Airbnb Rolled Up $809 Million in Acquisitions in 3 Years on Way to IPO

Online Travel This Week

Airbnb made nearly two dozen acquisitions since its founding 13 years ago, and the largest and most important was HotelTonight for $441.4 million in cash and stock in 2019.

Since 2017 through the first nine months of 2020, Airbnb bought about 10 startups, according to its announcements, and Airbnb’s S-1 statement cited acquisition costs of $808.9 million during this period. With travel collapsing in the spring of 2020, Airbnb didn’t acquire any companies this year.

The following is a partial list of Airbnb’s acquisitions and total acquisition costs since 2017 with some so small that there names weren’t mentioned in the company’s initial public offering registration statement. For example, in 2019 in addition to HotelTonight, Airbnb merely said it made “two business combinations,” which we believe were for Urbandoor and Gaest, for a total of $63.3 million.

Airbnb Acquisitions 2017 to 2019

Source: Airbnb, Crunchbase, and Skift 

Airbnb acknowledged that two of its largest and most recent acquisitions — HotelTonight and Luxury Retreats — have been hard hit by the company’s pandemic-induced decision to lay off 1,800 employees, and curtail marketing spend this year. Airbnb halted investments in its hotels and luxury businesses.

Acquired in 2017 for $224.1 million in cash and stock, Luxury Retreats was the foundation for Airbnb Luxe, an effort to get into the luxury space and compete against the likes of Onefinestay and other high-end accommodations’ providers. The prospect of Airbnb Luxe becoming a major component of Airbnb’s revenue was questionable even before the pandemic because the core of the Airbnb brand proposition to date has been traveling like a local, and finding a cheap and affordable stay.

Like much of Airbnb’s registration statement, there is little visibility into the performance of Airbnb Luxe because its numbers aren’t broken out. Airbnb likewise obtusely combined Experiences and room nights booked into one reporting category so it’s tough to gauge the trends of either.

In addition to buying Luxury Retreats in 2017, Airbnb publicly announced at least five other acquisitions, from Accomable to Tilt, that year and its total acquisition costs for these were smallish, totaling $39.8 million for the handful.

These relatively diminutive acquisitions have often been Airbnb’s modus operandi since 2017, when excluding the buys of Luxury Retreats and HotelTonight. The average cost of eight other acquisitions during this timespan was roughly $18 million each.

Although Luxury Retreats and HotelTonight were among Airbnb’s largest acquisitions since its founding, Airbnb’s pace of buying has slowed somewhat. It appears that Airbnb made about a dozen acquisitions in the six years through 2016, and it bought about 10 companies in the past four years.

HotelTonight is arguably Airbnb’s most important buy to date, although Airbnb CEO Brian Chesky announced in the spring that the company had temporarily ceased investing into hotels, as well as transportation, which would have brought flights to Airbnb.

If Airbnb hasn’t already devoted resources anew to HotelTonight and expanding its hotels business, Airbnb assuredly will once it goes public and generates more cash. After all, in addition to Google, Airbnb sees online travel agencies, with their breadth of accommodations’ offerings, as its most significant set of competitors. 

In Brief

Does Domio Have a Pulse?

After getting temporarily banned from Airbnb for behaving badly and severing ties with its co-founders as a price of reinstatement, short-term rental provider Domio is disputing reports that it is selling assets and closing shop. Instead, Domio claims, a “planned financial re-engineering” is under way. Short Term Rentalz

Booking.com Faces Legal Setback

The European Union’s Court of Justice made it easier for hotels to sue Booking.com in a member state even though the online travel company is headquartered in the Netherlands. German hotel operator Wikingerhof brought the initial action. Hey, a hometown jury and court can often be advantageous. Court of Justice of the European Union

Airbnb’s Brand Advantage

Airbnb attracts a higher percentage of direct traffic than do rivals Booking.com and Expedia Group, and “spends 10-20 percentage points less on brand and performance marketing as a share of overall revenue,” according to an analysis by Skift Research’s Seth Borko. Skift

Lime in the Black for the First Time

Scooter, bike and car-sharing platform Lime turned profitable in the third quarter, marking its first quarterly profit, as it exited money-draining markets, laid off employees, and optimized the operations of its two-wheel scooters. Skift

Booking.com Mandates Short-Term Rental Cleanliness Standards

With travelers sensitive to cleanliness standards in places they stay during the pandemic, Booking.com issued mandates for properties seeking to list on its platform. Airbnb has its own standards, but likewise requires hosts to comply. Skift