Airbnb will spend tens of millions of dollars, if not more, on its global advertising and referral campaigns to recruit more hosts, and that's probably a smart move. On the face of it, though, this proves that the company's host sign-up efforts are hardly organic, as one analyst alleged.
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Airbnb indeed has a brand advantage over many of its competitors, but what about its inroads in organically recruiting new hosts? Does that set Airbnb apart, as well?
In a recent research report, Alliance Bernstein analyst Richard Clarke touted Airbnb's guest-host "flywheel," sparking verbal allusions to Amazon's business momentum through its flywheel effect, a business principle that is a self-reinforcing loop fed by key strategic initiatives.
"Airbnb benefits from a peer-to-peer flywheel of guests becoming hosts, hosts becoming guests — which leads to more unique product, loyal customers and less reliance on third parties," Clarke wrote. "Ultimately this is expected to mean higher margins and the opportunity to extend into new verticals such as experiences and longer term lets."
Airbnb didn't user the word "flywheel" in its initial public offering registration statement in November, but made a similar argument about the organic way that it attracts new hosts.
"Hosts come to our platform organically, offering stays and experiences in nearly every community around the