Airbnb Summer Travel (Report: 2015) Source: AIRBNB
In 2007, Airbnb co-founders Brian and Joe hosted the first three Airbnb guests:
Michael, Kat, and Amol. At the time, none of them thought they were onto
something big. Brian and Joe simply needed to pay the rent. And Michael, Kat, and
Amol needed a place to stay during a design conference.
They were the first five members of the Airbnb community – but none of them
imagined just how big that community would grow. Just eight years later, the
Airbnb community now spans 191 countries and 34,000 cities around the world.
Over 50 million total guests have followed in the footsteps of Michael, Kat, and
Amol – over 30 million just in the last year. These guests are traveling on Airbnb
because staying in a home gives them a unique experience that they can’t get
anywhere else. And like Brian and Joe in 2007, the majority of Airbnb hosts are
sharing their space to make ends meet. Most Airbnb hosts use the money they earn
sharing their space to pay the bills, and a study earlier this summer showed that
Airbnb income is providing an economic lifeline to middle-class families.
This summer, millions of guests had the chance to have a unique, local travel
experience in communities around the world. They visited local coffee shops and
small businesses that haven’t benefitted from tourism in the past, and they met
community members they never would have encountered if they stayed in
traditional accommodations. As the summer travel season winds down, we took a
look at the numbers and analyzed travel that took place between the end of May
and early September. This report briefly summarizes our findings and includes
additional details regarding the Airbnb community.
Five years ago, in the summer of 2010, roughly 47,000 people stayed with Airbnb
hosts. This summer, nearly 17 million total guests stayed with Airbnb hosts
around the world. That means that in the last five years, summer travel on Airbnb
has grown 353 times over. To put that in context, that’s more people than the
population of Greece, or Sweden, or Switzerland
(…)
At this point five years ago, fewer than 90,000 total guests had ever stayed with
Airbnb hosts. Today, that number is nearly 55 million. Total guests have grown
more than 600x in just five years.
Guests from Around The World
The Airbnb guests traveling this summer came from all over the world, traveling
from 57,000 different cities. The average age of these travelers was 35 years old,
and 54% of the guests were women and 46% were men. These guests traveled
over 10 billion miles to their Airbnb destinations. That’s enough to fly from Earth
to Pluto and back again. The most popular routes for Airbnb guests weren’t quite
so out-of-this-world. Three of the biggest routes were Paris to Lisbon, New York
City to the Catskills and Hudson Valley, and Seoul to Osaka.
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A study by former White House National Economic Advisor Gene Sperling found
that the supplemental money earned by our U.S. hosts essentially represents a 14
percent annual raise for middle class families on our platform, and comes at a time
when middleclass income has stagnated across the U.S. The average host in the
study earns approximately $7,350 – vital income for middle-class households
trying to make ends meet.
Often, Airbnb hosts are welcoming travelers who are visiting their city for major
events like a Grateful Dead concert, the Copa America soccer tournament in Chile,
or the start of the Tour De France in the Netherlands. There are even more events
on the horizon, from Super Bowl 50 in the Bay Area to the Rio 2016 Olympic
Games, for which Airbnb is the official alternative accommodation services
supplier. And thousands of hosts are preparing to open their doors to travelers
when the Pope visits Philadelphia and Cuba. In terms of listings, Philadelphia and
Cuba are Airbnb’s two fastest-growing markets over the past six months. During
these major events, Airbnb can help a city complement its existing tourism
infrastructure and bring valuable income to the local neighborhoods that Airbnb
hosts call home.
Safe Travels
The Airbnb community has grown quickly because it is built on a foundation of
respect and kindness. We’ve developed a Trust and Safety team of over 250 people
that are available around-the-clock in every time zone. We are constantly working
on new products and features to help make Airbnb safer. These tools are making
a difference. 17 million guests were traveling this summer, but there were under
300 calls into our Trust and Safety team that were classified by our team as urgent
situations.
(…)
The Rise of Airbnb's Full-Time Landlords
[Link]
property-investors-rich-despite-the-neighbors - November 10, 2015 — 11:00 AM
CET
Ryan Scott says traditional landlords are missing out. The real money is in Airbnb
Inc.
