Rent a $1 million Polynesian island5 min read . Updated: 07 Jul 2019, 11:15 AM IST
- Airbnb Luxe will cater to the world’s richest travellers
- Each property is run through a 300-point check list
Gone are the days of air mattresses on the floor. Airbnb Inc. is now catering to the mega-wealthy with a new tier of luxury rentals.
Airbnb Luxe went live on 25 June after long being teased, with 2,000 new listings on Airbnb’s website offering guests the chance to stay in some of the world’s most extravagant homes. Everything, from entire islands to medieval castles and mansions decked out with water slides, dinosaur skulls and archery ranges, is up for rent.
The average luxury listing has an asking price of $14,000 (around ₹9.63 lakh) a week—but can go as high as $1 million a week for a private atoll near Tahiti that comprises 21 bungalows and a staff of 50.
Luxury travellers have been eyeing high-quality home rentals for a while, says Nick Guezen, Airbnb’s global director of portfolio strategy. But the market hasn’t offered enough security to high-profile and mega-rich clients who seek privacy, he says. “I think that’s something that was missing—the idea of ‘I want to travel to a luxury home, but I’m not sure where to find it or who to trust.’"
Which is not entirely the case, considering Accor SA-owned Onefinestay, the second-home rental platform ThirdHome, and apartment-rental company Paris Perfect are all established competitors in the space. And Airbnb Luxe itself is essentially a rebranding of Luxury Retreats, a Canadian company that specializes in high-quality listings and was acquired by Airbnb in 2017 for around $300 million. None of the listings on Luxe are new to market, they just now sit under the Airbnb umbrella.
The company is betting on the strength of its brand to give it the competitive edge.
“People are growing up with Airbnb," says Eshan Ponnadurai, global marketing director of luxury for Airbnb. “Someone that started in their early 20s renting a room at $100 a night and is now growing in affluence may want a room at $1,000 a night."
Because Airbnb has become part of the cultural dialogue, renting out your home to a stranger has become legitimized in a sociological sense as well—even to the super-rich, says New York University professor Arun Sundararajan, an expert on the sharing economy. In the past, those who own multimillion-dollar properties might have been reticent to share them with strangers, but today most people know someone who has stayed in an Airbnb, he says. “It feels like a more normal activity and that lowers the barriers to rent out a more expensive home."
In 2017, only 36% of affluent travellers (those with an income over $100,000) surveyed by Skift Research reported staying in alternative accommodation or home rentals. This year, that number has mushroomed to 59%.
Since its founding in 2008, Airbnb has upended the travel industry, challenging the big hotel chains and travel sites while also attracting the ire of cities around the world that are seeking to crack down on illegal listings and grappling with rising rents.
Conquering the luxury rental market will allow Airbnb to sell itself as a company that can not only comply with official rules, but also cater to the world’s richest travellers. “This is a way for a luxury traveller to book a home without any worries or hassle," Guezen says. “We can give them something that is vetted and can be trusted."
In April, it took over 10 floors of New York’s 75 Rockefeller Plaza with plans to convert them into 200 overnight apartment-style suites. In May, Airbnb added high-profile luxury retail executive Angela Ahrendts to its board of directors. Ahrendts, 58, spent five years overhauling Apple Inc.’s retail operations, and, prior to that, transformed Burberry into a global luxury brand.
This new luxury tier represents a lucrative revenue source as well, even if Luxe’s 2,000 listings pale in proportion to the more than six million listings available on the general site. The company takes a percentage of the cost of each booking it arranges, so more expensive inventory generates higher margins and helps justify the privately held company’s $31 billion valuation. Under Airbnb Luxe, the entire fee is coming from the host and the percentage depends on the market and the type of partnership arranged with homeowners, Guezen says, but declines to give any specifics as the fees vary too much between properties. The global luxury travel market is worth more than $200 billion, and analysts expect it to continue growing.
The biggest difference booking under Luxe vs Airbnb’s regular or higher-tier Plus listings is free access to a trip designer, who arranges check-in logistics, local bespoke experiences, and services from childcare to private chefs or in-house massage therapists (while novel for Airbnb, this sort of high-touch service, similar to that provided by Onefinestay’s dedicated concierges, is standard in super-high-end home rentals.)
Airbnb’s 20 trip designers will be available to guests around the clock for VIP support. Some have already handled bizarre requests during Luxe’s pilot phase, such as building a temporary basketball court in Los Cabos, Mexico, for a National Basketball Association player or cordoning off a section of a jungle in Tulum for a high-profile family to cave dive in private.
Homeowners or their representatives must apply to be part of Luxe. Each property is reviewed by an internal team that runs through a 300-point check list scrutinizing everything from the home’s design qualities and architecture to the quality of its linen and the water pressure in its showers. Listings include the Fleming Villa in Jamaica where Ian Fleming penned his James Bond novels and a medieval castle in the Tuscan countryside with nearly 100 acres of land for hiking and harvesting local produce.
Many of the homes are owned by megawealthy families, including billionaires and celebrities, Guezen says. Some own multiple properties around the world and rent up to half a dozen through the site, he says. In order to protect the host’s privacy, guests are never told who owns the property and each home is stripped of anything that could personally identify them. Staff are advised not to disclose the identity of hosts or guests and each property is insured by Airbnb’s standard $1 million guarantee to cover any damages. Guezen says these super-rich hosts rent out their vacation retreats not only to monetize their assets, but also to ensure that the properties are well-oiled for their own stays.
The move into luxury rentals is the next step in Airbnb’s plan to diversify its business ahead of an initial public offering likely next year.
Airbnb says the launch of Luxe helps meet increasing demand for luxury properties. In 2018, the number of Airbnb bookings for listings worth at least $1,000 a night increased by more than 60%, according to the company. “Today’s luxury traveller is craving more than just high-end accommodations," Airbnb chief executive officer Brian Chesky said in a statement. “They seek transformation and experiences that leave them feeling more connected to each other and to their destination.bloomberg