Brian Chesky & the Travel Revolution

Commentary on the Brian Chesky (Airbnb) interview at the Skift Global Forum 2021

"Travel as we know it, is never coming back, and there's a whole new game. 1/5 of our business, by room-nights is 30 days or longer"

A bit dramatic. The first comment comes from the second part. First of all, it's misleading. The 1/5 is room-nights, not bookings. If we assume the average of those long-stays is 40 days, and the average overall stay is 6 days, then the long-stay bookings make up around 3% of customers. Let’s also assume many of those are digital nomads, staying in Airbnbs for many months - that might make the long-stay segment about 1-2% of customers. Hardly a revolution.

It’s mostly a new segment, and significant for Airbnb, but it doesn’t affect and won’t affect the vast majority of travel industry (the other 99%)

There’s an assumption that just because people can now work anywhere, that everybody wants to live in a new location every month. That lifestyle has long been available to those who want it. Yes, it might be far more widely available now, and 10-20x bigger, but it’s still a small % of people who will choose this lifestyle for the long-term.?

"they are going to go to small cities, rural communities & national parks. The genie is out of the bottle."

Let’s assume Airbnb has more travel data than anybody outside of Google, Booking and Expedia. It’s a lot of data. The problem is, I’d argue, the data from the last 18 months is junk. I’m not saying it’s off by 10% here or 20% there. I’m saying it’s junk. Worthless. Too many lockdowns, covid surges, borders opening and closing, offices & schools opening and closing etc. I don’t think you can extrapolate anything whatsoever from what we have just been through. We all know the major cities have suffered the most since March 2020, but its a bad assumption to say “the genie is out of the bottle”

"I don't think business travel is ever coming back to the way it was in 2019"

I agree with this one. I wrote a post about this recently.

"New portion of business travel - people working remotely who need to go to the headquarters for a week or two"

This is interesting, and I believe a huge opportunity for many parts of the travel industry. Large companies may meet at the HQ, but many companies won’t have an HQ, and will plan multiple ‘off-sites’ throughout the year, which may be largely flexible in terms of destination, and looking for accommodation with services, as well as team experiences.

"The more people are home all day, the more people will need connection with other people. Travel will be about seeing people"

How very ‘Airbnb’. I don’t know if there is evidence of this new need for connection leading to travelling to see people. Where I’m from, people go to the pub to connect. Where I live, they mostly go to the coffee shop or the restaurant. All of a sudden they are going to travel to meet all these people? Which people? I'm not saying it doesn't happen, I'm just saying nothing has changed from before. I expect many will argue with me here. Bring it on.

"The biggest change to travel, probably since the advent of the airplane. The entire identity of travel has changed"

Overly dramatic, but I can’t think of what else you’d call ‘the biggest change’. He mentions the internet as the other biggest change. You’d have to add ‘mobile’ to that list. Maybe low-cost airlines?

"Business and Leisure travel will begin to blur together"

Interesting, and probably very true. Worthy of a longer discussion. Feels like that conveniently might bode well for Airbnb shareholders. I assume this is the point of his current PR. And why not. The promotion of these long-term stays creates ‘market liquidity’ for Airbnb - action on both supply and demand. Sounds quite profitable.

"The reason domestic travel is doing so well is the cost of flights. Long distance travel is being replaced by short distance travel"

Nonsense. The cost of flights is nothing new. Again, you can’t extrapolate covid-era-restricted trends. He should visit the UK and ask some Brits about this.

When restrictions were lifted from Germany this summer, and they were knocked out of the Euros in June (29th), they all went to Spain. A few weeks later, after the football finished, the English followed them. When people are able to travel abroad, they do.

"A little bit less of the old mass tourism - like people getting on double-decker buses"

He’s crazy. Airbnb loves to pick on the double-decker bus tour. San Francisco is one of the best double-decker bus tours in the world. I’ll send him some tickets.

"Now, 40% of people come to Airbnb without a destination in mind, or a date in mind"

This one is really surprising. 40% seems VERY high. Maybe an anomaly of Airbnb? I’m not sure why, but I often find myself searching the location first and adding dates later. Still, 40% is significant. This needs more discussion. It sounds like a big shift.

"Going forward, we're going to be in the business of inspiration. Pointing demand to where we have supply. Level the playing field for cities, communities and hosts - travel redistribution"

This was in reaction to an over-tourism question. It’s problematic. On one hand, we all know that hotel supply doesn’t change very quickly, and that Airbnb has been a large part of the over-tourism problem. Also, nothing has changed. Their supply is still in the same place (unless we start moving houses).?

It's a platform. Their job is to match people who want to visit Amsterdam, Barcelona and Prague, with people who have homes in those cities. I’d feel weird calling Brian Chesky and trying to explain supply and demand to him, but his argument doesn't make sense.

Aside from that, ‘redistributing’ those tourists to other places doesn’t necessarily help. There's a good argument to say that you knew what you were dealing with when chose to live in Barcelona. If you now move all those tourists to new ‘unsuspecting’ locations, you cause a whole new problem.

The ‘inspiration’ comment is important. Airbnb moving up in the funnel seems sensible, and potentially a threat to many sectors.

"It's helpful that our brand is a noun and a verb"

Is it? Clearly Google is only a verb. Uber is both. I’d argue Airbnb is only a noun. Whatever it is, it IS very helpful, saves them a few hundred million $ every year and probably adds 10-20 billion $ to their valuation.?

"Why do travel planning apps fail? Because they are very complicated, and we use them once a year - that's a bad combination. If you can solve the scale problem, or the frequency problem, you have a great subscription plan"

More people need to listen to that short quote. It will save investors many millions of $, and founders many years of stress. Again, maybe a topic for another day.

Conclusion

Who knows how much of what he says is purely PR, and how much he believes. Regardless, I think most would agree that Airbnb went from a place (last spring) where many predicted they wouldn’t make it, to being worth $109bn today, almost the size of Booking.com and Expedia combined.

Many people say (and have said for years) that Airbnb is overvalued. To me, the new world looks like it fits very well with their model. I think the sky’s the limit - Maybe $500bn. Maybe $1tn in 5 years.