CEO Says Airbnb Future Is To ‘Live’, Not Just Travel
COVID-19 precipitated “the most profound change in air travel,” said Brian Chesky, CEO and co-founder of Airbnb. Speaking on Zoom shortly after showcasing a site redesign consisting of 100 (mostly granular) improvements, Chesky detailed his take on what he meant by it.
The crux of the change, he says, is that “the lines between travel, work and life are blurring.” It’s something he’s been saying for months, but now – with the dust settling – what it means is a little clearer.
Working from home has boosted flexibility in where and how people live or how long they stay in one place. “When you go somewhere for 28 days or more, you probably don’t travel anymore,” he says. “At this point, 24% of our business is really alive – we’re not just a travel business anymore. “
The trend towards long-term stays is redefining Airbnb’s business. Far from the company’s original story of surfing the couch for a business convention, it’s the cornerstone of the new lifestyle of digital nomads: the winter months in Miami and Aspen, complemented by summer stays in New York, San Francisco or the Hamptons on Long Island. While this way of life existed before the pandemic, it was not for the masses.
“It used to be that you had to be rich to live elsewhere during the summer, but now people can defer costs by renting [their primary home] on Airbnb when they’re gone – it might even become a cashless possibility now, ”he says, foreshadowing a world in which Airbnb is replacing local markets for seasonal real estate.
That Chesky sees an opportunity for Airbnb in the wake of the pandemic is no surprise. The company, which rebounded for a strong summer in 2020 after the initial shock of COVID-19 wiped out 80% of its business, has come out of the past 16 months in better shape than most travel companies. Its valuation surpassed the $ 100 billion mark and shattered expectations immediately after its long-awaited IPO in December, and although it peaked at $ 219 per share in February, the current share price of $ 134 reflects a decrease of $ 10 from that initial peak.
That advantage wears off, however, as the rest of the world begins to find its place after the pandemic. As private home rentals provided an environment with privacy and social distancing controls in 2020, a May 25 report on summer travel from Deloitte shows the desire for hospitality has returned: some 85% of U.S. travelers opt for hotels. With schools returning to full capacity in the fall, it also remains to be seen whether the flexibility extended by large companies – upon which Chesky’s predictions are based – will continue to exist after 2021.
In the first quarter of 2021, Airbnb reported that average nightly rates were up 35% year-over-year. The figure, Chesky said on an earnings call, was linked to the popularity of large suburban homes for American family reunions. That number could flatten as more affordable markets around the world reopen to tourism and newly vaccinated travelers regain the confidence to explore urban markets. But it could also signal a new wave of tensions between Airbnb and local residents in places where the company encourages second home ownership and pulls residential housing stock off the market.
While related legal hurdles in global capitals had been the major issue for Airbnb until 2020, Chesky says “the pandemic has been a reset for us with cities, in a good way.” The company has signed agreements with more than 100 countries, cities and municipalities, including the Scottish Tourism Alliance and Travel Portland, all intended to help boost tours.
Governments “reach out because they want our support,” he said. “They are seeing massive shortages in tourism”, which, he adds, is “the wind in the back”.
It is a two-sided coin. In other parts of the world, governments are rethinking their tourism management plans, fearing that the travel industry will need to correct unsustainable practices that existed before the pandemic. Among those who have recently proposed to tighten restrictions on Airbnb include the Prime Minister of Ireland, the New York City Council and the City of Paris, whose latest move was to adopt quotas for the number of apartment rentals in line all over town.
Chesky sees two responses to these restrictions. One is winning over your enemies, which he says is one of the driving forces behind Airbnb’s latest improvements, which include new features in the City Portal compliance tool that highlights regulatory policies and transmits data to cities.
Another is to “redistribute travel” beyond these metropolitan poles, a trend that started during the pandemic. Highlighting less-visited places is the goal of the new ‘Flexible Destinations’ search, which retrieves unique accommodations such as treehouses and yurts. “People don’t go to the same 20 to 30 places anymore,” Chesky says.
Much of Airbnb’s success relies on remote working that continues after the pandemic, as the company looks beyond the traditional idea of leisure and business travel for its future, according to Chesky .
New features such as flexible dates, which help users find availability in popular homes on alternate dates, are based on continuing to work from home. The same goes for Airbnb’s new focus on relocation assistance. Since the beginning of May, the company has been helping its clients “try out” a new hometown before committing to it; To do this, it has partnered with business relocation companies in nine cities across the United States to offer discounts on home rentals.
What if working from home didn’t work? Give it two to three years, says Chesky. “Companies being strict today [about working from the office] maybe not in the future. Eventually, they’re going to have young, digital-native managers who don’t want the old limitations of legacy workplaces, and they’ll have to change to retain talent.
Conversely, totally remote businesses “will want to come together for key moments,” he adds, saying this will define “business travel 2.0 – where employees working remotely will return to headquarters for a week at a time. both for the busy financial planning season. or whatever. Chesky isn’t the only one predicting it: Evan Konwiser, executive vice president of product and strategy for American Express Global Business Travel, told Bloomberg the same thing in March.
“Gone are the days of flying to a meeting,” says Chesky. In their place, he says, it is “an opportunity for long stays for us”. At the end of the day, he’s optimistic: “Companies won’t determine this, employees will.”