During last year's FIFA World Cup in Brazil, FIFA looked to an unlikely tourism partner to find viable housing options for its massive sporting event. The soccer tournament, which took place over the course of a month last June through July, brought more than 3,429,873 people to the country - much more than the number of hotel rooms available.
"FIFA called us and told us their hotel supply was constrained," said Michael Brous, senior business development lead for Airbnb. "We unlocked increased supply in a matter of weeks, and 20 percent of attendees stayed in an Airbnb; 120,000 people stayed in more than 18,000 Airbnb homes in Rio de Janeiro alone. This generated $40 million for local residents."
Brous told this to a packed room of meetings and events industry players - planners, hoteliers, and tourism professionals alike - during an educational session held at IBTM America in Chicago on June 9. He was speaking as part of a panel, "Sharing Economy: Disruptive Opportunities for Events," organized by IBTM America and the Professional Convention Management Association (PCMA).
During the panel, Brous, along with moderator Gary Schirmacher, CMP, senior vice president of association sales and marketing for Experient, and fellow panelist Jack A. Johnson, chief administrative officer and senior vice president of public policy for Choose Chicago, spoke about the impact of shared economy applications like Airbnb, Uber, and Lyft, on the meetings and events industry.
The Shared Economy: Good or Bad?
Johnson, whose role with Choose Chicago involves him in government relations in addition to community outreach and tourism partner relationships, said that it's often challenging for destinations to understand how to work with shared economy applications like Airbnb.
"This shared economy is everywhere," Johnson said. "We're playing catch up at this point. This is new territory. Sometimes, we're in a defensive mode, but we're just trying to find our niche in it all." While shared economy applications have, in some ways benefited destinations, he says that public safety regulations and tax issues still need to be resolved. "The sharing economy does seem to be everywhere, but most cities don't have regulations related to it."
He added, "The biggest issue for us though, is push back from partners, especially the hotel industry. It's not just the hotel tax; it's parking, property, and sales tax. There are issues like licensing, insurance, fire, safety, zoning, health regulations, minimum wage requirements, and loss of revenue. This building you're standing in [McCormick Place] was sold by general obligation bonds and are backed by taxes from hotels and airport cabs, etc. As a DMO (destination marketing organization), 85 percent of my funding comes from public sources and they all compete in the shared economy.
"The opportunities these disruptors bring allow people to participate who might not have been able to do so before," said Schirmacher. "It's peer-to-peer business. It's us working with us."
When asked about his thoughts on Airbnb as a disruptor of the traditional hotel booking process for meetings and events, Gus Vonderheide, vice president of global sales, Americas, for Hyatt Hotels & Resorts, said, "We know that some organizations are more willing to show that flexibility, and allow travelers to experience what others may not. Airbnb isn't going anywhere. Security and safety is still an issue, but this isn't just a trend. It's a new way of life, and we're very conscious of it."
"This Is Our DNA"
For Airbnb, meetings are "our DNA," said Brous. Six years ago, Airbnb's three founders -- all three of whom were designers -- were having a hard time paying rent at their apartment, which was conveniently located near the Moscone Center in San Francisco. With just three aerobeds in their closet, the three decided to create a website -- AirBedAndBreakfast.com -- and they connected with the event registration for this design conference that was going to be held at the Moscone Center. "They got to meet other designers and showed them around the city, and that's what started what we like to call a 'global epidemic of hospitality.'"
Today, Airbnb is in more than 191 different countries and 34,000 cities. In just a single night, 400,000 guests will stay at an Airbnb property. The shared economy company itself is valued at $10 billion, and it continues to grow. And although it's often viewed as a disruptor of the traditional hotel booking model for groups and events, Brous says it's eager to work with planners, as well as convention and visitor bureaus (CVBs) and DMOs, to provide housing for meetings, incentives, conventions, and exhibitions.
In addition to the World Cup, Brous noted how Airbnb is currently working with Salesforce.com's Dreamforce conference -- one of the largest tech conventions in the world, which takes place every September in San Francisco -- to also unlock inventory. "You have like-minded tech people staying with other like-minded tech folks," he said.
He also spoke of a senior executive team of 15 people, including the chairman of the board, from BMW who recently met in San Francisco. Instead of having each person stay in his or her own hotel room, BMW chose to book two penthouse apartments -- each with seven bedrooms and seven bathrooms -- on Airbnb. "This way, teams of people can stay together," Brous explained. "The cost savings is extraordinary. That's kind of the future of us in terms of business travel."
Some groups, including members of Airbnb's own employees, have even booked an Airbnb space to be used exclusively as a gathering or meeting space for smaller groups. Experient, as well, has been working with Airbnb with a select number of clients. "Many of our clients were already using Airbnb, or seeing use among their attendee segment," said Schirmacher.
Brous says that Airbnb is working with a number of events, as well as in conjunction with CVBs and DMOs, to share data with them about who stayed in an Airbnb, especially for tax-related purposes. The company has also created custom online landing pages for conferences, such as the recent Fancy Food Show held in San Francisco.
There are benefits of using Airbnb, both for meeting and event organizers and attendees, says Brous. For organizers, he said that the increased room blocks increase the number of attendees, and that Airbnb is an ideal way to build community among attendees by having like-minded attendees stay together, or to stay with people who might share like-minded interests. Attendees, he said, can save money, have more authentic local experiences, build up team camaraderie, and also make money while they are attending the event by putting up their own homes on Airbnb to offset their travel and registration costs.
"We want to make partnering with us easy," said Brous. "We can activate across the board. The platform is open and accessible."
Work to Be Done
The fact that Airbnb is eager to work with the meetings and events industry, including destinations and planners, says Johnson is a positive opportunity, but one that requires "a lot of work."
"There are other sharing economy companies out there who aren't trying to partner with organizations," Johnson said. "We need to get our members to try to think differently about what people do when they come to a city. I see this as a key component. And as DMOs start migrating from DMOs to destination management organizations, we start facilitating the conversations that open doors. As DMOs go into the future, you'll see more of them being the entity that you'll go to for the shared economy."