Welcome to our Third issue of Focus series at the duologue. The reading time to finish this one is around 5 mins.
The Duologue is a concerted effort by Vivek and Bheem to make sense with a unique lens. Now, on to the post!
Hey Bheem,
I was suppose to write this a few weeks back as a follow up to the part 1. I was mulling about the piece which would have comprised of randomly thought out scenarios into a coherent prose and publish. Luckily, i didn’t do that due to my own laziness and surrounding circumstances we currently live in.
Also everyone else on the internet has written about Airbnb. I mean literally everyone. And i had nothing unique to offer or propose. So decided to mull further.
So, you must be thinking why now?
In the process of reading all the takes, analyses and commentary. I realised a pattern that Airbnb has been upto that is being missed. Undeniably it is a clever one as well. So, that’s why i am here and through the takes and analysis will walk you through what’s next. Let’s Begin.
Be the News and you might end up being the choice.
Finance: Most of the analysts and investors will be erring on the side of shorting travel sector all together. The irony in this act is that they are the ones that travel most. So much for having skin in the game. To put all the rumours to rest, Airbnb did two rounds of $1 Billion dollars each fund raising at a discounted valuation with varying investors. [1]
This ensures that they last this pandemic lockdowns and come back having enough cash reserves to fire on all cylinders if push comes to shove.
Charity: We see many hotels converting their premises into a frontline staff accommodations during these times but none have been covered in as grandeur terms as Aibnb. This comes in stark contrast to other coverage of hotels. The reason being, the hosts with their own volition are offering their houses in the times of Covid-19 to frontline workers across Europe and North America. Any one following the sector has to cover this as it pertains to multiple people coming together to help the cause. Unlike an Organisation ( Hotel management who don’t live in the hotel ) shifting its model to help in a pandemic. [2]
In interest of Customers ( Goodwill ): By offering full refunds to the guests which initially caused some uproar from the hosts world over was addressed with the launch of a $250 million fund to cover the loses for the hosts. [3] Starting an additional $17 Million dollar grant for their supper hosts from the employees, founders and investors is surely going to get you some praise and appreciation in these times. [4]
Monetisation: Being more than just accommodations has led many hosts to start earning money. So far as to $5000 dollars a day. We mentioned in our previous post how Airbnb at its core is a Gig economy based model. So, in order to ensure hosts are earning monies in these times as well through other means. Airbnb launched online experiences for guests to pay to those hosts who are creating experiences online. These range from guitar classes to coffee making session, from yoga session to Olympians instructing how to train. Like Airbnb’s community they are as diverse as it can be humanly possible. [5]
To put its money where its mouth is, this is the current home screen outlay of the Airbnb app.
By covering all bases Airbnb stays in the eyes and minds of people world over when travel comes to mind for any guest.
Travel Revision : In Beta gearing for World Launch
There is also an another change in the homepage of Airbnb. They are now offering monthly stays to guests and are actively nudging hosts to participate in these offerings.
Why though? I will let Brian Chesky, CEO of Airbnb say it in his own words. [6]
Human connection is a unique need
In order to satisfy this need after being locked up in your house for over extended period. You as a human would like to go to a place that is nicer and quieter for few weeks at the least.
Any travel that requires quarantining for a 2 week duration for the safety of yourself and others would add a couple more weeks to your preferred timeline of vacation. Hence, having a month long trip is the ideal duration. This aligns perfectly well with the people who would like a change of scenery and hosts who would like to earn, though discounted from their usual, revenue out of their properties.
The logistics and implementation might look like a hell hole for any company as large as airbnb. But not for Airbnb though, this is where marketplace and incentives come into play.
Every host is leaving money on the table and everyone of them is looking to earn some extra money on the side to tide over this onsetting recession. The people who can afford would like to travel at a discounted price to resume some sense of semblance post pandemic.
Marketplaces are vehicles of incentive alignment and right now Airbnb has been making tides to make the best of circumstances to align all its customers towards re-starting travel experiences through human connections.
Om Malik is an ex-journalist turned Investor who wrote a piece titled “My contrarian view on Airbnb” where he goes on to explain for any consumer internet company to succeed it needs to stay true to 3 things :
It has a clear sense of purpose: Travel. Enable Experiences.
It is dead simple to use. You shouldn’t need a manual to use it in the future.
It is about fun and entertainment. (Maybe infotainment and edutainment, but still entertainment. )
Listening to the interview that Brian Chesky, CEO of Airbnb, did with Rafat Ali of Skift last week it is clear that even Chesky is aware of what to do next and how to go about it. He and his team are more focused and i would paraphrase what he said in the interview :
Something about this crisis truly reminds you what is important.
Problem persists: Outlook Shift
Prior to pandemic, going public was a ticking time bomb that was Airbnb’s management own doing. Financials were not doing great as well. Yet, the management was forced to commit to a timeline because of expiring stocks of a lot of employees. [7] There was a large scale fraud being reported on the platform which forced them to take measures such as verification of all of their 7 Million properties.[8]
Post Pandemic, having secured the funding needed and not needing to go public anytime soon, as Brian Chesky said “There’s no update. We’ll be ready when the world’s ready.” In the meantime, launching online experiences which is claimed to be their fastest growing vertical. Enabling long stay travel for guest opting for monthly stays on Airbnb which is live as i write this. [9]
Stays of 30 days or more were already 15 percent of Airbnb’s business before the pandemic, Chesky said, and currently make up nearly half of its bookings.
All of these measures and steps make it abundantly clear that here is a company that knows what to expect and how do we cater to these expectations.
By being a marketplace provider, it presents an opportunity to align thousands of hosts with Millions of rooms to move towards the next iteration of travel we are about to witness in the post pandemic world.
Regards,
Vivek
References
[1]: Airbnb Gets $1 Billion Loan, Bringing Coronavirus Funding to $2 Billion
[2]: Airbnb Hosts have Offered 100,000 Places to Stay for COVID-19 Responders
[3]: $250M to support hosts impacted by cancellations
[4]: The Superhost Relief Fund
[5]: Enjoy the Magic of Airbnb Experiences From the Comfort of Your Home
[6]: Skift’s Interview with Brian Chesky
[7]: Airbnb’s Loss Nearly Doubles in Fourth Quarter, Before Virus
[8]:Shooting, Sex Crime and Theft: Airbnb Takes Halting Steps to Protect Its Users - WSJ
[9]: Airbnb CEO Brian Chesky Poised for New Era of Travel Redistribution: The Long View This Week
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