Airbnb's strategy boils down to this: Staying relatable to the typical 26-year-old could give the company an edge over rivals who often woo older travelers.
Young people made Airbnb a household name, and CEO and co-founder Brian Chesky doesn’t want his online travel agency to lose its cool factor. Chesky is pushing the online travel agency to evolve faster to give the next wave of emerging travelers what they want most, namely, affordable places to stay and a hip, intuitive booking interface.
All of the company’s changes announced this month and all of its strategy talk stated during an earnings call on Tuesday can be illuminated by Chesky’s focus on creating “a product that the 26-year-old me would’ve wanted.”
In the U.S., for instance, Airbnb’s lowest-price listings have the highest occupancy, Chesky said. But there isn’t enough budget-friendly supply.
“One of the most important things we can do to make Airbnb affordable is to make sure we have enough supply in the platform,” Chesky said.
The company believes that adding supply and highlighting affordable options will help its rates continue to normalize post-pandemic and retain its appeal to Gen Z.
“Hopefully, our rates do not increase as fast as hotels do over the next couple of years,” Chesky said.
As you might have expected, Airbnb saw an acceleration in the growth of its “active listings” on its platform as the pandemic waned. In the first quarter, Airbnb grew its global supply by 18 percent, compared to the same prior year period. That growth reflected a multi-quarter pattern.
But the online agency also wants to highlight affordable options, especially for younger travelers. Earlier this month it introduced a product called Airbnb Rooms — which aims to spotlight stays within people’s homes that have an average price in the U.S. of $67 a night. In comparison, Airbnb’s overall average daily rate was $168 in the first quarter.
The move was “not just to bring people to Airbnb that want affordable options, but [to appeal to] really new travelers that have never really traveled very much before, especially Gen Z,” Chesky explained.
Other priorities for the year — making its platform more host-friendly, fine-tuning its core services, and expanding geographically and product-wise — are all in the service of staying relatable for a new generation.
Next-Gen Booking for Next-Gen Travelers
One thing young people — and people with a youthful mindset — can’t stand is online travel booking and customer service interfaces that have barely changed in a couple of decades.
Even chatbots, much discussed today, aren’t cool enough.
A few months ago, when OpenAI’s launched plug-ins that enabled third parties to build chatbots using its ChatBGT service based on generative AI (artificial intelligence), Airbnb was supposed to be one of the launch partners for the plug-ins.
Right before our launch, Chesky pulled the plug on the text-based interface.
“Ultimately, I think the right interface for travel is multimodal,” Chesky said. “It’s rich media. It’s photo. It’s video. It’s much more immersive.”
For more on this vision of Airbnb as the “ultimate concierge,” catch Chesky’s interview with Skift CEO Rafat Ali from earlier this month.
Robust Quarter for Airbnb
In a first for the company, Airbnb had a profitable first quarter according to generally accepted accounting principles, locking in a net income of $117 million.
The company’s revenue totaled $1.8 billion, growing 20 percent compared to last year.
Its adjusted earnings before interest, taxes, depreciation, and amortization — a measure of profit — was $262 million. And the company’s free cash flow was $1.6 billion, up 32 percent annually.
Airbnb’s growth was buoyed by travel trends globally. Nights and experiences booked on the platform grew 19 percent in the first quarter to 121 million. Cross-border nights booked grew by 36 percent in the first quarter compared to a year ago — the recovery of bookings in Asia Pacific helped, as nights booked increased over 40 percent. The average daily rate remained flat at $168 last quarter compared to last year.
The company also saw more bookings in high-density urban areas — 20 percent compared to the first quarter of last year. Longer-term stays (28 nights or longer) were 18 percent of total gross nights booked in the first quarter.
Airbnb introduced 50 new features and upgrades as part of its annual summer release last week. Airbnb Rooms is at the center of new upgrades and features, which the company characterizes as “an all-new take on the original Airbnb.” There is now a rooms category with over 1 million listings, redesigned filters, and added new privacy and other features — such as host passports, which help guests get to know their host before booking their stay.
“Airbnb is a noun and a verb, but for travel. And every single person in this room will have heard of it from a travel perspective, but people don’t necessarily think about it as hosting. So we want to make people aware of that,” Airbnb’s global head of hosting said at Skift’s Future of Lodging forum in March 2023.
For guests and travelers, Airbnb emphasized its total price display (excluding taxes in markets such as the U.S.), discounts on longer stays, the ability to pay over time, and improvements to privacy and the shared home experience. There will also be discounts for guests who pay for a stay directly from their bank accounts.
Shortly after the launch, Airbnb chief executive officer Brian Chesky promised to work on more.
In response to a suggestion from a user on Twitter, Chesky has previously hinted at working on lower cleaning fees, better search & filters, verified listings, better customer service, a guest loyalty program, total price with taxes, a better review system, and lower prices.
Tags: airbnb, budget travel, chatgpt, earnings, future of lodging, gen z, vacation rentals
Photo credit: A living room at a short term rental in Nashville listed on Airbnb. Source: Airbnb.