Skift Take

Airbnb's Chesky has seen the future, and it is a lot like Airbnb: "This revolution really is about flexibility," he told attendees. "Suddenly you can live anywhere, you can work anywhere. And I think what’s pretty clear is we’ve all learned how much work can get done remotely."

Airbnb CEO and co-founder Brian Chesky spoke with Skift CEO Rafat Ali at Skift Global Forum 2021. The two discussed the theme “The Future of Human Mobility and the Long Term Affects on Travel.” 

You can watch a full video of their discussion as well as read a transcript of it, below.

Rafat Ali: Thank you, Brian, for being here.

Brian Chesky: Thank you.

Ali: I hear this as your first in person event you’re doing since the pandemic.

Chesky: Yeah, probably two years.

Ali: Wow, thank you again.

Chesky: Lot of Zooms before this.

Ali: I appreciate it. And obviously you’ve been in New York, I think for the last few days as well.

Chesky: Doing a little press.

Ali: Doing a little press. You have been talking about travel revolution. One of the things that you and I were talking about yesterday was many of the speakers that are going to come over the next two days have said that the travel industry is coming back and a lot of things will remain the same. You’re saying, and you’ve been saying I think from the start of this pandemic, the travel industry is completely changing and now you’re saying it’s in for a revolution. Talk about what you mean by that.

Chesky: Yeah. I think that travel as we know it is never coming back and there’s a whole new game and I think it’s a good thing. And I want to explain what it’s going to look like, what I think it’s going to look like. Before the pandemic, we used to live in one place, we called that our house, we went to another place to work, called that the office and we traveled to a third place. And what the pandemic did is it forced us all to do all three activities in one place. And that place could with Zoom, a new technology that didn’t exist 10 or 20 years ago, suddenly be anywhere. This revolution really is about flexibility. Suddenly you can live anywhere, you can work anywhere. And I think what’s pretty clear is we’ve all learned how much work can get done remotely. We actually managed a crisis, had to rebuild the company from the ground up on Zoom and when public on Zoom.

You can do everything remotely. It doesn’t mean everything should be but suddenly we all have flexibility. Imagine hundreds of millions of people now flexible. They don’t have to go back to the office five days a week. Most bosses aren’t going to force you to come back five days a week. If you’re one of the CEOs that forces people to come back five days a week, you’re probably going to struggle to compete with talent because I think mobility and flexibility will be number two to compensation as a benefit. All CEOs under 40, this is going to be totally normal to them so the next generation of companies are going to be flexible. And so what that means is if you don’t have to go back to the office five days a week, it means every weekend could be a three day weekend. It means every summer could be an opportunity to go away. If you don’t have a family, you don’t even have to be tethered to one city or one location. A fifth of our business by room nights is 30 days or longer.

Ali: This is now over the last year and a half.

Chesky: Yes. And we think this is going to stay and probably go up. That means that one fifth of our business in growing is not even travel.

Ali: How does that change your business?

Chesky: This is changing the entire identity. Well what would it changes is suddenly people kind of travel anytime. They’re not just going to tourist hotspots. They’ll still come back to Times Square. They’ll still go to Paris. They still go to Rome but suddenly they’re going to go to small cities. They’re going to go to rural communities. National parks are seeing a resurgence. And so suddenly the genie is out of the bottle, the playing field is leveled. And when people do travel, they’re going to travel longer. Business travel is going to be really affected because I don’t think business travel’s ever coming back to the way it was in 2019 because suddenly technology has replaced the need for a lot of business travel on Zoom.

Again, we did a whole IPO on zoom and so there will still be a need to meet in person. But I think that these very short trips for a single meeting here and there, unless it’s really critical relationship building, you’re just going to do it remotely. And then when there is business travel, there’s going to be I think a new portion of business travel. People working remotely, they want to go back to the headquarters they’re going to need to be there for a week or two weeks. And so I think this is what it’s going to start to look like.

The last thing I’ll just say is the more we live remotely and live flexibly, the more we’re home all day and so the more we’re home all day, the more I think people are going to actually need connection, real connection with other people. You can only stay at home so much, watch Netflix, be alone. You want to get out. And so suddenly I think travel is going to be about not just seeing places but really seeing people. And so it’s going to be about off sites for companies. That’s a big part of business travel, off sites. Family reunions, friends coming together. And I think this is probably the biggest change to travel, I don’t know, certainly since the internet but probably since the advent of the airplane because the entire identity of travel has changed. But I do think that it’s going to come back way bigger than ever because the more people have freedom, what is the first thing a middle class does when they can have the money? One of the biggest luxuries is travel.

