On Airbnb’s Future

Traveling is about experiences

AirBnb has change the way people go about travelling and exploring new cities. It was not a surprise to see the company going into the field of travel experiences when they introduced Trip. Restaurant, city tour, culture, lifestyle, AirBnb is exploring all the possibilities to grow even bigger as THE travel company. Maybe one day you would even have an AirBnb airline, who knows…
The startup ecosystem around AirBnb is gigantic, there are thousands of companies providing extra services to make your travel experiences even better, or to help host providing you with a top-notch service, in some case rivaling with the best hotels.

AirBnb’s numbers are insane. It has more than 2.3 million listing in its inventory and is still fast growing. With a valuation approaching $30B, AirBnb dwarfs every other hotel chains. AirBnb revenues ($340M) seem pale compared to Hilton ($2.9B), but AirBnb has far less operating costs making it much more profitable. And they experienced 86% growth in their revenues in 2016!

And it’s showing no sign of slowdown despite all the regulatory hurdles it’s facing. Some cities (sometimes countries) are simply forbidding AirBnb, some restrict its use, and some give it special taxes.
While changing the way people travel, AirBnb has also change how people go about renting apartments (on both sides of the table, I already used AirBnb to find an apartment instead of Craigslist or more specialized site), it’s changing the way people design their living spaces. AirBnb’s influence is going far beyond travel.
Regulations have AirBnb to adapt but also evolve to maintain their impressive growth.
AirBnb is expanding its services to own the most complete scope possible of peoples’ travels. Doing so they can have an almost complete control of peoples’ traveling experience. This is of course the best way to increase their average value per customer while adding new users thanks to more services.
To expand they rely as much on in-house development, they are helping hosts to become city guides to enable travelers to discover the best local experiences, and partnership, for example, they have a partnership with Rezi, one fo the most upcoming restaurant reservation platform.
Going this way, they are going head to head against well-established companies like TripAdvisor or Foursquare.
The question is will AirBnb able to maintain their growth while adding massive competitors to their tables?

The future of the travel industry

I think the answer to AirBnb’s future is intimately tied to the future of the travel industry.
The travel industry is becoming more vertical. People don’t want to deal with tenths of services providers to make the most of their travel experiences. They also want these travel experiences to be more authentic and are always looking for the best value.
This gives a lot of weight to AirBnb’s strategy and would rely a lot on collaboration and sharing economy.
Another future of the travel industry is to get closer and closer to the entertainment industry. I won’t discuss it here because I don’t think AirBnb will go this way, but it has to do with Virtual Reality. Many people may choose to put on their VR headset to “travel” directly from their living room instead of flying their fat ass over there…

I do think AirBnb has a bright future in front of it and will probably redefine the burdens of the travel industry (if you think they already did it big times, it’s close to nothing compare what will be next), though I can see them being at high risks.
AirBnb is the biggest, most valuable hotel company in the goddamn world without owning a single closet… But at some point, the lack of ownership would unable you to own the experience you want to provide. Which you can’t be in control, thus you can end up loosing opportunities.
Hotel chains on the other hand sit on a huge real estate pool, though they don’t know how to make the most of it. But I think hotels hold the most potential to revolutionize the travel industry. If they do the right moves, they could crush AirBnb…
Ok, I am maybe being a little bit too radical. AirBnb is sitting on a pile of cash bigger than the valuation of any hotel company. So they have the resources to see it coming and do something about it. Something I am sure about is either AirBnb will have to invest in its own real estate (the likely solution) or they will have to partner with hotel chains (less likely solution but that offer some cool opportunities).
Much like I said about Uber in another article, AirBnb could be the OS of the travel industry. AirBnb has by far the most efficient process in the industry, and it could help other brands be great by having them implement the AirBnb process. Though this won’t give full control to AirBnb on travelers experiences so I think they will rather stay on their own.

When we talk about the sharing economy, Uber and AirBnb are the 2 most recurring example. But I think AirBnb is far more representative of this industry than Uber, I actually doubt about Uber being a sharing economy company. AirBnb is 100% based on sharing and collaboration. Thus it helps design the codes. AirBnb has gained supreme intelligence in designing products that are adapted to the sharing economy.
Today products and services are barely adapted to the sharing economy, developing its own real estate, AirBnb could demonstrate to a greater extent their design abilities. At first they will completely redesign the travel industry to make it 100% compatible with the sharing economy (doing so they will probably be able to contribute to the redesign of the regulatory environment). But then this could expend far beyond travel, expending AirBnb’s influence indefinitely.

Whether AirBnb or Hotel companies are the first ones to make the big move will probably decide on who will own the travel industry. AirBnb has the skills (and the $$$) but hotels already have the assets.
Who knows what is going to happen…

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