Airbnb’s McDonagh says service good for tourism

09/08/2016 - 14:17

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The number of Western Australian listings for accommodation site Airbnb has more than doubled in 12 months, but that growth hadn’t come at the expense of the hotel sector, Sam McDonagh told a Success & Leadership Breakfast today.

Airbnb’s McDonagh says service good for tourism
Airbnb general manager (Australia) Sam McDonagh at this morning's breakfast. Photo: Attila Csaszar

The number of Western Australian listings for accommodation site Airbnb has more than doubled in 12 months, but that growth hadn’t come at the expense of the hotel sector, Sam McDonagh told a Success & Leadership Breakfast today.

“Western Australia is an incredible market for Airbnb; there are now over 7,000 listings in this state,” said Mr McDonagh, who is Airbnb’s general manager for Australia and New Zealand.

The San Francisco-based technology company started in 2008 and connects people needing short-term accommodation with homeowners who have a spare room – a model widely seen as disruptive to the hotel industry.

The service is online and available through phone and tablet apps.

Airbnb has had immense growth in just the past two years, with its 100 million-plus bookings in that period up from 20 million in the six years to 2014.

A ‘listing’ is where a property owner puts their home or a room on the website.

“It’s (the WA market) more than doubled, pretty much on any metric, in the past 12 months,” Mr McDonagh said.

“In the preceding 12 months just gone there have been 150,000 guests that have come into WA specifically to stay in an Airbnb.”

But that wasn’t coming at the expense of market share for hotels, he said.

“I think there's a strong synergy, I think that Airbnb can very happily coexist with hotels,” Mr McDonagh told the Success & Leadership audience this morning.

“One of the key things with that is that 74 per cent of all Airbnbs are where hotels aren’t, and 83 per cent of all Airbnbs, particularly in Australia, are people sharing their homes that they live in every day.

“There are independent reports that would certainly suggest hotel occupancy rates have never been higher, and room rates have never been higher as well.

“I think hotels are doing very well.”

That statement echoed an argument made by Uber general manager Australia Simon Rossi at a Success & Leadership event last year, where he said the disruptive ride-sharing app was growing the on-demand transport market, rather than just taking market share from taxis.

Tourism win

Mr McDonagh said Airbnb offered benefits for the tourism industry in particular, a sector that had received growing attention this year as the mining sector cooled, and with Premier Colin Barnett taking on the state’s tourism portfolio.

A key part of the Airbnb product was that it enabled guests to live like locals, Mr McDonagh said, with the company focusing its strategy on encouraging users to feel like they are a part of the local community they visit.

“One of the things we do know about Airbnb guests that come to Perth is that they stay 2.1 times longer than the average tourist and they spend 1.8 times more,” he said.

“They’re spending that money in local communities that otherwise wouldn’t benefit from the tourist dollar.”

Nonetheless, Airbnb still faces regulatory hurdles, including in the City of Bayswater, which late last year threatened fines of up to $200,000 for residents who posted on the accommodation service without approval.

Mr McDonagh said the key to resolving that was dialogue with local governments.

Airbnb is very much about fair and progressive regulation; we think regulation is a really good thing,” he said.

“It gives certainty particularly for our hosts as well as our guests.”

However, many planning regulations were in place before the internet existed, and in some ways society was playing catch up, he said.

Mr McDonagh highlighted South Australia as having one of the best models in the world, after that state made some recent regulatory changes.

“We know that we have very good support on both sides of politics at a federal level, obviously we have six states and each one of those has different planning regulations,” Mr McDonagh said.

“The challenge of that is we’ve got 570 local governments in Australia that are tasked with enforcing those state planning regulations.

“If we can be part of the discussion (for change), I think it’s a really good thing.”

Value

Today’s Success & Leadership breakfast came just a week after Airbnb disclosed a new $US850 million round of financing, which would value the company at a reported $US30 billion.

That’s up from an estimate of $US10 billion last year, and would make it the third most valuable startup in the world, after Uber (with a reported valuation of $US68 billion) and Chinese smartphone maker Xiaomi.

By comparison, hotel chain Marriott International is listed on the Nasdaq and has a market capitalisation of about $US18 billion.

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