As CEO and head of community, Brian Chesky makes his way around the world and he’s offering some insights into what’s next for his $31-billion company.
Airbnb co-founder, CEO, and newly minted head of community Brian Chesky has embarked on a world tour of seven different cities and midway into his journey, he’s been dropping quite a few hints into the future of his company, which is now theoretically worth almost as much as the world’s largest hotel company.
On March 10, Chesky spoke in front of university students at the Oxford Union in Oxford, England, and on March 13, Chesky stopped by the New York Stock Exchange (NYSE) to be interviewed on stage by The Airbnb Story author and Fortune assistant managing editor Leigh Gallagher as part of a New York Economic Club lunch meeting.
During both appearances, Chesky spoke about what it was like to launch a now $31-billion company, as well as discussed the possibility of a future initial public offering (IPO) and what Airbnb Flights might look like.
To IPO or Not to IPO?
Airbnb’s latest round of funding seemed to quell rumors that the company was nearing an IPO, but during his NYSE discussion, Chesky confirmed that, yes, Airbnb is on the path to an IPO. However, when exactly that will be is still to be determined.
“We don’t have anything to announce,” Chesky said. “We are working on making sure the company is ready to go public and so, you know, we’ve always said it’s a two-year project and we’re probably halfway through that project as far as being ready to go public. At that point, you know, our investors are very patient. None of them are anxiously waiting for us to go public.”
When reminded he made the same comments in 2015, Chesky said the two-year period was “flexible.”
Chesky also said the only reason Airbnb would seriously enter into an IPO would be to deliver immediate liquidity for the company’s shareholders.
Flights & End-to-End Travel Experiences
During Chesky’s talk at the Oxford Union, he gave bit more insight into one of the company’s most anticipated — and yet to be launched — products, flights. During the Airbnb Open in November 2016, Chesky hinted that Airbnb would enter into the flights arena, but didn’t divulge many details.
If Chesky’s recent comments are any indication, it certainly seems like the company has something large planned for flights that extends beyond just metasearch or booking.
“I would like Airbnb to one day redefine how we fly,” Chesky said. “I think today, if you look at modern aviation, it’s a bit stagnating.” He recalled the time he recently returned to the first airport he ever flew out of as a seven-year-old, and how it hadn’t changed since 1987, lamenting how the flying experience hasn’t changed much over the years, and remains painful for most passengers.
“The funny thing about flying is, no matter how successful you are in life, you are reminded how much of a mere mortal you are, and that’s another area we really want to invest in,” Chesky added.
Later, when asked whom he looks to for source information, Chesky said that, in his efforts to work on Airbnb’s aviation product, he’s enlisted the help of a variety of sources including major airline CEOs, most of whom told him to read the book, Hard Landing: The Epic Contest for Power and Profits That Plunged the Airlines into Chaos. He said he also hired a former head of a major airline to serve as an advisor, no doubt similarly to how he once enlisted Joie de Vivre Hotels founder Chip Conley to serve as his hospitality advisor. He said he also spoke to Elon Musk and other individuals about topics ranging from vertical takeoffs, technology, and circular runways. And then he ended his statement by asking, “What if you took a home and put it in the sky?”
Chesky said that the company’s latest $1 billion in funding will go toward developing its aviation product, as well as into its core homes product and its newly launched Trips product.
“We’re going to do a lot more with homes … we want to help redefine how to stay in a home again,” he said at the Oxford Union. “We want to massively scale experiences.”
Since launching Airbnb Trips in November with 12 cities, the company has added experiences in Barcelona, Paris, and Singapore, with the hopes of offering Trips in 51 cities worldwide by year’s end.