Ali: Is travel.

Chesky: And if you ask people if he had all the money in the world, what would you do? Years ago we actually did a survey. The number one answer was travel. The number two answer was start a business.

Ali: You said you did the survey.

Chesky: A number of years ago before the pandemic. I am quite certain that today with a lot more flexibility, that number would probably go up.

Ali: That number would probably go, that’s true. As you’re thinking about your own company, Airbnb, what does it mean? The hybrid word, I know you don’t like the word hybrid. Explain why.

Chesky: Well, I think hybrid is, we’re not really sure so we’re going to call it a little bit of the old world little bit of the new world until we figured it out. I think it is true that very few companies are going to be a 100% remote. We’re not going to be a 100% remote. I think people are going to realize that’s going to be a drag and we need human connection. And I think anyone that thinks they’re going back five days a week, some can, that’s their prerogative. I don’t think they’re going to be very competitive from talent. I think people are going to come back occasionally. Are they going to come back Tuesday through Thursday and have four day weekends? Maybe. Probably what will be more likely to happen is that people will come back weeks at a time in a coordinated way and be gone for weeks at a time. Because four day weekends don’t give you a ton more flexibility than the old world. And so I think the key is I don’t think companies will dictate this. I think the employees will dictate this.

Ali: Which is actually what we’ve been seeing over the last.

Chesky: Totally.

Ali: Certainly over the last six months.

Chesky: We all want the best people and we will do anything to get the very best people.

Ali: And so you have two buildings?

Chesky: In San Francisco,

Ali: In San Francisco.

Chesky: Yeah, we had four. We now have two. We had 40 offices or 50 offices before the pandemic. We have maybe half or a little more than a half but we have a significantly smaller footprint.

Ali: And I feel that’s what’s going to continue to happen.

Chesky: Oh yeah. I think every CFO in the country has not forgotten the lesson of how much money they’re saving on real estate and how much money they’re saving on travel entertainment. And they’ll spend more but who wants to go back to a 100%? A lot of businesses and a lot of PNLs have gotten used to reducing expenses. I don’t think it’s all coming back a 100% but I do think that it doesn’t mean travel’s coming back. I think again, the less people travel for business, the more I think they travel for leisure. I think it’s a little bit of a shift and business and leisure probably will blur together anyway. When your home is your office, they’re kind of blurring anyway.

Ali: And one of the things that happened over the last 18 months is obviously domestic tourism boomed.

Chesky: Massive.

Ali: People within drive distance. How do we continue this boom? Obviously now we saw the news yesterday that international borders are opening up, I’m guessing your bookings are going up.

Chesky: Yeah, absolutely.

Ali: Or you’ve at least seen since yesterday. And how do we continue the boom in domestic travel, only because domestic travel has such a big effect in the small businesses across the country as well. How do we continue the small? How are you thinking about it?

Chesky: Yeah, just to say a couple things. Before the pandemic, half of our business was cross border. We were really exposed to cross border travel because the way Airbnb started was basically people in New York going to Paris or vice versa and that was like having a cultural experience in the community. That was our business. What we weren’t expecting was that when borders shut down, suddenly domestic travel could rise. The reason I’m super bullish about domestic travel, and by the way, there’s not a lot of domestic travel in Asia, at least not in our kind of business. Where we’ve seen a lot of domestic travel is US, France, UK, really big markets. And I think that the reason business domestic trip is going to stay really popular is what’s one of the largest expenses to travel? It’s flights.

And so increasingly I think a lot of long distance travel is being replaced by short distance travel. People realizing, well I could spend a certain amount of money to fly and get a place to stay or I could not fly and I could stay longer. And so I think you’re going to see not everyone do that but some people continue to do that. I also think, mass tourism, which is basically people going to Times Square that I think we’ll be back but I think it’s going to have an alternative, people going to small communities, staying with friends. I think it’s less about the landmarks and more about being with other people. I do think that’s going to also lead to a little bit less maybe of what we call old mass tourism travel, people getting on double decker buses, taking selfie stick photos in front of landmarks. That will come back but again, there’s going to be more competition of other types of travel.

