Retaining its focus on short-term rentals would probably be the largest contributor to any competitive moat that Airbnb has. Neither of its two largest rivals has that luxury.
What’s next for Airbnb? Among the possibilities are a new array of services for hosts and guests, some for free and some for sale, and an advertising platform that might include sponsored listings.
These were some of the ideas that Airbnb co-founder and CEO Brian Chesky discussed yesterday at an investor conference in San Francisco. Part of the interview revolved around his hope that Airbnb can deepen its “moat” to stave off the competition.
“And so my general principle is I want the moat of everyone to get deeper every year,” Chesky said. “And that means that every year, we need to give away more value than we’re charging.”
Chesky said Airbnb already offers its hosts things that competitors don’t, such as $3 million in damage protection in its AirCover insurance, and “24/7 support” for hosts. (There’s definitely room for improvement in the quality of that support, however.)
Expedia’s Vrbo offers $1 million in insurance coverage for hosts, as does Booking.com.
Chesky said he wants to provide more free services to hosts, and provide more value, and then Airbnb can start selling new products to hosts, as well. “And I want it to feel cheaper and cheaper and cheaper every year to be a host because they’re like, I can’t believe we’re giving all this,” Chesky said. “But there’s a point where we can also start charging for things.”
“Most we’ll give away for free to get our moat deeper because that’s the key, but some we could charge for,” he added.
Competitors might argue about the existence of that moat, let alone its depths, but no one would argue that the Airbnb brand, and the lack of digital ad spending that the company needs to put behind it, is among its major advantages, and it’s extremely hard to replicate.
A suite of services for guests may be in the offing, as well. Airbnb began offering travel insurance to guests in some countries last year.
“So I think if you look at the suite of services that are possible from a guest side and a host side, there is a huge amount of opportunity,” Chesky said.
ArtificiaI Intelligence and Advertising
Chesky said Airbnb currently ranks listings — in terms of where they might appear on a page — using machine learning. He inferred that Artificial Intelligence would help match guests looking for a stay to some of Airbnb’s 6.6 million listings while culling through its 500 million reviews as a foundation.
He said Artificial Intelligence appears to be a platform shift, probably larger than the move from desktop to mobile, or the invention of the Internet.
Companies with “innovative cultures” will be able to take advantage of Artificial Intelligence, Chesky said, adding that other companies that will be left behind are “the same companies that were talking last year about crypto and the metaverse.”
Asked if Airbnb has the opportunity to launch sponsored listings from advertisers, Chesky mentioned that such advertising is a significant portion of Booking.com’s monetization. Booking.com also enables hotels to pay to have their listings move higher on the page.
He said sponsored listings are “absolutely on the horizon.”
“And when we would do it, I would also want to do an ad platform different than anyone else,” he said. “I’d want it to be much more targeted and really abide by user experience principles and be very, very careful over turning that dial too quickly.”
Other Growth Opportunities
When it comes to other growth opportunities, Chesky said Airbnb, which counts 62 percent of its guests as 34 years old and younger, will continue to focus on the next generation of travelers.
“I think Gen Z is a whole new game,” he said. “The great thing about young people is [there are] more every year, so the market keeps growing. And so that’s the first thing.”
Asia Pacific has huge growth potential for Airbnb, the Latin America market is expanding, and Africa will become an important geography for the sector in the next 10-20 years, he said.
Another focus area will be expanding Airbnb’s host roster, Chesky said. While Airbnb is mainstream, he said, “hosting is a little more underground.”
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Tags: advertising, africa, airbnb, artificial intelligence, booking.com, future of lodging, generation z, guests, hosts, latam, machine learning, online travel, online travel newsletter, sponsored listings, travel insurance, travel technology, vacation rentals, vrbo
Photo credit: Airbnb CEO Brian Chesky on its IPO roadshow on December 1, 2020. The company wants to expand services for hosts and guests. Airbnb