Airbnb surprised many in the travel industry when it announced its intent to list on the public markets earlier this year despite a crisis year for the travel industry.
Though the home-share giant stated in 2019 that it would, in fact, file for its IPO in 2020, the pandemic upended plans for nearly every business around the globe.
Indeed, the COVID-19 crisis has increased losses at Airbnb during 2020, with its red figure standing at $697 million for the first nine months of 2020.
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And despite assistance from a $1 billion investment from Silver Lake and Sixth Street Partners and a $1 billion syndicated term loan, the company wound up laying off 25% of its staff in May.
Yet, this week, Airbnb filed its S-1, ending any remaining speculation from travel industry players who have been awaiting this move for quite some time.
Below, we hear from short-term rental experts and other commentators on what Airbnb’s initial public offering will mean for the sector and the travel industry at large.
Jared Alster, co-founder and chief strategy officer, Wildebeest
“Airbnb's S-1 filing confirms a lot of what we already knew. For instance, building a strong brand is key in scaling user acquisition, especially when it comes to organic traffic. The S-1 shows that thus far in 2020, approximately 91% of all traffic came organically. While Airbnb also notes their disdain for Google in siphoning off traffic through their own travel products, Airbnb is much better positioned than most other OTAs because they have invested in brand building since day one, versus spending predominantly in performance marketing channels.
“Entire companies like AirDNA and BeyondPricing have risen and grew as a result of Airbnb. The microeconomy surrounding Airbnb is really unprecedented in travel. I expect short-term rentals to continue to outpace traditional hotels as the recovery takes shape. I've been an Airbnb customer for many years, and now look forward to also being a shareholder.”
Tom Caton, co-founder and chief revenue officer, AirDNA
“I think Airbnb, possibly by accident, has timed the IPO to perfection. It was well-considered inside the firm that they missed the boat to IPO. Holding on, and holding on, until everything was perfect, and it looked in March as though they had blown it.
“But whilst Airbnb is in the travel sector, by tremendous fortune, they have been in the very best place in travel. In all their markets, people have shown a cacoethes for travel. There is a basic human need to get away, and the safest option, by far, is a vacation rental. Given the current megatrends in travel - prioritizing drive-to, rural destinations and private, controlled spaces - home-sharing is poised to do exceptionally well and Airbnb is better placed than ever to capitalize on this.
“Moreover, the capital markets have shown incredible resilience, particularly to tech stocks and if Airbnb markets itself right, can put itself firmly in the COVID winners stock as travelers flood to vacation rentals as opposed to hotels.
“Finally, the likely structural shift away from office-based work should be a huge boon to Airbnb in the medium term. Second-home sales are through the roof, and traffic to AirDNA related to investment purchases has grown 300% since February. The future is having multiple residences, for those who can afford it, with the costs offset by rentals.”
Jesse DePinto, co-founder, Frontdesk
"What I find incredibly impressive is Airbnb showing a profitable Q3 amidst the backdrop of COVID-19. To me, this is proof of the company's resiliency. Airbnb is a globally recognized brand, and Airbnb serves as both a ‘noun and a verb’ - this is a crucial differentiator, and in large part why they have been more successful than rivals in reducing their reliance on Google.
“Between their focus on brand-building and their emphasis on serving all stakeholders, it's clear that Airbnb is playing the long game in terms of shareholder value creation. The word ‘Stakeholder’ was repeated 69 times, unheard of for tech company S-1 filings."
Nick Shay, head of travel and hospitality, Publicis Sapient
“Airbnb’s filing is the most anticipated U.S. stock market float in 2020. And when you look at what is happening with the stock market, now is a good time to be raising capital. During a year like no other, Airbnb’s business has been hit hard. The numbers show this - $576 million loss in Q2. However, like so many digital businesses, it continues to weather the coronavirus storm relatively well.
"Over the summer months, bookings returned to pre-pandemic levels as people sought to escape lockdown life, and Q3 once again reported strong. Whilst I expect them to drop again with the latest and current wave of global lockdowns, previous months show how quickly Airbnb is able to bounce back. It’s this agility and nimbleness that puts it ahead of the competition.
"It’s unfortunately more complicated for the traditional hotel sector. Whereas Airbnb is a digital platform business with minimal physical assets and subsequent employees, the hotel sector is not. Whilst the sector has moved towards an asset-light model, it still has higher overheads. Secondly, Airbnb is focused on vacation rentals and was historically far less reliant on business travel. Given we expect to see leisure travel bounce back more quickly as we adopt working from home for an indefinite period, the hotel sector is going to need to adapt further; I expect to see a continued diversification into home vacation rentals, sneaking into Airbnb’s domain.
"But Airbnb is making strides to differentiate further. The recent hire of Jony Ive – former Apple design chief – shows the company’s commitment to user experience and we wait with interest to see how far the company will deviate from and/or enrich its roadmap laid out just two years ago.
