefinestay.comairbnb.com

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