Airbnb announced that it was using Paris as a test for its new partnership with Century 21, which it said would make it “easier to sublet”.
The agreement came six months after a deal with Brookfield Property Partners, which saw the platform move deeper into the residential property market.
In Paris, the company described the deal as a “win-win” as tenants, landlords and the agency all share the income when a booking is made on Airbnb. Under the terms of the agreement, any tenant or landlord whose contract has been entered into with Century 21 may apply for an Airbnb-friendly lease, which authorises subletting as part of a revenue share between the landlord, tenant and agency.
For any booking, revenues are shared with 70% for the tenant, 23% for the owner and 7% for Century 21. The platform said that, for landlords “it is a way to build tenant loyalty while increasing their income. For tenants: it is a source of additional income earned legally. For the agency: this is a new service that adapts to growing tenant demand.”
The group added: “Subletting is legal in France, as long as you have written permission from the owner. With the Airbnb-friendly lease, subletting will be much better supervised. Moreover, this deal does not dry up the supply of housing in tense areas but encourages subletting of occupied homes.
“In Paris, more than 60% of households are rented, and housing is their main expense. With this new subletting regime, they will be able to increase their purchasing power and build their lives in Paris. This lease will also allow more mobility for students and young workers. When they travel, they may receive an additional source of income.”
The partnership will be tested first in Paris. The Airbnb-friendly lease could then be offered by the 852 branches of the Century 21 network throughout the country.
The announcement came a week after a voluntary commitment by the National Home Holidays Association – which includes Airbnb, HomeAway and TripAdvisor – which would include measures such as asking their hosts to specify whether they rent a primary residence, a second home or a professional type of accommodation.
In addition, from 1 January 2019, in Paris and in large cities facing a housing shortage, National Home Holidays Association members will undertake to set up, after consultation with the cities, an automatic tool to ensure that primary residences cannot be booked for more than 120 days per year.
The agreement with Century 21 had echoes of a pilot programme launched in San Francisco at the end of last year, which saw tenants in five buildings owned by Veritas Investments able to rent their apartments out, with a percentage going to the landlord.
Airbnb now has 13,000 units eligible for short-term rentals as part of its Airbnb Friendly Buildings initiative, which was launched in September 2016 and sees tenants and landlords share the income from Airbnb rentals.
Airbnb has been moving deeper into the residential market. At the beginning of this year Brookfield Property Partners confirmed that it was to invest up to USD200m in a joint venture with Niido, the multifamily development partner of Airbnb.
USD20m of the investment has already been deployed at a 423-unit building in Florida, which will be under the Niido Powered by Airbnb brand. As previously reported by Hotel Analyst, the apartments will be built by Newgard
Jaja Jackson, director, global multifamily housing partnerships, Airbnb, said: “This partnership shows how landlords, developers and Airbnb can work together to create value for everyone and better serve tenants. The team at Newgard is leading the way and we’re thrilled to work with them. Together, we’re making it easier for more hosts to share their space, and giving guests access to more affordable options when they travel.”
Tenants will have permission to rent their homes on Airbnb for up to 180 days per year, giving their landlord a portion of the earnings. The apartments have been designed with the sharing economy in mind, with keyless entry, shared common spaces and a “master host” at each property who can assist with checking guests in and cleaning.
Chris Lehane, Airbnb’s global head of policy and public affairs, said: “This is going to be part of the future of housing, not only in Florida, but also across the country.”
HA Perspective [by Katherine Doggrell]: Ah, they grow up so fast. One day Airbnb was a glorified couch surfing website which was barely a squint in the hotel sector’s eye and the next the company threatened to colonise any market in which there was a bed.
Here at Hotel Analyst we have often speculated as to what Airbnb would do should it find supply of new rooms limited and the platform has shown itself adept at keeping the buildings with beds rolling in, by any means necessary.
With the hotel sector offering up only marginal competition – Accor has taken a good stab with Onefinestay and Jo&Joe – the limiter to expansion has been the reactions of assorted jurisdictions around the globe. These have ebbed and flowed, with Amsterdam recently tightening its rules while Berlin has relaxed. Not the most calming environment to run a business in and the deal with Century 21 illustrated that, wherever possible, Airbnb has tried to keep a close a grip on control of supply.
While the company tries to find a place for itself in the world of both hospitality and residential, we look with intrigue to its long-term impact. The group is currently being blamed for what has been called ‘over tourism’, which has seen residents of cities including Venice and Barcelona spending their summers protesting their swollen streets and brutalised property markets. But it is also helping to foster a changing attitude towards real estate itself.
In the UK we are used to talking about generations being priced out of property and, at a recent Hotel Analyst event delegates were told that the younger generations now saw housing as a service, not an investment. With nothing being done to change the housing market – in any territory – that trend is only likely to build and companies such as Airbnb could be well placed to capitalise on it.
The platform is currently an irritant to the hotel sector. It could find itself a major player in the long-term as well as short-term property market. One suspects that Brookfield Property Partners has considered this. Other investors may be having similar thoughts.
Additional comment [by Andrew Sangster]: There are several compelling reasons for Airbnb to be doing this deal and more like it. Firstly, the valuation put on Airbnb can only be justified if it can grow to be a much larger business than it currently is. It is doubtful that there is sufficient room in its current space of hosted rooms to grow sufficiently.
Secondly, Airbnb has to tap into the new trends in accommodation property. The convergence between buildings with beds is probably the biggest trend it has to be on top of. Whether it is student accommodation that is let in the summer and at other holiday periods or caravan parks seeking to increase utilisation in the off-season, digital platforms can make accessing more obscure types of accommodation much easier. As the biggest digital platform in the sharing economy that is focused on accommodation, Airbnb has much to gain as such trends gain real traction.