Airbnb aims to diversify its revenue streams by launching ‘two to three new lines of business every single year’, reveals CEO Brian Chesky. Although some might fail, some could bring in billions of dollars annually. Jenny Southan reports
Globetrender attended the recent Skift Forum in New York where Airbnb co-founder and CEO Brian Chesky took part in a live video-call conversation with Skift co-founder Rafat Ali. Here is what he said in regard to the future of the company, experimenting with Experiences and doubling down on long-term rentals…
Ali: “In 2024, the numbers are showing that your growth is slow. Has the thrill of fast growth gone for Airbnb?”
Chesky: “There’s many different ways to answer that question, so I’ll answer it in a personal way. I’m 43 years old. And I plan to do this for a couple more decades at least. I’m having more fun than I ever have. And I think that the most exciting part of my career, and the most exciting part of Airbnb, is in front of us.
“Imagine if Apple never launched the iPod. Imagine if they never launched the iPhone. Imagine if they never created the Apple retail store. Imagine if all they ever did was sell iMacs.
“Let’s take another company – Amazon. Imagine if the only thing they ever did was sell books. How big would Amazon be? So, to answer your question, why would Airbnb just offer homes? Why couldn’t we offer significantly more things? And that’s the future of this company.
“We are not an OTA. We do not do alternative accommodations. Alternative accommodations is what Booking.com does. We do Airbnb. It’s a distinct standalone category. We’re going to take the Airbnb model and we’re going to bring it to a lot of different categories.”
Ali: Brian, you’ve been saying that for a while. When is it going to be reality?
Chesky: “This October, we’re going to launch a new host service. It’s going to be an opportunity to match people that have homes, but they don’t have time to host, with people that have time to host, but they don’t have homes. And we’re going to build a marketplace to match those two people together, those two parties. That’s going to unlock a lot more inventory.
“Then next May is going to be the 2025 summer release. That’s going to involve numerous things, including Experiences coming back in a much bigger way. I anticipate every year we launch two to three things that could eventually generate a billion dollars a year annually in revenue. And we’re going to launch two to three a year on a go for it basis.
“Now to clarify, it doesn’t mean they’re going to all be successful. So there may be a percentage that work. But we are going to aim for two to three new lines of business every single year starting next year. So we’re entering a new phase of the company. We left the phase of perfecting the core. 40% of our revenue is now free cash flow. It’s one of the highest free cash flow markets in Silicon Valley. My bread and butter is going to be innovation.”
Ali: Will you stay under the ‘travel umbrella’?
Chesky: “I think initially. I’ll give you an example with Apple. In 2001 they launched the iPod. And initially you might recall the iPod was only available on the Mac, so you had to have a Macintosh computer to buy an iPod. So iPods were merely subsets of Mac sales. They could never sell more because you need to have a Mac.
“The big holy grail for Apple was the moment that iPod was available to Windows and then suddenly they started selling more iPods than Macs. I think that’s a good analogy for Airbnb. I think we’re going to start with travel. If we start with travel, that’s our nearest adjacency, that makes the most sense. But if we start with travel, that means everything we sell will be a subset of our core business. Eventually, we think there’s a path here to be doing more than just travel.”
Ali: What is the current state of Airbnb Experiences?
Chesky: “The current state of business is it’s now recovering. We had a business that we thought was going to be really big before the pandemic. Then the pandemic happened. We had to pull the entire product back. We paused it. It’s now around where it was pre-pandemic. It’s recovered. It’s doing really well. We’ve optimised it.
“It’s much more efficient than it was before the pandemic. So in other words, it’s a lot more profitable. And what we’re focused on is the next generation of this product. People really love experiences – the people that do them – but the biggest problem with experiences is just not a lot of people know about them and not a lot of people use them.”
Ali: Are you going to sell generic Eiffel Tower type of experiences? I know you don’t do it today, but is that possibility of competing with some of the other players in the market?
Chesky: “When people go to Paris they want to see the Eiffel Tower. When they go to New York, they want to see the Statue of Liberty. But we think there’s a way to do it with a bit of a twist. What’s the local way to see the Eiffel Tower? So I think we’re going to have a unique product, it’s going to be more local and more authentic than what you might consider kind of ‘mass tourism’ activities, but we are absolutely going to cater to people who want to see the iconic landmarks.”
Ali: What about long-term home rentals?
Chesky: “17% of our business today are stays of 30 days or longer. This is going to be a huge opportunity. Because let me ask you – you want to go to Buenos Aires for 45 days. What website do you go to to get a rental in 45 days? The longer the reservation, the higher the stakes for what I would describe as ‘sight unseen’.
“The way most people solve this is they go to the property, they tour the property for a reason. There’s a whole bunch of use cases where you can’t see it before you book it. And so stays of 30 to 90 days, really monthly stays to seasonal stays, I think that’s a huge growth opportunity for Airbnb, and I don’t think OTAs [online travel agents] are going to do that.”