"Current and, perhaps, future lockdowns in the U.K. and Europe pose questions on the impact to Airbnb hosts and what Airbnb is going to do about it. As is the case with many startups that have reinvented traditional business models and challenged the status quo, Airbnb had already been facing challenges by local governments and regulators on its short term rentals model and the impact to the housing market in Europe (the question of whether it is contributing to the housing shortage). Now it faces further challenges as hosts are looking for more support to get through the crisis. On one hand Airbnb wants to offer its customers flexible cancellation and refund policies, but on the other, individual hosts set their own policies to protect their businesses. How much Airbnb will put aside to help hosts that are struggling is a question that remains to be answered.
"Looking ahead to 2021 and with Airbnb’s much-anticipated float in December, we will witness a continuing trend of ‘staycation’ bookings, family bubble rentals and ‘half-tourists’ – those people looking to work remotely from a new location.”
Steven Jankowski, head of growth, AllTheRooms
“Short-term rentals have emerged as the closest thing the travel industry has to a ‘COVID-proof’ business model thanks to their compatibility with social distancing guidelines, and Airbnb was best positioned to capitalize on the rebound in bookings with the largest and most varied inventory and strongest brand in the space. With cases of the virus in Europe and the U.S. starting to weigh on travel again (although not as disastrously as in March/April), it made sense for Airbnb to file before the winter in order to prepare the company for next phase in its growth strategy, while also finally allowing employees to realize their equity gains.”
Satoru Steve Naito, co-founder and CEO of Anyplace, one of PhocusWire’s Hot 25 Startups for 2021
“Airbnb is a great company that has made history in the field of travel startups and emerging markets in the past decade. I respect them greatly. A remarkable startup has created a major new market and is now entering a period of maturity. This means that new startups will be born that will also make history over the next decade. COVID-19 will create emerging markets such as the nomadic lifestyle and trend of slow travel. We will soon see the next startup akin to Airbnb that will deliver great success in these areas.”
James Burrows, CEO, Rentals United
“As a long-term Airbnb preferred partner, over the years we have consistently seen a company striving to be the best while fostering a strong community and brand. They exemplified how well they understand traveler behavior when adapting to the two trends that came out of the mobility crisis: mid-term and domestic. We and our customers have great confidence in the company. And we’re delighted for the close connections we have at Airbnb!”
Jeremy Gall, CEO, Breezeway
"One point that is clear from the S-1 filing, Airbnb has done an incredible job building their community of hosts. Airbnb’s commitment to educating its hosts on best practices demonstrates the growing importance of promoting responsible operations across cleaning, safety, communication and regulation. Technology plays a major role in achieving this, reinforcing the need for tools that are purposefully designed to empower hosts and managers to deliver exceptional hospitality experiences."
Steve Davis, CEO, Operto
"The short-term rental market, led by industry leaders like Airbnb, is poised for explosive growth as the travel and business industry both recover post-COVID. We believe this will be led by intelligent, frictionless technology solutions, that safely enhance the end-to-end guest experience. Airbnb customers, guests and the immediate short-term rental ecosystem are perfectly positioned to transition to this new, technology-led landscape."
Simon Lehmann, CEO, AJL Atelier
"One of the challenges that I see for Airbnb's future growth and the reason that listings have dropped from seven million in 2019 to 5.8.million today, is that the available second home inventory has been shrinking. With more and more of us working from home and stay-at-home mandates, it has become even more attractive to keep second homes for personal use.
"Many more, especially city dwellers, are now buying up second homes in traditional vacation areas and moving there. 80% of Airbnb's listings are private homes and not the shared living that Airbnb started with, and this stock has its limits."
Andrew Bate, CEO, Safely.com
"Airbnb claims a massive total addressable market of $3.4 trillion and total serviceable market of $1.5 trillion. These seem to cover short and mid-term home rentals, plus tours and activities. I have never seen such aggressive market sizes, and the ambition indicates the broad application of peer-to-peer commerce will be mainstream.
"However, for this to happen, there needs to be a real focus and innovation on trust, respecting the hosts and ensuring trustworthy relationships. While Airbnb has been a leader in trust and safety so far, there was not enough focus on their approach to keeping internet stranger interactions safer, and even pleasant in the S-1 filing."
Jill Mason, CEO, VRScheduler
"Airbnb's IPO defines a milestone in consumerism. They are pioneers of the sharing economy, creating a more sustainable use of resources, building community and allowing individuals to earn money. Airbnb's success and IPO proves that current generations care more about local flavor, culture and the environment than a dependable yet generic experience.
"Vacation rentals are one of the only profitable sectors in travel during this pandemic, and Airbnb showed profits in their third quarter. These facts indicate great potential and inspiration for everyone in our VR world, and for startups in hospitality technology, which is very exciting for VRScheduler."