“We’ve completely changed and created a whole new category of how to stay,” Chesky said during his talk at the NYSE. “For the next 10 years I want to get to a place where we can sell end-to-end trips. That we can have hundreds of millions of people every year booking end-to-end experiences, where the home might be a minority of what we are doing. We’ve completely changed what to do. Ten years from now, if it’s Friday night or Saturday night, you’re like, ‘What’s fun to do around here?’ whether it’s a city that live in or you’re traveling, you look to Airbnb. We’ve created tens of millions of entrepreneurs that are creating experiences. [It’s] a whole new part of the economy — an experience-based economy. We’ve also gone to aviation and started to redefine how we fly. Because what if flying were the best part of travel and not the worst part of travel? We call all of this ‘Magical Trips.’ Trips that are amazing, memorable, end-to-end experiences, and that’s what we want to be doing in the next 10 years.”
The Future of Airbnb’s Regulatory Challenges
Chesky’s plans for evolving Airbnb into a company that does more than just serve as a marketplace for homes, could be hindered, however, by some of the many regulatory battles it is facing in some of its largest markets, New York City, in particular.
To curb some of the potential harm that could come from stricter regulations or potential short-term rental bans, it’s clear the company is sending a message to cities like New York that it (1) wants to work with them and (2) that Airbnb can be a vital source of positive economic impact.
During his speech at the NYSE, Chesky acknowledged that he understands the need for regulations on short-term rentals, and he reflected on what has become a rather contentious relationship between Airbnb and local city officials here in New York:
“When we started Airbnb, we didn’t fathom millions of people doing this,” he said. “So I did not consider landlords. I didn’t consider cities. It was so bigger than what our idea was. Our idea was just to bring two people together. It grew so fast.”
Chesky said he soon realized that his “Craigslist school of thought” about how the community could monitor itself wasn’t enough to solve problems that eventually arose, and that the company needed to be more “mindful.” Since then, Airbnb has signed 200 agreements with cities worldwide that often involve tax collection agreements and, in some cases, enforcement of rental caps, but New York City remains one major city where Airbnb hasn’t been able to successfully work with regulators.
“In New York City, there were a number of things going on,” Chesky said. “The first thing is we were slow to be here. I think we didn’t get our story out early. There was a bit of misinformation about who our company was. There were substantive problems, a phenomenon that occurred where landlords saw they could make a lot of money taking units off the market and renting them on a short-term basis. Though I think the scope of this was overstated on our platform, this was a problem, and people were doing this. We were a little behind on this and we had to play catch up.”
He later added that Airbnb wants to work with New York City to collect and remit local taxes as it does in cities such as San Francisco, and that the company is committed to a “One Home, One Host” policy in New York to ensure people are renting out the homes they actually live in, versus acting as commercial operators and taking housing units off the market.
A report issued last week by the American Hotel & Lodging Association (AH&LA) and CBRE Hotels’ America Research suggested that commercial operators drive a substantial amount of Airbnb’s business in top markets like New York, however. Airbnb head of public policy Chris Lehane told Skift that the report was “intellectually dishonest.”
Chesky also noted he hopes the company can work more with landlords as part of its Friendly Buildings program, whereby multi-unit housing operators can actually work with Airbnb to regulate Airbnb rentals in their buildings with their tenants and even get a cut of the revenue generated. That particular program is now available in 3,000 cities, said Lehane.
Additionally, Airbnb commissioned a report from NERA Economic Consulting to demonstrate the company’s overall economic impact in 200 cities worldwide. According to this report, Airbnb generated a total global economic impact of $61 billion in 2016 ($14 billion in the U.S.) and supported a total of 730,000 jobs worldwide (130,000 in the U.S.).
By contrast, an Oxford Economics study commissioned by the AH&LA on the economic impact of the U.S. hotel industry found that the industry supports 8 million jobs and contributes $600 billion to the U.S. economy.
Chesky said the NERA report estimates Airbnb will support a total of 1.3 million jobs worldwide in 2017 and that the report demonstrates how Airbnb is empowering people economically. By Labor Day of this year, the company will also allow hosts to take a Living Wage Pledge so that they pay anyone who cleans their home listing a minimum of $15 per hour.
Photo credit: Airbnb CEO Brian Chesky (L) during an interview with Fortune editor Leigh Gallagher at the Economic Club of New York. Economic Club of New York