Towards the tail end of results season comes time for those who don’t have what one might think of as a traditional hotel company, or what one might not be sure of what to think of at all. So: Airbnb and the OTAs.
But for all the ‘is it a brand, is it a platform, can it engender loyalty’ trauma around these, well, distributors, there is some Venn diagram overlap with hotels and that overlap is in supply. Everyone is desperate for it and desperate to not mess up where they get it. 2019’s Barcelona is 2021’s rural Ohio. For hotels, the pipeline can’t be turned on and off so speedily, but for the OTAs and Airbnb, they very much hope that it can.
In the case of Airbnb, the platform is going for double prizes and hoping to control both supply and demand, which will be quite the night out for economists if it comes off.
But first on supply, the key point of concern for any investor looking at Airbnb, where the platform has zero influence on whether a room/apartment/treehouse is open on a given day (you’ll have to ignore the idea of professional hosts to believe that, but you’re in good company; Airbnb ignores the fact that it has them all the time).
CEO and co-founder Brian Chesky told analysts on the group’s Q3 earnings call that the “vast majority” of its 4 million hosts were only listed on Airbnb. There is no mention of how Chesky can possibly have verified this, but believing you can only find a certain treehouse with his platform is a key marketing message, which hotels would love to be able to claim for themselves, but they sold out to OTAs so, um…
The group has made it easier to become a host (look away now, authorities in Barcelona) and has started a sort of Tupperware party approach where it uses hosts to help other hosts, which sure must help keep costs down. The group was already using hosts to mediate disputes, which was not the way to reassure guests that they were getting an unbiased hearing.
Chesky said: “Potential hosts can now be paired with Superhosts to answer their questions or concerns. We began Ask a Superhost in nine countries, and we’ve since expanded the programme to over 30 languages in 196 countries.
“This is the power of the Airbnb model. One of the things that makes me so special is we’re a community. And we’re a community where hosts tell other hosts about Airbnb and they bring them on to the platform.
“We’ve had more than 50,000 prospective hosts sign up to use that. And we’re going to continue to scale that, and we’re announcing on November 9 that we’re going to be scaling the Ask a Superhost programme.”
Meanwhile at Expedia, where one can find Airbnb rival Vrbo, CEO Peter Kern told analysts that it expected to book “in excess of $2bn of earnings for new Vrbo hosts who came on the platform this year”. Is anyone still just living in their houses any more, one wonders, or is there always someone living in the basement?
The Vrbo story this quarter was more one about demand. Where Chesky was setting off the fireworks about how we’re all going to become nomads, Kern was more restrained, commenting: “I’d like to tell you that people use Vrbo every two weeks, but they tend to need vacation time”.
Where things get interesting for Vrbo and Vrbo’s customers is that the OTA also offers the means to get to these destinations, which creates some fun and handy packages. Back in the annals of Airbnb’s changing strategies, it too was looking at travel, but we haven’t heard so much about that of late.
Meanwhile in Chesky’s fireworks, long-term stays – 28 days or more – remained Airbnb’s fastest-growing category by trip length. People were, he said, travelling with Airbnb for extended vacations, relocation, temporary housing, student housing, and “many other reasons”.
And this was helping the CEO in his big plan to control demand, with the platform’s new flexible search product. He said: “We’re able to point demand to where we have supply. There’s a lot of really unique listings that are in locations that people wouldn’t have thought to type in, right? It might be in a small town you never heard of.
“With I’m Flexible, it really levels the playing field and allows many more properties to be discovered. Maybe another way of thinking about it is I’m Flexible turns the home into the destination, so you don’t have to type in the destination.
“And I’m really excited about this. So this tells us that we’re on to something. It also tells us that there’s a new paradigm in travel. And so I think that this flexibility is here to stay. I think one of the holy grails in travel is to answer a question for a guest of where should I go and when should I go. And by having these new flexible features, we’re able to really be able to do that.”
He added that more than 40% of Airbnb searches saw guests flexible on where or when they’re traveling – again, no detail on that, so it might just be a small amount of date flexibility, which does not a nomad imply.
But still. A world in which Brian Chesky tells you where and when to go away. Startling.
Before you start fretting over how you’re going to sleep tonight, Vrbo is more likely to be the threat to the hotel sector. Hotels have not been slow to suggest destinations with infinity pools on Instagram. It’s called marketing. And hotels have based their business plans on having hotels in places people want to visit and won’t be persuaded away from.
But at Expedia, Vrbo is part of the set needed to offer guests every possible destination and create loyalty. And book your flight. Maybe promise the best rate. Or a good cancellation policy (at Airbnb the cancellation policies are host-by-host and woe betide you forget that). Where Chesky was hailing the brave new world, Kern was thinking about long-term customers. Slow and steady may win this race.
Image: You can visit Carrie Bradshaw’s flat, thanks to Airbnb. You can stay in the hotel where she was accidentally slapped in Season Five on Expedia. Hmm.