Airbnb is well past its days as a fledgling start-up. The company has cemented itself in the travel ecosystem and now is unfurling its tentacles, looking to latch on to new opportunities in the travel-experience space.
I use the word travel because, for too long, the Airbnb threat was leveled solely at hotels: this prodigious, scarcely untapped level of supply now had a robust platform to market on. Surely this would maim the hotel industry. And while Airbnb hasn't yet brought the hotel industry to its knees, it's certainly made a puncture wound, one that could deepen, as one recent report states, and if Mariah Carey and Rihanna are big fans, whose to say what its vast potential is?
Airbnb's biggest strength is its asset-zero structure. It doesn't invest in real estate, it doesn't operate real estate, it derives fees off it. It's the younger sibling of the asset-light model that most global hotel companies—many global companies, too—are reaching for.
What it allows is for Airbnb to be nimble, able to launch more initiatives in a shorter window. In order for Airbnb to keep its valuation high and attract more investment, it needs to stretch itself out into other spaces. There is a finite amount of supply that Airbnb can tap into—and with some cities making it tougher for Airbnb to operate, the company has to create new opportunities for itself.
Airbnb is not an accommodations company, it is a full-fledged travel company. Or, at least, that's its intent. What Airbnb is doing by diversifying its offerings is not unlike what other great successful American companies have done before. Colgate was originally founded in 1806 and started by selling soap, candles and starch. It didn’t start selling toothpaste until 1873. Wrigley started, too, by selling soap and baking powder. It wasn't until later that it started pumping out confections like Juicy Fruit, Extra, Orbit and Hubba Bubba.
Point is: Start-up companies today, and historically, are always moving forward, looking for the next bright idea. Airbnb is no different.
Airbnb Trips
In November, it made its first strike when it launched Trips, a feature that is divided into Experiences (learn the art of ancient pottery with a Kintsugi master) and Places (recommendations from local hosts of the best spots, etc.).
Last summer, Airbnb reportedly raised $1 billion in debt financing to help expand and develop new add-on travel services. And as Business Insider points out, Airbnb plans to add Flights and Services in the near future.
Also in November, Airbnb announced a partnership with restaurant reservations app Resy. Today, it was revealed that Airbnb led a $13-million funding round in the restaurant-booking app, and that, by February, Resy will begin allowing for reservations to be made through Airbnb’s app, its CEO Ben Leventhal said.
Airbnb is also at the forefront taking advantage of new technology features, like Twitter's live 360 video.
Airbnb is no longer just a hotel competitor, it's competition for the travel industry as a whole. Should tour operators and travel agents be concerned the same way the likes of Hilton and Marriott—even if they put on a brave face and say they aren't—are?
Airbnb CEO Brian Chesky has said he wants to make travel magical again, something that isn't sitting all too well within the travel agent community.
What's happening is this: Airbnb is not so much automating the travel experience—like what online travel agencies did in the hotel-booking space—they are becoming a matchmaker, connecting prospective travelers to other people and places. In that way, Airbnb is comparable to a travel agent—maybe not with the personal touch and access one gets when they engage a human one. But it's not a bad second and likely cheaper.
The Endgame
Airbnb is still a private company; one that constantly needs to be fed with investment dollars. Last month, it said it was looking to raise an additional $153 million as an extension of a recent funding round. The company is now valued at $30 billion.
Tapping the public markets is likely in Airbnb's future, but until that day comes, it will continue to expand its reach and find new ways to insert itself further into the business of travel experiences. Trips is just the iceberg. They will dive even further.