Scott, 33, figures he brings in half a million dollars a year in revenue from 14 San
Diego homes he leases by the night using the short-term rental site. That’s a 20
percent profit margin and almost twice the revenue he could get from year-round
tenants, he said. Scott owns eight of the houses and manages six others for
landlords, and he’s able to do it and still keep his day job.
“When I got started a few years ago, it was very easy -- there wasn’t a lot of
professional competition on Airbnb,” Scott said. “Now I think it’s going to get much
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more crowded with professional managers, for better or worse. There’s a huge
opportunity for bigger companies.”
Listings by investor hosts such as Scott, powered by sites like Airbnb, Vacasa and
HomeAway Inc., are surging in urban hot spots around the U.S. The rise of full-time
hosts is spawning a crop of startups offering support services from housecleaning
to key exchange. While the unlicensed lodgings are giving a lift to local restaurants,
shops and bars, they’re drawing scrutiny from city governments and driving some
neighbors crazy.
Airbnb gives investors a chance to scale like never before, said Jake Wegmann, a
University of Texas professor who analyzed data scraped from the company’s
website for San Francisco, Boston, Chicago, Washington and Austin. Listings by
hosts with more than one Airbnb property in those cities made up about 40
percent of the inventory last year, unchanged from 2013. Total listings more than
doubled in the same period, he said.
Chris Lehane, Airbnb’s head of global policy, declined to provide data on the share
of listings by hosts with more than one property on the website. He said he
questioned the use of scraped data, noting that it could include boutique hotels or
neighbors listing their properties for each other. About 75 percent of hosts
nationally are families sharing their primary residence, he said.
“Airbnb is a middle-class, people-to-people platform -- for the people, by the
people, of the people,” Lehane said.
Home-Sharing Ordinance
Scott Shatford, 35, said he’s not concerned about a Santa Monica, California, home-
sharing ordinance that took effect in June. It prohibits stays of less than 30 days in
homes where the host isn’t living, with fines of as much as $500 per day. He said
enforcing the ban will be difficult for the city because Airbnb listings don’t include
addresses. Shatford said he makes “six figures” annually from his five properties,
each one renting for an average of $250 a night –- about $150 cheaper than nearby
hotels. And he offers something hotels don’t: surfboards.
Shatford started [Link], a data analytics firm, to find the most lucrative
properties and locations for short stays. He said a low-risk approach to investing
in the industry is to build a portfolio by signing yearlong leases instead of buying
the properties. The worst that can happen is a landlord who isn’t told about the
operation can terminate a lease and keep the security deposit. That happened to
him in March. “As soon as I signed the documents saying that I’d be leaving, the
landlord asked me how much I would charge to consult for him to list other units
on Airbnb,” Shatford said. Troy Flanagan of the American Hotel & Lodging
Association says investors have an advantage over hotels because they often don’t
pay taxes and don’t have to comply with safety or zoning regulations.
“The current laws are being flouted,” said Flanagan, the group’s vice president of
state and local government affairs. “The entire industry is operating under
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loopholes.” Lehane of Airbnb said the company is “happy to have a level playing
field and pay our fair share of hotel taxes. We believe we present an incredible
value proposition both for hosts and for guests.”
Hostile Cities
Investors frequently operate in cities that are hostile to their business model. New
York Attorney General Eric Schneiderman concluded in a 2014 report that as
much as 72 percent of Airbnb reservations in the past several years violated state
law. Airbnb, last valued at $25.5 billion, spent $8.4 million to successfully defeat a
ballot measure that would have limited short-term rentals to 75 days a year from
the current 90 days. In San Francisco, about 77 percent of entire units are rented
for less than 90 nights a year, according to data from Airbnb. Jason Martin has four
homes in Austin, where the city council is considering the suspension of new
short-term rental licenses and unhappy neighbors have made it harder for him to
do business. Code officers knocking on the doors in response to neighbors’
complaints about loud partying often interrupt guests who were just sleeping or
showering, he said. “Austin is completely under fire,” Martin said. “A minority of
neighbors are pushing their agenda to get the rentals out.”