Ali: And so over tourism, which was obviously a term that was there before the pandemic, we coined in fact in 2016, was a term that everybody latched onto. You think that post pandemic, some of the challenges of Airbnb in cities, there’s less going forward because people are probably spread out more?

Chesky: Absolutely. Listen, I don’t think there’s too much tourism in the world, I think over tourism is too many people going to too few places at the exact same time. That’s mostly what it is. And so, I remember years ago I met with the minister of tourism in France and he said, “How can we help get fewer people to come to Paris and more people go to the rest of the France?” Well, before the pandemic, it was all pretty hard because on Airbnb and every other website, there was a search box. And the question asked, “Where are you going?” Most people would type a location. And then we’d ask, “Well, when are you going?” People would add dates. Well, that whole paradigm has changed because now suddenly in a world of flexibility, a lot of people, 40% of people come to Airbnb now, 40%, this is hundreds of millions of people and they either don’t have a destination in mind or they don’t have a date range in mind.

What this means is we have the ability to point demand to where we have supply. And the holy grail of over tourism is travel redistribution. The only alternative is not traveling. You either can not travel or you can try to redistribute people to different places at different times but that’s not possible if people have high intent, they know exactly where they’re going. Well, the moment people are flexible and they’re open minded, you can point demand. And we’ve had hundreds of millions of people, more than 500 million searches have used just our flexible date feature, where you basically say, “I am willing to go anywhere for a night, a weekend, a week, a month in this date range,” that’s been used over half a billion times.

Ali: Which is very interesting because historically people when they do the travel planning cycle, they will think of a destination first and figure out where to stay.

Chesky: Yeah, yeah, yeah. It’s you had travel planning, so travel content, where should I go? Then flight, then hotel Airbnb. We were the third choice. Suddenly for many people, the accommodation is now the first choice. And so that’s obviously beneficial.

Ali: And how does that change the product itself?

Chesky: Well, the product changes because you go to right now, there’s a big button that says I am flexible. I think going forward, we’re going to be in the business of inspiration. We’re going to be in the business of pointing demand to where we have supply, inspiring people about different communities around the world. And I think it’s going to level the playing field, not just for cities and communities but for hosts. And I’m not sure anyone loses because most of the cities that will get demand redistributed away were the ones often complaining about over tourism in the first place. I think travel redistribution, this is to me pretty revolutionary. I think that’s a massively good thing for most of the industry.

Ali: And so speaking of inspiration, you used to spend hundreds of millions of dollars in marketing, which you’ve cut out completely.

Chesky: We were spending $800 million on a run rate basis on marketing, mostly Google keywords and we got to do the experiment that I think every CMO in the world wish they could do. What if we just turned off a 100% of marketing? What would happen? And everyone’s been afraid to try that experiment. Of course we were forced into that experiment. We shut off $800 million of run rate marketing and what happened was our traffic was still 95% of the year prior. And so we started realizing, maybe we don’t have to return to that level of spending and we have not. And it’s helpful that our brand is a noun and a verb and we spend a lot of energy now investing in a brand. I do a lot of press. We got a half a million articles written about us last year. I think if you can get people to talk about you, that’s the best marketing.

Ali: And so you obviously have a lot of data on your hand where people are traveling to, where people are moving. What would it take and Parag spoke a lot about people moving, mobility as destiny for human beings obviously.

Chesky: I agree what he was saying, by the way. I didn’t hear the whole talk but I think it’s totally true that. By the way, he used the word mobile. I remember I came to Silicon Valley in 2007. I got there in October 2007. January 2007, Steve Jobs introduces the iPhone. It goes on sale summer 2007. Couple years later people said, “There’s a mobile revolution.” I even back then thought that’s not the real mobile revolution, the mobile revolution isn’t being able to take a computer with you. A real mobile revolution is we all can go anywhere. I think this is what I mean by the revolution that actually we all have so much more freedom. And I think that’s going to lead to a new golden age of travel. I think it’s going to be so much bigger than anyone’s forecasting and everything we are seeing is pent up demand, a business that’s, you saw our numbers in Q2 back to where it was before the pandemic, without half the business. Cross border recovering. There’s no way that it’s going to cannibalize all the domestic travel.

