Rental revenues

One of the biggest challenges in the tourism industry is getting the word out. Airbnb, designed to bring people to a single website to book unique accommodations worldwide, is addressing that challenge — in a big way. The company, with a $24 billion valuation, is a website and mobile app that allows people to list their property as a short-term rental. Airbnb has a presence in 190 countries.

In Airbnb, just about anyone can be a host. To the Marriotts and Westins, that means anyone can be competition. The battle, without the regulatory controversy, is similar to how Uber and Lyft have disrupted the taxi industry.

The Business Observer spoke with several owners and agents who list properties and rooms on the Gulf Coast on Airbnb. Perhaps the biggest lesson shared by all was that through Airbnb, they have an opportunity to compete against the Goliaths. Here's a glance at how they've used Airbnb to become the hospitalty industry's newest entrepreneurs.

Anne and Neil Martinelli
Madeira Beach

Two and a half years ago Anne Martinelli and her husband Neil Martinelli decided they wanted to invest in rental property. They bought a small four-unit motel on Madeira Beach in Pinellas County that needed some work.

“Our initial intention was to list as a weekly vacation rental,” Anne Martinelli says. After they fixed it up, they started to look for customers by building their own website. But that didn't get much traffic.

Two weeks after opening the doors, they decided to list on Airbnb. Bookings came in immediately.

This year they expect to bring in $90,000 in revenues, with a 40% margin. The Martinellis rent each of the studio units for $90 a night, a rate much lower than the surrounding hotels on the beach, Anne Martinelli says. They increase the rates during busy season, and have managed to maintain occupancy around 70%, which is higher than industry trends, Anne Martinelli adds.

Airbnb helped the couple figure out an appropriate list price to gain traffic and reviews, Martinelli says.

To make units stand out, the Martinellis make sure they have plenty of pictures posted on the listing and they invest in extras such as beach chairs, beach towels and outdoor grills. “Things a regular inn wouldn't have,” Anne Martinelli says.

The biggest challenge for the Martinellis is dealing with issues at the inn during the day — Anne is an accountant and Neil is in merchandising. They ended up hiring the woman who runs their cleaning service to help when necessary. This was a nice change from their first year in business, when Anne Martinelli did all of the cleaning and communication herself. “We enjoy it but sometimes it can be a lot of work,” Anne Martinelli says.

Ryan Block
Sanibel Island

Re/Max real estate agent Ryan Block says Airbnb approached his company last February to list properties. By March, all 50 of his vacation properties were posted. Now the site is his top source for bookings — a spot that used to be held by FlipKey and TripAdvisor.

“The rep had people do everything for us,” posting the photos and rates on the site, he says. Now Block and his colleagues go through and make the property profiles more robust, with additional information like things to do and online guestbooks.

The Re/Max team has an office on Sanibel Island, where guests stop by to pick up their parking pass and keys. Re/Max also has a full-time inspector who visits each property to make sure everything is perfect before a new guest arrives. Around 95% of the owners of the properties that Block manages are out of state or out of the country, so Re/Max takes on all of the cleaning and maintenance responsibilities, Block says.

Even though the Re/Max presence is growing on Sanibel, they're still considered a small property management company on the island. Out of the seven or eight competitors, only a few are listed on Airbnb. Says Block: “We're smaller so we have to stay up with the technology that the bigger companies aren't.”

Block likes Airbnb because it is an easy-to-use app for responding to inquiries. Airbnb can also tie in schedules from other rental sites where you have property listed, such as VRBO and HomeAway.

But being all online can also be a challenge, says Block, who sometimes wishes he could have more a of a dialogue with the guest to help them figure out which property might be best for them. But that's just the reality of how people have changed their booking habits, he adds.

Perhaps the best benefit of Airbnb is the cost, according to Block. Airbnb charges the guest a 2% service fee and the property manager 3%. “For us it works well because they process the transaction and we avoid the 2.5% credit card fee,” he says. VRBO and FlipKey charge 10% or more for the booking.

Louise and Edgar Hansen
Englewood

Guests at Louise and Edgar Hansen's Englewood property are surprised when they realize their host is a television celebrity. Edgar Hansen is on the reality show Deadliest Catch.

The Hansens, who live most of the year in Seattle, decided to invest in property in Florida because of Edgar's financial success. “I'm in a high tax bracket...and we wanted to put our money somewhere that makes sense,” he says. Louise Hansen Googled how to get started. The first thing that popped up? Airbnb.

The couple bought a five-unit property on quiet Manasota Key in Charlotte County because they weren't interested in guests who wanted to party. They have one long-term renter that serves as a property manager, showing guests where they can find laundry and paddleboards. Communication with guests is the key to success, says Louise Hansen, who has made answering requests her full-time job.

The couple posted their first unit in December but found people were hesitant to book until they had a few reviews. Once they had a couple of reviews on their listing page, the units picked up traction. They've kept busy through the summer and all units are already booked through high season. “We could probably double the price and still keep it rented,” Edgar Hansen says.

The Hansens also bought a single-family home on a Siesta Key canal that is separately listed through a property management company. Louise Hansen says the house isn't shared on Airbnb because it targets a different type of guest. They find most renters from Airbnb are young adventure seekers, while this house is a better fit for someone who seeks a spa-like environment.

The Hansens say that thus far the investments have paid off. “We should have done it a long time ago,” Edgar Hansen says.

Keep it Level

Airbnb has a presence in more than 34,000 cities in 190 countries worldwide. Listings range from shared rooms to mother-in-law suites. Even castles.

That's great news for travelers who like the hyper-local, sharing-economy experience a stay through Airbnb and similar sites can provide.

But local governments, convention and visitor bureaus and hotels are watching the site's increasing popularity closely — mainly to make sure there's a level playing field.

“As long as everyone is operating by the same rules, this industry understands that competition comes with the territory — but fair competition,” says Bob Morrison, executive director of the Hillsborough County Hotel & Motel Association.

At stake are things such as local tourist or “bed” taxes hotels are required to collect from guests. These taxes typically are used to fund local efforts to market their destination to travelers.

“To the extent that Airbnb takes a chunk out of the taxable marketplace, that would be a concern to [hotels and CVBs],” says Kevin Carl, managing director of digital for Accenture Travel Services. “In theory, those renting out properties should be collecting and paying those taxes. But by and large in many localities it's an honor-based system, which in and of itself is a challenge.”

Airbnb tells hosts they're required to collect and pay any applicable taxes in their localities. But that doesn't always happen.

“We are doing a lot of education,” says Sherri Smith, assistant tax collector for Sarasota County. Her office looks through sites such as Airbnb to identify short-term rental properties, then sends out letters to inform owners of their obligations.

“We really believe that a lot of people want to follow the law and just may not know what the requirements are,” says Smith.

Airbnb also presents opportunities. “Airbnb attracts travelers to destinations who might not have traveled there to begin with,” says Virginia Haley, president of Visit Sarasota County, who'll be meeting with Airbnb in San Francisco in November. Millennials, in particular, are fans of Airbnb, and the chance to live like a local may lure them to a new city.

Airbnb hasn't really taken off yet in Collier County, but officials there see how it could be helpful.

“From late December through the Easter holidays, our vacation-home rentals are pretty well booked up,” says Jack Wert, executive director of the Naples, Marco Island, Everglades Convention & Visitors Bureau. “So it could be an opportunity for some additional folks who want to stay in that kind of accommodation.”

— Beth Luberecki