Angry Neighbors
Tracy Smith lives two houses down from one of Martin’s rentals, a short walk to
the popular Rainey Street restaurants and bars. She says she’d rather see kids in
the backyard of Martin’s property than guys playing beer pong, she said. “People
are making a killing,” Smith said. “Homes are taken up for families who’d want to
live here.” Angry neighbors haven’t slowed the expanding universe of the more
than dozen startups that have emerged to serve the alternative travel industry,
said Jeremiah Owyang, an industry analyst at Crowd Cos., a Redwood City,
California-based research firm. Companies include Beyond Pricing, which offers
software so that owners can vary rates based on supply and demand;
[Link], a turndown service for hosts that replaces towels and sheets and
reports back on the state of the property; Airspruce, which links hosts with
professional travel writers to pen listing descriptions; and Keycafe, which allows
guests to pick up keys from neighborhood cafes. “There’s a real industry here,”
Owyang said. “It’s not just a fad.” Guesty, a Tel Aviv-based startup, provides
concierge services, promising to respond to guest inquiries within an hour, said
Nathan Tobin, the company’s head of growth and marketing. The company now
manages about 3,000 listings, primarily for professional hosts. “There’s a huge
spike in people asking us whether or not a property is ‘Airbnb-able,’” Tobin said.
“Suddenly it’s on the checklist of whether to buy a property.”
Morgan Stanley: Hotels Don't Need to Worry About Airbnb as Much as
Investors Might Think
[Link]
hotels-don-t-need-to-worry-about-airbnb-as-much-investors-might-think
November 16, 2015 — 2:24 PM CET by Julie Verhaget
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Airbnb could prove far more disruptive for online travel agencies.
Hilton, Marriott, and other hotel chains can breathe a sigh of relief when it comes
to upstart Airbnb, but online travel agencies (OTAs) have cause for concern. At
least, that's what the analysts at Morgan Stanley conclude in a new research note.
According to the piece, based on a survey of some 4,000 travelers, such companies
as Expedia and Priceline have much more to lose than hotels when it comes to
Airbnb. The analysts, led by Brian Nowak, have three reasons they believe this to
be the case:
1. Airbnb is geared more toward leisure than business travel
Morgan Stanley figures that Airbnb is still primarily used for leisure trips, putting
it in more direct competition with OTAs than hotels, which get a significant chunk
of their bookings from business travelers. According to findings from its survey,
only 42 percent of Airbnb customers are eschewing traditional hotels, and the vast
majority of Airbnb guests stay three to five nights.
2. Airbnb also attracts customers from nonhotel categories
It's not just hotel customers who use Airbnb, however. Some 36 percent of the
company's customers are switching from bed and breakfasts, while 31 percent are
using Airbnb instead of staying with friends and family.
3. Airbnb cannibalizing hotel demand hurts the travel agencies more than the
hotels
If Airbnb does begin to hurt hotel demand, Morgan Stanley takes the view that the
hotels would start working directly with the company, which would then hurt
OTAs more than the hotels. In fact, there's quite a big difference between what
Airbnb charges hosts and what OTAs charge hotels, the bank notes. According to
the firm, OTAs currently charge around 12 to 18 percent on transactions, while
Airbnb charges 3 percent. Thus, Airbnb could increase the amount it charges and
still be a net positive for hotels.
Even if Airbnb offered the hotels a commission rate that is triple its standard rate,
it would be positive for hotels, likely leading to lower average customer
acquisition costs and giving them more leverage against the OTAs. Suffice to say,
this would be a further negative to the OTA industry.
"We think investors overestimate Airbnb's threat to hotels ... but underestimate
its threat to OTAs," Morgan Stanley concludes.
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QUESTIONS: AIRBNB (75 minutes)
a) Look at “The innovation process” as discussed in the course. How would
you define and position AIRBNB as an innovation?
b) Discuss the appropriation of value of AIRBNB’s innovation based on the
framework(s) presented in the course.
c) Make a stakeholder analysis of AIRBNB, based on the articles, and apply
Eden and Ackermann’s framework. Is AIRBNB applying the appropriate
stakeholder management strategies?
d) SWOT analysis. Based on the articles, define for AIRBNB:
e) There are some criticisms on Porter’s five-forces framework. Do you find
evidence based on these articles that these critics might be right? Give 2
examples.