Ali: And so one of the things which people may or may not know, 10 years ago, I heard you speak at one of the early conferences and you said, I don’t own a home. You were living in Airbnb.

Chesky: I was living in 2010, we were working out of a three bedroom apartment. We had 20 employees. We couldn’t get an office in time and we had no meeting rooms. Because we’re working at a three bedroom apartment and so people were doing sales calls in the stairwell. And so at some point I’m like, all right, I’m going to give up my bedroom. And I initially thought to go on Craigslist to get a longterm rental. And I thought to myself, well I have a website, I can just stay in different homes. And so in 2010, I stayed in 40 or 50 homes, hopping home to home and I didn’t own a car but luckily, another service at that time in 2010 had just launched. It’s actually a funny story.

One day I get an email from a kid named Ryan Graves. He said, “I have a company it’s called Uber Cab and me and a 100 of my friends want to pool together this black car service,” which became Uber. And so I lived in Airbnbs and I was one of the first users of Uber. That I think was a glimpse of the world that we’re now living in because people are now living on Airbnb. We had a competition, a contest where you could basically apply to get to live on Airbnb. We had 300,000 applications of people wanting to live on Airbnb. I think the biggest thing about travel isn’t just that people can go everywhere, the bigger part of revolution is that length of stay is going to increase and it’s going to blur with living. It’s going to blur. It’s not going to be like I live here, I travel there. It will be for some people but for others, it’s going to blur together. The 24 year old version of me, I’d be probably moving all over the place.

Ali: The boom that’s happened in real estate prices, obviously all the housing and not just US but globally has obviously increased quite a bit just in the last year and a half. How does that affect Airbnb as a company?

Chesky: Well, there’s really pre pandemic and post pandemic. Pre pandemic, affordable housing is a major issue. The problem before the pandemic was, take San Francisco, home prices were rising but you felt like you had to be in San Francisco. I think I don’t want to make an overgeneralized statement but in a post pandemic world, the place you have to be is the internet. Said differently, you don’t have to be anywhere. Some people will have to be in New York, some people have to be in San Francisco but also remember this is the worst technology will ever be in our life. This is the worst it will ever be. Technology is going to increase. Camera technology is going to increase, bandwidth is going to increase, behaviors are going to become completely habitual.

And so that basically means that I think people are going to live, they’re going to migrate to where more affordable housing is. And we are seeing this right now on Airbnb where there’s a really good deal people are moving. They’re going to the corridors of cities. Last year, we had more people stay in upstate New York than New York City on Airbnb. Now that’s going to reverse. But it did show you that people were looking for cheaper places to live with more land.

Ali: If you are talking to the city mayors, for instance, which I’m sure you do, or at least they want to talk to you.

Chesky: I’ll tell you what I told the mayor of a really big city. I won’t say which one but there were a number of people leaving their city and they asked my advice. I said, “I’m not sure I have that much advice to you but I’ll tell you this, before the pandemic, most of the people in your city felt like they had to live in your city to work. Now they’re like customers, like our customers and you got to compete with them like every other city has to and they have choice.” And so that’s the major difference now. Mayors should think of their citizens as customers who have choices because this era of mobility and being untethered means that you’re going to have hundreds of millions of people that suddenly can go anywhere to live.

Ali: And so let’s talk about a little bit aligned to that, climate change and your sense of what it means for you as well as the company itself and the world in general as you’re thinking about the next 10 years. Let me give an example, Miami, the hottest city in US, the hottest as in people are moving to it. They obviously have a lot of I’m sure, Airbnbs in Miami are probably the most expensive right now. Probably. It’s a city that may not exist in 25 years. Or at least parts of the city may not exist in 20, 25 years. As you think about Airbnb, how are you wrapping your head around climate change? And what does it mean to you? And how do you want to see this move from here?

Chesky: Well, I think climate change is probably one of a couple of the great challenges of our time. I’ll get to the other one in a second but I think climate change is one of the great challenges of our time. And again, I don’t think there’s a over tourism problem in the world. There is probably a problem of too many people going to too few places at same time. There may also be a problem with too many people going too far of a distance for too short of a time. Nothing wrong with getting on a plane, going from here to here. But if you’re going to go there, make the destination count, maybe stay longer. And if you don’t need to get on a plane, maybe drive, do a drive by destination. And so that’s one of the things that we’re thinking about, partnering with cities.

