Airbnb (ABNB) is betting that a continued economic downturn will provide a tailwind for the travel company to expand its pool of guests, seeking to earn additional revenue.
In fact, CEO Brian Chesky said he was already seeing a change in behavior on the platform, recalling the Great Recession when the company was founded.
“I think it’s going to be in some ways similar to 2008,” Chesky said, speaking to Yahoo Finance Live (video above). “A lot of people who weren’t considering hosting are probably considering it now.”
The change prompted the San Francisco-based company to launch Airbnb Setup this week, a service that matches new hosts with Superhosts, to offer one-on-one guidance on how to list a property on the platform. The company has also expanded its AirCover program to offer more protections for hosts, including guest identity verification, reservation control and $3 million in damage protection.
After spending the first half of the year working on Airbnb properties himself, Chesky lists a room from his own home in San Francisco on the platform, to prove to users that hosting isn’t risky nor difficult.
“I wanted to show people, if I can do it, they can do it too, make it accessible. And I thought that would be really fun,” Chesky said. “This is my real home. You will be accommodated in a private room. You will stay with me and my golden retriever Sophie.
This marks a return to the origins of Airbnb. Launched in the depths of the financial crisis, Chesky and co-founder Joe Gebbia listed their own property as the platform’s first hosts.
Fourteen years later, Airbnb has more than four million hosts, who have booked more than one million travelers worldwide. Chesky said interest in accommodations has only accelerated with the economic downturn as more people seek to earn extra income to cushion the pain of the rising cost of living.
This year alone, more than 30 million people have visited the site to find out more about accommodation opportunities.
“If it hadn’t been for the Great Recession of 2008, I can’t say for sure that Airbnb would have taken off,” he said. “But in times of recession, people were ready to change their behavior. They’re ready to do things they weren’t ready to do before the recession, like listing their house and allowing other people in.
Keeping these listings affordable is becoming increasingly difficult, even as Airbnb seeks to stay competitive with competitors in the hospitality industry. The average price per night for an Airbnb stay jumped 40% from pre-pandemic levels, with the average daily cost of a stay totaling $156 in the second quarter.
Chesky said supply constraints have contributed to the price spike, as well as a sharp rise in the cost of cleaning fees. Average cleaning fees for short-term rentals rose nearly 30% last month, according to AirDNA data, compared to the same period in 2019.
To address these concerns, Airbnb made changes to improve transparency, choosing to prioritize the total price paid by guests before taxes, instead of the price per night, in its search ranking algorithm. Chesky said this allows the platform to rank “the highest quality homes with the best total prices” higher in search results.
“Airbnb started out as an affordable alternative to a hotel. We need to stay affordable, especially now, because affordability matters more than ever in this economic environment,” he said.
Akiko Fujita is a presenter and reporter for Yahoo Finance. Follow her on Twitter @AkikoFujita
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