Opinion: Airbnb Is Not A Threat To Traditional African Hotel Business

Avatar
Written by Dana Sanchez

You should not be surprised to encounter blue monkeys, chameleons, and a donkey named Habib when you rent a beach cottage on Wasini Island, Kenya, the ad says.

You can also expect to use rainwater for your showers, and sea water for non-potable use, reads the online Airbnb listing. There’s a traditional Arab dhow available for private sailing trips. The price for the two-bedroom rental: $160 for a week and $639 for a month.

Lodgings-rental website Airbnb is a cheaper alternative to hotels, but rather than threaten the traditional African hotel business model, it will benefit local tourism and allow hosts to become micro-entrepreneurs, says the company’s general manager for Africa.

Business Beat interviewed Nicolai D’Elia about Airbnb’s growth prospects in Africa, where tourism and technology are growing, if not booming, StandardMedia reports. Airbnb wants to do business in every country in Africa by creating a way for people to stay at other people’s homes when they travel.

Airbnb connects people who have space to spare — anything from a sofa or shared room to a private island and everything in between — with those who are looking for a place to stay.

“Hosts not only share their rooms, but also their culture, traditions and values with the people they let into their houses,” D’Elia said. “This benefits a country’s tourism industry, particularly in destinations that do not have mature accommodation infrastructure.

Airbnb is expected to offer tourists, particularly those from within the country, a cheaper alternative to conventional hotel accommodation. This is seen as directly rivaling conventional hotel business, StandardMedia reports.

Like ride-sharing platform Uber, Airbnb has disrupted traditional business establishments, with the hotel industry viewing it as a giant online hotel that gets around conventional regulations.

D’Elia says there is a positive impact on cities and communities if hosts are able to become micro entrepreneurs.

Despite being disruptive, companies like Airbnb and Uber are not setting out to kill traditional business models, but to complement them, according to StandardMedia.

“Africa is definitely a key part of our next growth phase,” D’Elia told StandardMedia. “This is a market with 54 countries and almost a billion people, with growth prospects that are higher than almost every other region in the world.”

Africa’s infrastructure gaps provide the perfect opportunity for users of the $25-billion Airbnb startup, D’Elia said. Kenya, for example, has a bed-capacity gap of between 10,000 and 15,000 beds. Its tourism sector is just starting to climb out of a four-year slump that led to several hotels closing on the coast. Some are starting to reopen.

The total African travel market is estimated to go as high as $50 billion-plus in the next five years, according to D’Elia. “There are already 60 million people who travel to Africa every year, and these numbers are expected to grow both in terms of people who travel into Africa and people who travel within Africa.”

South Africa has the most Airbnb listings in Africa with 9,000 out of the 27,000 total. Nairobi has 1,500 listings, StandardMedia reports.

In Nairobi, guests can choose rooms ranging from $14.46 per night to $96.38. There are also beachfront houses listed in coastal areas such as Nyali, Watamu, Lamu and Malindi.

Airbnb grows through referrals and it has seen healthy listing increases in Africa — 250 percent year on year,  D’Elia said. “We want to accelerate this growth.”

However, with growth comes challenges. In other parts of the world, Airbnb’s central operating model is seen to directly rival conventional hotel business, StandardMedia reported.

Tax authorities in the U.S. and some European countries are cracking down on Airbnb landlords. Some home owners complain of their properties being trashed. There have been safety concerns, the latest being a sexual assault allegation where a 19-year-old guest claimed his Airbnb host imprisoned and sexually assaulted him, according to StandardMedia.

Trust is central to Airbnb’s operating model and it will work with regulators in all countries where it is present, said D’Elia, who has worked as innovation manager at global telecoms umbrella organization GSMA.

“As far as we know, there are no regulations here in Kenya and other African countries that we have explored that are against home sharing,” D’Elia said. “We are at the beginning of our journey and we are building constructive relationships with the relevant government stakeholders, showing them that there is a definite positive impact on cities and communities if we are able to let hosts become micro entrepreneurs.”

Despite being disruptive, companies like Airbnb and Uber are not setting out to kill traditional business models, but to complement them, D’Elia said. “Like here in Kenya, there is a lot of development in infrastructure that is invaluable in propping up traditional brick and mortar businesses. We should, however, be able to build conditions that support entrepreneurship, which include access to capital, training and good governance.

“If we have all these things in place, we can have both systems working in tandem with each other.”