And I don’t think this forebodes anything negative for airlines, I think airlines are going to do better than they ever have. I think the whole travel industry is going to do so much better than even most travel proponents are saying. I think everyone’s underestimating vastly the upside of travel. And again, remember we have some of the most data in the world so this is what we’re seeing. But I also think our model is pretty adaptable. Wherever travel migrates to, we have nearly every type of space in nearly every type of community in nearly every price point so we’ll be able to adapt. But the one thing I’ll just say is, I think climate change is one of the great crisis of our time. I think there’s another crisis that will be of probably equal significance and I think that’s the loneliness and isolation crisis.

It’s a crisis of despair. I think so much division, hate, depression, anxiety, so many of these problems are problems of loneliness. And I think if we weren’t already in a crisis of loneliness before the pandemic, we are absolutely now in a crisis of loneliness. And I think the problem is the pandemic has removed a lot of physical spaces. Physical stores have been shifted to Amazon. The office is becoming your home office. There’s a lot of benefit to that. The world is more efficient, it moves faster. The problem is physical communities becoming virtual communities. There’s a huge gap.

And so I think we in the travel industry and the tech industry have to make sure that we’re part of the solution not the problem because the promise of travel is freedom and flexibility. The downside is, when you can hire people from anywhere, people could get left behind and you’re going to have this huge issue of loneliness and isolation. And so I think designing for new ways to bring people together in the physical world is going to be critical. And this is one of the things that we’re trying to really think a lot about.

Ali: And so would you think that programming in the larger sense of the word, as in create a programming is part of Airbnb’s future?

Chesky: You say create a programming.

Ali: Meaning trying to figure out ways to get people together?

Chesky: Oh, a 100%. Why are we traveling otherwise? You can travel to see something. You can travel to walk through the wilderness. But I think travel has always been about the community and the people. The word tourism, we were talking about etymologies of words. The word travel comes from, I believe the word travail, which means a painful, arduous journey. The word tourism to my knowledge is rooted in grand tour. Grand tour, where these aristocrats that would go to and study painting and live in the community in Paris and somehow studying painting and Paris became looking at a painting behind glass. My optimistic view is that suddenly travel is going to be much more about friendship, connection, bringing people together. And I think all of us in industry, if we want to be in the business travel game, let’s be in the game of bringing employees together because they’re otherwise isolated. If we want to be in the business of bringing people together, let’s instead of being sightseeing, it’s people seeing.

Ali: In terms of, I want to talk a little bit about Silicon Valley. We only have four minutes left but there’s the last two years and the last five years has Silicon Valley’s brand or tech companies’ brands have gone down in terms of reputation itself. Do you see that changing? Are you seeing that change? Are companies that are disruptive to the extreme? Do they have a better sense of how to bring everybody along?

Chesky: I think it’s hard for me to speak for every company. I see that changing if companies change. When I came to Silicon Valley, the word technology in 2007 may as well have been a dictionary definition for the word good. YouTube was for cat videos and Facebook was a way to see what your friend’s doing and Twitter was the way to say I’m drinking a milkshake. It all seemed wonderful and innocent. I think we all thought that technology was progress and any new technology was a step forward of humanity, hence making the world a better place. I think the problem is we all learned a different lesson. When you build a platform, you unleash technology and hundreds of millions of people use it. And I learned this the hard way, your product is used for unintended consequences. And I think what we’ve all had to reconcile in the technology industry is that we have more responsibility than we probably thought we did 10 years ago.

And technology isn’t per se inherently good or bad. It’s probably good on balance but it can be designed for good or designed for bad. And so I think all of us have to design with multiple stakeholders in mind, not just investors but customers, the communities we live in. And so I’m optimistic. I think the tech industry has got more noble intentions than maybe the world thinks but we were much slower than we should have been as an industry. And I think, I always thought if you’re a little behind, it takes you years to catch up. If you’re a little behind the eight ball, suddenly you get a reputation, now that reputation dogs you for years. And so I think we’re in a hole and we’re going to be in it for a long time.

Ali: Let me ask you this completely different question. A lot of what Skift covers has covered in the last, let’s say two years is subscription model coming into travel. Some of the companies Tripadvisor CEO is going to speak as well. A bunch of other companies. Why isn’t there an Airbnb subscription service?

