Airbnb Enters the ‘Luxe’ Market

When Airbnb launched in 2008, the tech start-up offered cash-strapped travelers cheap overnight stays on sofas and in spare bedrooms around the world.

What a difference 11 years makes.

With the introduction of a new rental tier aptly called Airbnb Luxe, the company’s accommodation options, which had already expanded to include entire houses and even some upscale ones at that, now include the high-end market.

“We have an overall strategy of having a product for every traveler, and Luxe is for the ones seeking luxury,” said Brian Chesky, Airbnb’s chief executive and co-founder.

The Luxe portfolio of 2,000 homes, available starting Tuesday, includes villas in Tuscany, ski lodges in New Zealand and castles in the French countryside. They were selected from the 5,000 properties listed on Luxury Retreats, a high-end vacation rental company that Airbnb acquired in 2017.

The customers for these homes, Mr. Chesky said, are the same guests who rented sofas with the company when they were younger, though now they have well-paying jobs and more discerning tastes and seek upscale accommodations. Airbnb has seen a 60 percent increase in the last year in bookings that cost $1,000 or more a night, Mr. Chesky said (he declined to be more specific).

Several criteria were used to select the Luxe properties. The home’s design, location and views must reflect a sense of place. For example, a modern villa situated above Cape Town’s Clifton Beach has custom finishes made from locally sourced materials, and houses an expansive collection of indigenous art.

The activities the homes offer also figure in and should give guests an idea of the destination’s culture and way of life. At Castello di Vicarello, a medieval castle in the Tuscan countryside, guests can hike through 100 acres of land and help local farmers with the grape and olive harvests.

Bookings for Luxe’s entry-level listings, typically two-bedroom condominiums in the Caribbean, start at around $600 a night during low season. The most expensive, a private atoll in French Polynesia called Nukutepipi, is about $1 million a week. The property includes 21 bedrooms, four pools and a staff of 50.

Mr. Chesky said that the average listing on Luxe is $2,000 a night. On the main site, in comparison, travelers can find listings for under $20 a night that include an apartment in St. Petersburg, Fla., for $10 a night. For Plus, the company’s tier that includes more upmarket but not necessarily luxury homes, the average listing is $150 a night.

All renters are assigned a trip designer — similar to a concierge or travel adviser — who helps them arrange every aspect of their stay, from airport transfers and restaurant reservations to local tours and experiences at the property itself.

Even with this level of detail, it will be a challenge for Airbnb to gain credibility in the luxury travel sector, said Rummy Pandit, the executive director of the Lloyd D. Levenson Institute of Gaming, Hospitality and Tourism at Stockton University in New Jersey.

“Airbnb has a reputation of being a more affordable alternative to a hotel, and the company needs to build a track record in a new area and appeal to a new demographic of travelers,” he said. “That’s not easy to do in a market that’s ultracompetitive.”

Airbnb will face heat from competitors including HomeAway and Oliver’s Travels. Marriott recently ventured into the home rental business with the launch of Homes & Villas by Marriott International, which offers 2,000 rentals in more than a 100 destinations globally. Last week, Four Seasons Hotels & Resorts announced Four Seasons Private Retreats, a collection of more than 750 upscale rental villas and homes in 21 destinations including Kyoto, Japan; the Seychelles; and Whistler, in Canada.

The overwhelming demand for vacation home rentals may go in Airbnb’s favor. Skift Research estimates that in 2018 alternative accommodations, which include these rentals, generated $22.7 billion in revenue. This year, Skift expects this sector’s revenue to grow 30 percent to nearly $30 billion.

While luxury may be new to Airbnb, the company has already branched out to different segments of travel. Its Experiences platform, where travelers can book tours and activities with Airbnb hosts, is offered in more than a dozen destinations globally. Earlier this month, its Adventures platform was introduced, offering hosted adventure-focused overnight trips such as tracking lions on foot in Africa.