Olympic Accoms Disrupter Airbnb

(ATR) Airbnb was hatched in San Francisco as the Beijing Olympics took place in August 2008. A curiosity at first, the infant has grown into a multi-billion enterprise reaching 190 nations. And now this accommodation industry disrupter is about to shake up the way rooms are booked at the Olympic and Paralympic Games.

Now a member of the burgeoning band of 13 worldwide sponsors of the IOC, this youngest of the group is poised to become the place to go for rooms at the Games. The category is a first for the IOC Top program and a mouthful: Unique Accommodation Products and Unique Experiences Services.

The Airbnb sponsorship was announced in low-key style in London this week. A couple of dozen people filled a small room at Japan House in Kensington . Airbnb founder Joe Gebbia went without a necktie while IOC president Thomas Bach kept his knotted. No glitzy presentation, over-the-top videos or cavalcade of athletes. Bach may have been the only Olympic medalist in the room.

Reports say the deal is worth up to $500 million through 2028. It covers five Olympics, Paralympics and the Youth Olympic Games. The money is not an issue for Airbnb which is on the verge of launching an IPO which could be worth upwards of $30 billion.

Airbnb Fills Olympic Housing Needs

With the housing challenges posed by hosting an Olympics, Airbnb is being viewed as a sustainable alternative to building new hotels that molder after the Games.

"In the Rio 2016 Olympics, we saw a significant surge in both supply and demand for Airbnb listings --alternative accommodation by short term home rentals was widely recognized as a solution for the spike in visitors as well as an economic opportunity for locals in a period of economic recession," says the company, which was designated as the official Alternative Accommodations Service of Rio 2016. It had a similar arrangement with PyeonmgChgang for the 2018 Winter Games.

"Just before the Games began in Rio, we had registered reservations for 66,000 guest arrivals. By the end of the Games, we had 85,000 total guest arrivals for that three week period.

"Despite the last minute surge, we measured affordable, stable pricing per guest per night at a very busy period in the city," says the Airbnb statement.

Despite the massive number of hotels rooms in Tokyo, the IOC and organizing committee have locked up the best properties. With just about six months to go, Airbnb will provide a jolt to the inventory. While hotel rooms are in limited supply, Airbnb still offers a range of listings from single rooms to luxurious apartments.

Prices aren’t cheap. Costs next July are comparable to what can be found from other online booking sites. But bargains can be found. The Airbnb listings range from a few hundred dollars a night into the thousands. Some of those listings have space for several guests.

The rates being charged for the Olympic period appear to reflect demand. Airbnb hosts in Tokyo during the Olympics are triple or more for those same listings outside the period of the Games.

Airbnb has not indicated whether it will have any control over the rates being charged by accommodation hosts during the Olympics.

"Providing diverse accommodation with existing and vacant homes would help sustainably cater to various kinds of demand, from reasonably priced lodging during the event participants, accessibility needs, longer stays and families who seek other locations," says a statement from the company.

Reaction from Industry, Government

Watching these developments are companies already serving the Olympic family with hospitality services. U.S. based Jet Set Sports has been in business since 1984.

"Jet Set Sports welcomes news of the innovative IOC-Airbnb partnership and does not expect that Airbnb as the Olympic Experience Partner will adversely impact the hospitality sector, whereJet Set Sports has operated as the leading provider since 1984 and is proud sponsor of the U.S. Olympic & Paralympic Committee, in addition to other National Olympic Committees," says a statement from Jet Set.

"With the Airbnb partnership set to offer travelers diverse year-round Olympic experiences, such as athletic training with Olympians, we believe the partnership can create new opportunities for hospitality needs and contribute to the Olympic Movement and ecosystem," says Jet Set.

Jet Set is an authorized ticket reseller in the U.S. and number of other NOCs. That enables the company to package tickets with hotel rooms in Tokyo. Airbnb does not have access to tickets for clients under its current deal with the IOC.

Less welcoming for Airbnb is the response from 2024 Olympic host Paris and 2028 Los Angeles. Both cities want to limit the spread of Airbnb which is blamed for squeezing out the supply of affordable long-term rental housing in those cities.

"By removing a significant number of lodgings from Paris, Airbnb contributes to rising rents and worsens the shortage of apartments on the rental market, at a cost for all Parisians, in particular the middle class," Paris Mayor Anne Hidalgo writes in a letter to the IOC president ahead of the Airbnb announcement.

Hidalgo wants toput the brakes on Airbnb in Paris, one of the company’s biggest markets with 60,000 listings. A referendum to restrict Airbnb in certain parts of the city has been raised as a possibility.

At the sponsorship launch in London, Bach said Airbnb is coming to terms with the communities where it operates.

"It is quite normal that such a disruptive business then needs to settle and needs regulation. This is happening in a dialogue with Airbnb and cities and countries," Bach said.

Airbnb’s Other Olympic Projects

While the Youth Olympic Games are include in Airbnb’s marketing rights, it’s not clear yet how the company will activate in Lausanne for the 2020 Winter Youth Olympic Games in January or the 2022 YOG in Dakar, Senegal.

Support for the Refugee team organized by the IOC is another aspect of the Airbnb sponsorship. The company says it has provided help to 35,000 refugees around the world since 2015.

"Over the course of the partnership, the IOC and Airbnb will establish further programs to provide long-term support to refugees," says Airbnb.

For something completely different, Airbnb is planning to create Airbnb "Olympian Experiences". To be launched in early 2020, the program will employ athletes around the world to interact with Airbnb customers to promote sport and physical activity. Training with an Olympian or a tour of a city conducted by an athlete are given as examples of the kind of experiences being planned.

The IOC will make at least $28 million worth of Airbnb accommodations available for athletes to use for travel related to Olympic and Paralympic Games competition.

Australian Olympic Committee President and IOC member John Coates says these plans from Airbnb are well-suited to his country's athletes,

"This is a shot in the arm for current and retired athletes. The opportunities created through the Airbnb Olympian Experiences platform will generate revenue for athletes in a way that suits their individual circumstances," says Coates in a statement.

"With their expertise and interests, Olympic athletes are uniquely placed to build a business model around anything from training sessions, workshops, insights or city tours and hosting athletes from around the world.

"The fact that athletes will be given the training and support to make these options viable is a major step forward and a great feature of this new partnership.

"Australia is a wonderful destination for people who embrace our lifestyle and our environment. The Airbnb Olympian Experiences is an exciting addition to that market, providing income to athletes as well as promoting sport and physical activity," Coates says.

Reported by Ed Hula.