Airbnb's growing foray into hotels

Airbnb used to be seen as a direct competitor to hotels — but the lines between the two are increasingly becoming blurred.

What's new: Not only did Airbnb recently acquire HotelTonight, which is a last-minute hotel booking company, but it’s getting into the business of operating hotels itself.

• Yesterday, Airbnb announced a new partnership with RXR Realty, a large developer, to turn some of its properties in New York City into Airbnb-only units.
• The news comes on the heels of Airbnb’s recent investment in Lyric, a startup that operates short-stay apartments — a cross between a hotel and an Airbnb.

Why it matters: Airbnb has long presented itself as an alternative to hotels, promoting the idea of experiencing a destination “like a local” by staying in a host’s home.

• It even expanded on the idea a couple of years ago with its Experiences, which are activities designed and led by hosts to give travelers a greater local experience.

Yes, but: Airbnb has long allowed professionally managed vacation rentals in certain locations onto its marketplace, so it has not been entirely hostile to professional accommodations.

• And last year it made a bigger push to highlight and attract more boutique hotels in an effort to be more mainstream.
• Even companies like Lyric and its competitors like Sonder advertise their rentals via Airbnb.

Now, with its acquisition of HotelTonight, investment into Lyric, and deal with RXR Realty, it’s fully embracing hotels.

Our thought bubble: This could be a smart move as Airbnb inches closer to going public, when it will need to show investors a diversified revenue stream.