Airbnb said to ready a premium tier to compete more with hotels

[SAN FRANCISCO] Airbnb Inc is close to launching a new service that will match guests with quality-inspected home and apartment rentals. The product is intended to attract higher-paying travelers who have yet to use Airbnb because they prefer the amenities guaranteed by fancy hotels, said three people familiar with the project.

The service, expected to launch as a pilot with a select group of hosts as soon as this week, will send Airbnb inspectors into hosts' homes to ensure they meet a checklist of quality standards designated by the company, said two of the people. If the homes pass the inspection they will be eligible for a featured section of Airbnb's website and mobile apps, they added.

The company has been encouraging hosts to behave more like hoteliers, but this is the first time premium rooms will be packaged into a distinct product with official inspections and incentives for participants. The service is internally referred to as "Select," but the people said an official name has not yet been determined. They asked not to be identified discussing an unannounced product. The full service could launch by the end of 2017. Airbnb declined to comment.

Offering a premium selection of rentals may help Airbnb lure older and wealthier travelers, who've been hesitant to book on the home-sharing platform because they believe it's less polished than a luxury hotel room, said the people. These users present a potentially new lucrative revenue source for the nine year-old startup, which began as a couch-surfing website for cost-cutting millennials. Airbnb takes a percentage of the cost of each booking, so more-expensive inventory may support revenue growth and help justify the privately held company's US$31 billion valuation.

The new programme may also concern hotel chain operators, such as Hilton Worldwide Holdings Inc and Marriott International Inc. They have lost some lower-end customers to Airbnb and other home-sharing services, while most luxury and business guests have so far kept booking.

"With Airbnb expanding its services to improve travelers' experience by including hotel-like features," Bloomberg Intelligence analysts wrote recently, "it may be able to attract a wider customer base."

Later this week, Airbnb is expected to invite a select group of hosts to participate in the new service, said the people. If they accept, the hosts will be visited by an inspector who will determine if the homes meet requirements ranging from new and matching bed linens to plush towels and single-use toiletries typically found in hotel bathrooms, they said. Premium homes would also be vetted for working appliances and a host's commitment to stock the home's kitchen with bottled water and a selection of teas and coffee, similar to hotel offerings.

A screenshot of a website Airbnb plans to send to a select group of hosts references the new service. "Congrats!" it reads. "Your reviews for high consistent quality have qualified you for a special pilot programme." The page said hosts should take part because they will receive "priority placement in a new section for premium places."

Hosts who participate get access to a professional photographer who would take pictures of the home for Airbnb, along with other free perks like a consultation with an Airbnb-provided interior decorator, said two of the people familiar with the programme.

BLOOMBERG