Airbnb CEO Brian Chesky Says Competitors Have the Travel Marketing Funnel All Wrong

The common wisdom in the travel industry for many years has been that the marketing “funnel, starting with inspiration, research and discovery, booking, and then retention, should be centered around flights because that’s where travelers start their trip planning.

Enter Airbnb chairman and CEO Brian Chesky who thinks online travel competitors — his exact words were “a lot of people” — have that flight focus at the top of the funnel all wrong, and that instead marketing should revolve around the destination, and presumably accommodations. Alas, it should be pointed out, Airbnb doesn’t offer flights.

“A lot of people think that the way to be top of the funnel in travel is to sell flights because flights is the [ first ] purchase you make,” Chesky said during an interview at a Goldman Sachs technology conference earlier this week. “I actually think the top of funnel isn’t flights, it’s inspiring people where to travel to. That’s the first decision you make. Where should I travel?”

Consumer travel writers often advise people to book flights first because of the volatility in airfares, and in some cases they booking an accommodation at the last minute might bring some cost savings if demand isn’t strong, and you are price-conscious. On the other hand, when demand is surging, the accommodation may not be available in a desired location if the traveler waits too long.

But Chesky said travelers have new flexibility with remote work, and Airbnb can inspire them where to vacation or work, and that’s why the company several months ago launched an expanded list of accommodations categories, ranging from Islands to the Arctic, OMG!, and Tiny Homes. He said these search features have been used more than 180 million times since the launch in May.

“You see when people come to [ Airbnb ] and they’re flexble where to travel, we can inspire them to where to go,” Chesky said. “And this allows us to be top of funnel and be in the inspiration business.”

Airbnb CEO Chesky, Booking Holdings CEO Glenn Fogel and Expedia CEO Peter Kern will all be speakers at Skift Global Forum Sept. 19-21.

Chesky said the company uses performance marketing, public relations (writers penned a half a million articles about Airbnb in 2021), and brand marketing to broadcasts its messages, and he was disparaging about rivals who need to play arbitrage in their paid search engine marketing.

“And so if travel is so aspirational, then why is it sold like a casino?” Chesky asked. “And I really feel like, first of all, the positioning for travel to get back to that kind of golden age, it could be much more about something that is not just about direct like performance marketing, but it could be supplemented with like the reason people are traveling in the first place. And so what we’ve decided to do is we have a very different approach to marketing.”

Expedia’s Marketing Funnel Was More Like a Sieve

However wonky, marketing funnels have been very much in the conversation this week.

In a separate interview at the Goldman Sachs conference, Expedia Group CEO Peter Kern said that traditional approaches to performance marketing haven’t worked.

“And a lot of our business, the industry has been built on, a lot of throughput, a lot of just customers [going] through the machine. We joked that we didn’t have a funnel. We had a sieve. Everything just came through and went out the other end. And we’re much more focused now on customer retention, trying to buy as best we can the right kinds of traffic, the high-value traffic, keeping them longer.”

Expedia, Kern said, is now emphasizing loyalty and retention.

“What we want is for you to become a member, get the app, get all the best tools, get all the sticky stuff you can use,” Kern said. “And then we have a much higher likelihood of you becoming a high-value, long-term member, so long-term customers.”

Changes will take time, however. That’s for sure.

In the second quarter of 2022, Airbnb allocated 18 percent of its revenue toward sales and marketing, while Expedia Group and Booking Holdings each spent more than half of their revenue on sales and marketing.

Airbnb to Invest in Experiences After 2-Year Pause

In other news, Chesky said Airbnb will begin to invest in its experiences business again in 2023 after a two-year pause cause by the pandemic.

“It’s ready to invest like significantly in this business again,” he said.

Trotting out another e-commerce buzzword after discussing funnels, namely “flywheels,” Chesky argued that Airbnb’s homes and experiences businesses would invigorate each other.

“We have some really exciting things in the roadmap,” Chesky said, including for 2023. “And I think that experience is a great flywheel for homes because, again, the number one thing in travel is you want to have direct traffic, booking something unique that you can’t find anywhere else.”

Booking.com: Attractions Won’t Be a ‘Huge Money Spinner’

Booking Holdings Chief Financial Officer David Goulden, speaking at an Evercore technology conference September 8, noted that the company transitioned from a “homegrown acquisition strategy” for tours and activities — when it acquired Fareharbor in 2018 — to a partnerships model, such as through deals with TUI Musement and Viator.

He added that the market size and transaction values for attractions are not as substantial as for accommodations or flights.

“So I don’t think it will be a huge money spinner for us, but it’s certainly something that will create, I think, a lot of value for our customers, therefore, something we want to continue to focus on,” Goulden said.