Airbnb's Playbook Is to Beat Hotels on Price and International Expansion

Flush after a profitable second quarter, Airbnb executives laid out what they see as the growth opportunities: Provide better value than hotels; expand into under-penetrated markets in Europe, Latin America and Asia-Pacific; and provide new services to hosts.

Co-founder and CEO Brian Chesky told analysts Thursday he believes the company is still relatively small compared with the hotel industry, perhaps one-tenth the size. He added that he took to heart feedback last year that Airbnb was becoming less affordable compared with hotels.

However, in the second quarter, Airbnb saw its rates rise just 1% globally, and they were down 1% in North America. The hotel industry saw rates rise 4-10%, he said.

"Hosts have started lowering their prices, and some of them are offering weekly and ...