Skift Take

Every company goes through growing pains, but Airbnb can't forget what initially drew so many travelers away from hotels and into the short-term rental sector.

Airbnb is an increasingly formidable player in the hospitality sector, but with its rapid growth came critiques that the company risked losing its “live like a local” ideology and soul.

A key advisor to the company says it is possible to expand into new revenue streams without losing Airbnb’s foundation business.

“The company is a strong enough brand that there have been ways for us to expand the brand and expand the revenue,” said Chip Conley, strategic advisor for hospitality and leadership at Airbnb, Wednesday at Skift’s Short-Term Rental and Outdoor Summit in discussion with Executive Editor Dennis Schaal. “I believe Airbnb has the capacity to be a lifestyle curator in a way that it’s not just a homesharing company.”

Short-term home rentals remain Airbnb’s major source of revenue, but the company branched out into other business lines that grew especially during the months of pandemic-related lockdown. Experiential bookings, like cooking classes, are popular with local residents as well as those on the other side of the world looking to explore a different culture.

Guests migrated to Airbnb because they wanted to book more space for less money and live more like locals, Conley added. This live-like-a-local goal is something that goes beyond a home, and it is something Airbnb sees as a competitive advantage to online travel agencies like Expedia and — which the company sees as its biggest competition, according to its IPO filing documents.

“There are plenty of opportunities for Airbnb to remain unique but grow mainstream,” Conley said.

Airbnb’s success still threatens its “live like a local” identity. While the hosts of many properties actually live nearby (or even at the listing), there are plenty of hosts that are just businesses operating from an entirely different city.

It is easy to see why some critics fear Airbnb could lose its local charm, as the company is on track to debut on the stock market Thursday at a valuation that could exceed $42 billion, the Wall Street Journal reported this week.

Conley sees both host profiles as playing an important role in the company.

Some customers want a localized experience, and those hosts exist. But Airbnb also caters to people traveling on business or wanting an extended-stay accommodation with limited interaction with their landlord.

“Airbnb is the extended stay lodging provider for the world. I think some of those people want a simple accommodation experience that doesn’t have a host as integrated in it,” Conley said. “It’s like saying Baskin Robbins has 31 flavors, and they have 31 flavors because not everyone wants one flavor.”

Wooing a Major Headwind

The San Francisco-based short-term rental company has been the travel industry’s silver lining amid the pandemic’s brutal financial havoc on sectors like airlines and hotels. Travelers like the idea of fully controlling the space they are in like an entire-home rental, industry thinking goes.

But Airbnb was growing in the years leading up to the pandemic, and hotel trade groups didn’t like what they saw as an unregulated competitor seizing market share. Rather than add fuel to a tense situation in some of America’s largest cities, Airbnb leaders held meetings with the leaders of some of the world’s largest hotel companies.

“Part of the reason we did this is you can’t hate up close — that was one of our premises,” Conley said. “We will be perceived as the bad guy, but what we wanted to do is share information with these companies.”

Conley, who serves as what Airbnb calls a “modern elder” mentor to CEO Brian Chesky, described the meetings as learning sessions on where the company saw homesharing becoming a long-term travel trend. Airbnb leaders saw the sector becoming less alternative and more mainstream, especially as millennial travelers increasingly favored this type of vacation stay offering.

The CEOs and leaders of Marriott, Hilton, Hyatt, and IHG are among those who met with Airbnb, Conley said. Those meetings were key in achieving what the company hoped would be a more hospitable disruption environment than Uber had with the taxi industry.

“What was very clear is, if we’re in the hospitality business and going to be a disrupter, we better be a disruptor that’s as gracious as possible,” Conley said.

Those meetings may have inspired some hotel companies to enter into the short-term rental space themselves, but they did not lead to a détente between short-term rental providers and the greater hotel industry.

Hotel trade organizations often led the fight in major U.S. cities to regulate companies like Airbnb for operating like hotels in these urban markets. Conley downplayed that battle Wednesday.

“In 2014, what we believed is, if we wanted to legitimize ourselves in the hospitality space, we had to pay occupancy taxes and be open to regulations in big cities,” he said.

As for relationships today with the hotel industry, Conley described those with hotel companies as “moderately neutral” and with hotel associations as “a bit of a blood sport.”

“At the end of the day, there’s been much more regulation in the last few years, but Airbnb’s business has continued to grow,” he added. “Now, it’s continued to grow in new ways.”

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Tags: airbnb, coronavirus, coronavirus recovery, marriott, stro2020

Photo credit: Airbnb leaders are juggling how to expand revenue streams while not losing sight of the business lines that made the company an initial success. Raysonho @ Open Grid Scheduler / Scalable Grid Engine / Wikimedia

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