Big shocks in the homestays space as love for serviced suites and apartments outpaces that of Airbnb
For some travelers, staying in a home or apartment as a guest who is paying, offers a thrilling experience. There’s no better feeling to live with an individual or a family enjoying a furnished room, and getting a chance to use facilities including laundry, kitchen, parking, swimming pool, library, dryer….
In 2019, when the concept of short and long-term stays was hip, thanks to AirBnB, most players in the rental market struggled to stay afloat. The pandemic era made the situation worse, as a majority of travelers seemingly became “team AirBnB” to be able to meet the minimum requirements that the Ministry of Health put in place at the height of Covid-19 pandemic.
AirBnB was meant to offer an alternative, but with a widening service gap, the ground seems to be shifting, with leisure travelers now having a predilection to serviced suites and apartments mainly because of ‘the experience’.
“I think some hosts abuse the AirBnB concept,” says George Kibet, a plumber who likes short and long homestays when working for outside town clients.
“I was once in Nyeri, and I was listening to music through a Bluetooth speaker just outside the house. The caretaker said they don’t condone that and that I should play music from the house, not outside. I didn’t agree with him and just like that I was told to leave,” he says.
The craziest one for Mr. Kibet is how homestay players factor in “service fees” for those who book through online portals. “There is always a disclaimer by home and apartment owners that prices are not final, which means there could be extra costs when you wash your clothes and prepare meals. What if I have little money? So I also find that to be insensitive and unprofessional,” Kibet adds.
All this paints a picture of some unprofessional investors ‘lurking’ in the hospitality sector – imagine you are on holiday and your host wakes up one grey morning and demands that you pack and go. Or, a host asking a caretaker to chase you away because a high paying client has shown up.
A tweet by Nick Gerli, the CEO of Reventure Consulting, sent waves in the industry. Gerli noted that the “Airbnb collapse is real,” raising concerns about potential implications for the hospitality market.
Gerli’s argument is backed by data from AllTheRooms, a short-term rental analytics site, which indicates that there is a “decline in revenue per available listing in the United States between May 2022 and May 2023.”The tweet was all about the dwindling demand for Airbnb rentals, especially in the face of an increasing supply. Some experts say factors such as remote work opportunities and closed borders during the pandemic led to a surge in domestic travel and a boom in short and long homestays.
However, numerous complaints surfaced from travellers who felt they were shelling out considerable amounts for Airbnb accommodations, questioning whether they were truly getting value for their money compared to booking hotels and resorts.
At the end of the fuss, it was clear that most travellers opted for mainstream hotels because of transparent pricing, reliable service, and no hidden fees like cleaning charges.
“The market is looking for value. You are also aware that this is a very big market. We have a big corporate industry in this market, blue chip companies. We also have a different market segment which is the travel agents who book the entire suites and bring clients,” says Amos Maunde, Pan Pacific Hotel Group’s finance manager.
Mr Maunde, an ex-Hilton hotel employee, adds that there is a latent demand in the hospitality market which high end-end hotel investors can explore. Although Hilton, for example, stopped its operation in Kenya after the government failed to renew leasing of the brand, the hospitality industry is witnessing rapid growth.
Interestingly, the hospitality sector is slowly showing signs of recovery after the setbacks it faced during the pandemic. The foray of Pan Pacific suites, a division of Singapore-based developer UOL Group which is located within Global Trade Centre (GTC) overlooking the Nairobi expressway, for example, is not only informed by the value, but also the local demand in the market. For the last nine months, the facility has been offering short or long term homestay services, an indication that there is potential in high-end hospitality business.
Susan Waringa, a sales and marketing professional says hotel suites are basically focusing on a discerning customer, one who identifies with a five star hotel, and would pay top dollar for bed and breakfast, and it seems the target market is super positive.
“Serviced suites are looking at a client who would pay $200 dollars for a 30 square room. What do I offer a client who pays $230? I offer you an entire suite with quality space. I offer a business traveler the confidence of being in a suite with a brand label. So there is a lot to look into, and the pricing will definitely be competitive,” says Ms Waringa.
She adds that a high-end serviced suite will not be the same as Airbnb because of a number factors such as tranquility, experiential conferencing and accommodation, globally accepted standards as an environment that is ideal for both work and play. They are also not overpriced, and generally target customers looking for modern amenities under proper management.
“There will always be someone cheaper than you always so we do believe in what we are offering. Then, of course it is not about the pricing but about what we are giving guests. Our hotel brand is going to grow because we are very strong in the service suites space,” says Joyce Minjire, a sales account manager.
One of Airbnb’s initial strengths was its affordability compared to traditional hotels. However, in some cases, the charm has waned, particularly when hosts add extra cleaning fees and prices surge. This has made Airbnb less appealing, especially for short stays.
“If you go to a place and find a nice welcome next time you travel you will go back there. So we may not capture the market now, but we are saying whoever will come through our doors for the first time, we’ll try and do everything to make them come a second time and third time and tell their friends, and tell their business networks and that is one of the strategies that we intend to apply as we make an entry in this market,” Maunde says.
As the hospitality industry continues its recovery journey, stakeholders will be closely monitoring the developments in the short-term rental market. To excite customers, it is critical to address gaps.
“Our customers are not just surprised when they walk in here, and there is only one thing: they are very happy that there is something different, there is something new in the Nairobi market. It is not just another hotel that you walk in through the lobby and go straight to the reception. It is an ecosystem that gives you quite a variety of services so customers are actually very excited to be part of this and looking forward to growing with us because we definitely stand out,” Ms Waringa says.
