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Airbnb has appointed retiring American Express CEO Kenneth Chenault to its board, signaling major changes for the company, including a potential rollout of a loyalty program and its commitment to an eventual initial public offering.
Airbnb CEO Brian Chesky announced Chenault’s appointment as part of an open letter in which he conveyed his vision to transform Airbnb into a “21st century company,” including plans to make improvements to its service.
That scenario calls for “empower[ing] a host-led world with some substantial improvements to our service that set us up for an infinite time horizon,” Chesky wrote.
In other words, Airbnb is not an Uber; it sees itself as caring about its community and the people who built its business. With the appointment of outgoing American Express CEO Kenneth Chenault as its first independent director, Airbnb — like Facebook, which also recently appointed Chenault to its board — is making a major statement about its valuation and its willingness to transition into a public company.
Chesky also said the company will announce service improvements on February 22, and that in March it intends to release its first-ever stakeholder report.
There is speculation that Airbnb could file for an IPO in 2018, depending on market conditions. Recode reported that Airbnb can show “$100 million in cash-flow profitability” for 2017, which wouldn’t hurt if it opts to file IPO registration papers in 2018.
Here’s a closer look at what Chesky’s open letter really means, and what the possibilities of a “host-led world” might be like.
The Appointment of Kenneth Chenault
In his note, Chesky wrote that “Airbnb is built on trust,” and that Chenault enhances that attribute because American Express is “one of the most successful trust-based companies in the world.”
Critics of credit card companies and their cardholder practices, however, may take issue with that assessment, but Chenault’s 17 years’ experience in leading a company that has been a pioneer in loyalty may have some big benefits for Airbnb. American Express has had many loyalty/credit card relationships with other travel companies, including Hilton, Starwood, and Delta Air Lines.
What better way to know or track host and guest activity, and to attract repeat customers than through a loyalty program?
If Airbnb is indeed planning to launch a loyalty program, as chief strategy officer and co-founder Nathan Blecharczyk and Chesky have hinted at before, having someone like Chenault to help guide them through that process is a clutch move.
Rented.com CEO Andrew McConnell said adding Chenault to Airbnb’s board sends a clear message to investors. “Within a week of Facebook announcing Kenneth Chenault was joining its board, Airbnb does the same,” he said. “The signal? People thought we might be overvalued at $31 billion. With this board addition we are putting ourselves in the same conversation as a company with a market cap of over half a trillion. Watch out.”
Another important thing to note about Chenault’s appointment is that he has also been one of the longest-serving black CEOs of a major corporation, and in an industry often dominated by white male chief executives — not unlike Silicon Valley. By appointing him to its board, Airbnb is demonstrating its commitment to diversity in leadership, even as the company has been previously criticized for its lack of diversity in terms of its employment numbers.
Chenault’s last day as CEO of American Express is February 1.
We Haven’t Forgotten Who Built Our Business
Last year, Skift published a comprehensive look at “Airbnb’s Road to an IPO,” which detailed the many challenges and opportunities the company faces as it pursues that eventual IPO. Perhaps the biggest challenge outlined in the piece was Airbnb’s ability to maintain strong ties to its three million member host community.
One host Skift spoke to said she no longer felt valued thanks to policies that seemed to make it more challenging for her to be one. ““You need to still feel valued as a host. Right now, I don’t feel like they’re doing that at all. Hosts built the business for them. Without hosts, they wouldn’t have a business.”
She, like other hosts we’ve spoken to in recent months, felt like the majority of Airbnb’s recent efforts, such as pushing Instant Booking or Pay Less Up Front or testing new guest cancellation policies, were intended to benefit guests more than hosts.
One such host, David Jacoby, co-founder and president of Hostfully, a company that helps vacation rental and short-term rental hosts develop digital guidebooks for their guests, said he admires Chesky’s “approach of swinging for the fences” and that fact that “he has often backed it up with his actions.”
“It will be challenging for him to navigate some inherent conflicts as Airbnb grows,” Jacoby, a three-year Superhost and board member of the Home Sharers Democratic Club, said.
Jacoby noted that in 2017, Airbnb increased its efforts to work more closely with traditional vacation rental management companies, which manage multiple listings, and that although Chesky appointed himself “head of community, there haven’t been major changes that are host-centric. In fact, for the first time in four years, there was no Airbnb Open host conference” last year.
What’s in store regarding the February 22 service-improvement announcements?
Our biggest hunches are that Airbnb will make improvements to communication channels between hosts and guests, that it will debut new tools to make it easier for hosts to manage their listings and make more money, and that it will dramatically reorganize how its platform is displayed, making it easier for guests to find the exact types of accommodations or experiences they are looking for.
The company’s recent move to make it easier for bed-and-breakfasts to host on Airbnb also points to the increasing professionalization of the platform, and its ability to compete with established online travel agencies such as Priceline and Expedia.
Jacoby, for one, thinks Airbnb will find it increasingly difficult to differentiate itself. “Another inherent conflict is regarding providing unique experiences that make the tourist feel like a local. If you are staying in a completely private accommodation, and you book a tour through Airbnb that has tons of other Airbnb tourists, and eat at a restaurant recommended by Airbnb, and not the local host,” he explained. “They are becoming more and more like a traditional OTA [online travel agency].”
We’re Not an Uber
Unlike many travel giants, Airbnb has always marketed itself not as a company, but as a global community.
Chesky’s note, and its emphasis on serving “all stakeholders,” fits in with the image the company has been cultivating for years: That it’s a business that lets you “belong anywhere.”
Chesky wrote: “It’s clear that our responsibility isn’t just to our employees, our shareholders, or even to our community – it’s also to the next generation. Companies have a responsibility to improve society, and the problems Airbnb can have a role in solving are so vast that we need to operate on a longer time horizon.”
McConnell thinks this messaging is a brilliant marketing play on Chesky’s part.
“The point on all stakeholders sends two signals in its own right,” he said. “One is we are not Uber. We care about communities, the people who use our product and service, and those we don’t. Please don’t paint us with that brush. Secondly, we are not like other online travel agencies who are all about bottom line and serving only the consumer at the cost of the other stakeholders. We love you all.”
Uber, a fellow Silicon Valley unicorn, with a current valuation of $70 billion, has been plagued by scandals. Airbnb, in contrast, has marketed itself as an “iconic, community-driven super brand,” as noted by former Airbnb chief marketing officer Jonathan Mildenhall. Airbnb, however, has had pitched regulatory battles with a variety of cities, and has been criticizing for enabling racial and gender discrimination on its platform.
McConnell also noted the company’s recent promotion of Airbnb listings in Trump’s “shithole countries” as a move that also demonstrated the company’s efforts to endear itself to the general public, especially younger generations. “It signals the company’s mission is way more than dollars and cents, which, by the way, helps it earn more dollars and cents. Well done,” McConnell said.
He also applauded Chesky’s efforts. “This has been something Brian and Airbnb have been brilliant at from the beginning. They are the cuddly lovable startup changing the world. To be able to make almost everyone happy all of the time seems impossible, but they aren’t giving up on the dream.”