Chesky: Why isn’t there yet? I don’t know.

Ali: Or a loyalty program?

Chesky: Why isn’t there? Well, we’ve had our hands full the last 18 months. Well I thought we were going to do one and then I wasn’t expecting last March. Last March, we were preparing to go public and all of a sudden in eight weeks we lost 80% of our business. It’s like a Mac truck going 80 miles an hour and it’s slamming on the brakes. We had to rebuild the company from the ground up. People were predicting, is this the end of Airbnb? Will Airbnb exist in the future? And so we basically just really had to pause almost all of our efforts, get really, really focused.

I thankfully never had a near death experience but I’ve heard about them. People describe them as you stare into the abyss and then suddenly you have this moment of clarity. Well, it felt like I had a near business death experience. And in that moment, I had a lot of clarity and the clarity was we need to get back to what made Airbnb really special, back to the roots of human connection, of empowering hosts. That’s what we’ve been focused on but never say never in the future.

Ali: You think subscription model could work and I’m not saying Airbnb just. What about travel in general? Do you think a flat fee where people are able to use?

Chesky: I think anything that’s used frequently, a subscription model works. Somebody once said, what is the most popular app in the world that’s never worked? And a lot of people say it’s a travel planning app. Every engineer and every product person, their pet project is a travel planning app. Why do travel planning apps not stick? Because they’re very complicated and use them once a year. That’s a bad combination. You need to have something that’s used frequently. And to be a travel source used frequently, you need really, really big scale or you need to be something that’s relevant to people’s daily lives. That’s hard in an infrequent business but if you can solve either the scale problem or the frequency problem, you have a great subscription product.

Ali: Okay. You heard it here first. It’s coming. He’s not saying that but I hope it does, because I use Airbnb I think at least once a month.

Chesky: There you go. You’d be a good candidate for a subscription.

Ali: I would love to do that. This is my last question, this is my favorite question of all which I’m going to ask I think every speaker I speak to. Why isn’t the travel industry more aware of families traveling? It seems there’s so many things in this industry that are not designed with keeping families in mind and how do you think Airbnb is thinking about that?

Chesky: Well Airbnb, I definitely am not the best person to comment on the travel industry because I never worked in the travel industry and I had didn’t even traveled very much before I started Bnb. I grew up in Upstate New York in Albany. My parents were both social workers and I traveled once a year because my mom was a social worker, she’d get to a conference and we’d kind of freeload. And so we’d stay in her hotel and freeload. I don’t know a lot about travel. I do think the travel industry’s probably been really focused on business travel. I do think a bigger opportunity the next 10 years for everyone is family travel. And I think, even people with families, they can’t be totally untethered but most of their kids are only at school a 180 days a year, the other 185 days a year they can travel, a lot of them.

And so I think that family travel is one of the great opportunities and it’s benefited us. Why did our average daily rate go up? Our unit economics improved in part because people started spending more money per night on Airbnb. Why do they do that? Because they were booking larger homes. Well who were booking larger homes? Families and groups. And I think family travel will boom. And I think the other thing that’s going to boom is basically multiple families traveling together or friend groups traveling together because living in a house by yourself when you can’t even go to an office is a pretty isolating life. But if you could be around your friends and you all have flexibility, that’s a pretty big opportunity as well. And this is really exciting.

Ali: I think we’re out of time. Thank you again, Brian.

Chesky: Thank you very much for having me.

Ali: Appreciate it. I’m sure we can go on for the whole evening.

Chesky: Oh, of course.

Ali: And if you have time, I’m sure you would love to see the hotel. I know you have been liking the hotel so far.

Chesky: Well, thank you very much. Thank you, everyone.

Ali: Thank you, everyone.

Chesky: Thank you, man.

Ali: Thank you, Brian.

Chesky: Awesome.

Ali: Good to see you.

Okay. With that ends the evening. And then we have full two days ahead. Am I supposed to make some announcement for the rest of the evening? Are we going out on the tarmac? We’re going out on the tarmac. We’re going out on the tarmac. That’s where the drinks are. I know we can take off our masks there as well and see each other’s faces as well for the first time. All right. Thank you again, everyone. See you tomorrow morning.


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Tags: airbnb, ceo interviews, sgf2021, skift live

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