Airbnb’s ambitious plan to attract 1 billion guests
Airbnb, which turns 10 this year, hopes to reach a stunning 1 billion annual guests by the time it’s 20. One way it hopes to achieve that vast increase — it’s only hosted 300 million guests to date — is by creating new categories of homes-as-hotels.
The San Francisco company, whose private valuation of $31 billion makes it the nation’s second-most valuable startup after Uber, has said it will not seek an initial public offering on Wall Street this year.
But its expansion road map — unveiled Thursday by CEO Brian Chesky at a splashy event for a few hundred hosts and reporters at San Francisco’s Masonic auditorium — should help position it for an eventual IPO. Airbnb said it now has more than 4.5 million listings in 81,000 cities worldwide, a portfolio that vastly exceeds that of any hotel chain.
Airbnb is adding four new property categories: vacation home (residences dedicated to short-term use); unique (tree houses, yurts, igloos, Airstreams and other novelty properties); bed and breakfasts; and boutiques (“professional hospitality businesses with unique styles or themes,” as Chesky put it, carefully avoiding the word “hotel.”) Currently, property types are entire home, private room and shared room.
The goal is for hosts to fine-tune how they categorize their homes to ease guests’ searches. “We have something for everyone, but it’s hard to find everything,” Chesky said.
That’s just the beginning, he said, laying out plans to add thousands more categories to slice and dice listings by features such as architectural style, proximity to a zoo or golf course, “knockout kitchen” and backyard size.
One new category, called “social stays” is closely tied to the company’s original mission of helping travelers “live like locals” and forge friendships with them. Social stays are when hosts “say they’ll hang out with guests, have a meal, show them around the city,” Chesky said.
The moves — and the acknowledgment that social stays now need their own category — show Airbnb seeking to go more mainstream and to professionalize its rentals. At the same time, it will have a tricky balancing act to maintain the distinctive local flavor that’s been its strong selling point.
Hosts in the Masonic audience enthusiastically applauded Chesky’s presentation, but some later said they had concerns about keeping the personal aesthetic.
“I hope the simplicity and intimacy won’t be lost,” said Dee Reilly, who’s been hosting Airbnb guests in her San Francisco home since 2013 and said she appreciates her relationships with visitors. “You could have always gone to a high-end travel agency, but Airbnb had the niche of one-on-one connections.”
The company is also creating various new higher-end designations such as Airbnb Plus, Beyond by Airbnb and Airbnb Collections.
The Collections moniker is for properties suited to specific occasions, such as weddings or family reunions. The first two types of Collections to be introduced will be Airbnb for Family and Airbnb for Work.
The Airbnb Plus designation applies to homes the company has inspected and verified as meeting high standards for “cleanliness, comfort and design,” Airbnb said. Initially, about 2,000 homes in 13 cities have earned this label, it said. The Plus homes will be showcased on the site.
A bigger benefit may be that they will have what Chesky described as “a dedicated team for fast resolutions.” The CEO’s Twitter feed is filled with messages from anxious hosts and guests who say they couldn’t get help from Airbnb’s current support structure. Hosts seeking the Plus designation will pay $149 to apply, which partially covers the company’s costs for inspections and support.
Beyond by Airbnb shows the company’s ambition to be more of a full-scale travel agency. Airbnb described it as offering “custom designed trips of a lifetime, including the world’s finest homes, custom experiences and world-class hospitality.” It incorporates Luxury Retreats, a high-end vacation rental company that Airbnb bought last year.
Airbnb said it will also reward its most-loyal guests with a Superguest membership program, starting this summer after a spring pilot with 10,000 guests. While Chesky did not specify exactly what perks would be included, he mentioned ideas such as airport pickups, concierge service, fitness center access and fully stocked fridges.
Likewise, highly rated hosts, who already have a Superhost designation, will soon gain new benefits such as discounts on products and services, starting with a 30 percent offer from Nest for its smart-home devices.
Airbnb often tussles with cities that fear that its explosive growth eats into permanent housing supply. It has recently achieved detente with its hometown, agreeing — under the threat of big penalties — to limit its San Francisco offerings to properties that have met the city’s registration requirements. That caused listings to plunge by more than half, although many of those removed had never rented to guests. San Francisco regulations basically outlaw Airbnb’s new vacationhome category unless they are rented for 30 days at a time, but laws in other cities vary.
Airbnb exceeded its financial projections last year with revenues reported at $2.6 billion by both Bloomberg and the Wall Street Journal. Bloomberg said it made $93 million in profit before interest, taxes and other expenses, while the Journal reported it had a $75 million loss by traditional accounting standards — still close to breakeven.