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As of August 2017, the company has four million listings in over 191 countries. The company says it has facilitated over 200 million guest arrivals since its conception in 2008. Although the company’s core business is lodging, Airbnb is looking to branch out through acquisitions and pilot launches of peripheral services. Airbnb has seen a dramatic rise in value sales since 2009, benefiting from growing demand and supply, as well as becoming near synonymous with the short-term rental industry. While growth rates have fallen sharply, the company still registered strong organic growth of just over 41% in 2017, far higher than any hotel or online travel agent is achieving.
Source: Euromonitor International
Because Airbnb facilitates lodging transactions, the company straddles the boundary between being an intermediary and a lodging provider. The company is often thought of as a competitor to lodging providers such as hotels, as well as online travel agents such as Expedia and Priceline’s booking.com. Over 2012-2017, the company has outperformed intermediaries, hotels and short-term rentals growth. The 2012-2017 CAGR was 10.3% for short-term rentals, 1.3% for hotels and 1.7% for intermediaries, which is in sharp contrast to Airbnb’s CAGR of 62%. With the strong growth in value sales for Airbnb, the company ranked eighth when compared with all lodging and intermediary players. Online travel agents such as The Priceline Group and Ctrip.com have seen strong growth over the past decade, while traditional intermediaries such as TUI (number one in 2008) and Carlson Wagonlit Travel, have fallen down the ranking.
Although Airbnb and hotels do not offer exactly the same service, the question remains how much of a competitor is the company to hotels. In a report by the American Hotel and Lodging Association, leaked in early 2017, the association took credit for the ban of Airbnb in New York, and an investigation by the Federal Trade Commission, due to its multipronged campaign against Airbnb. Some hotel companies, meanwhile, are taking another approach, and are dipping their toe in the short-term rental category themselves. Accor acquired luxury short-term rental platform Onefinestay in April 2016 for a reported EUR148 million. Competitor Hyatt Hotels invested in the start-up during a USD40 million funding round in 2014, but its minority stake was bought out by the deal. For its part, Airbnb is increasingly looking to offer a hotel-style service in its properties, having introduced a set of service guidelines, and piloting hotel-like services in 37 properties in Sonoma, California.
At its annual conference in November 2016, the company launched Airbnb Trips with a lot of fanfare. The service, which lets local people offer their local knowledge, services and time to travellers, has been on the cards for a few years. It was clear from the start that Airbnb would never remain just a short-term rentals platform. What is clear is that to Airbnb, offering the experience of “living like a local”, including homestays and local tour guides, is the way forward. With Airbnb Trips, the company can shake-up the tour guide industry, and allow travellers to truly immerse themselves in cities, while allowing locals to increase their incomes.
With the launch of Trips, integration of restaurant booking app Resy, and talk about a future flights booking facility, Airbnb is spreading its tentacles across the wider travel landscape. It is no secret that the company wants to be a fully-fledged online travel agent, involved in every step of the traveller’s journey. These recent developments will help the company to achieve this goal.
Airbnb states that it wants to help and work together with local and national legislators to implement regulations for short-term rentals, but at the same time takes a sometimes aggressive stance towards regulators when it feels it is being inhibited too much. The case of Uber shows that cooperation is the best way forward, and Airbnb is seemingly still looking for the right balance between collaboration and resistance.
Although new products help with growth, numerous experiments may cause the company to lose focus. The travel landscape is littered with companies that failed when trying to own the whole travel journey. It may be best for Airbnb to decide whether it wants to be an online travel agent or the best lodging distribution channel, and work towards building products that achieve the main goal.