Adrian Loveridge Column – What is Airbnb?
Despite all the current challenges, according to news agency Reuters,
San Francisco based home sharing giant, Airbnb, is scheduled to launch an Initial Public Offering (IPO) possibly in this December.
Pundits have widely speculated that it could achieve a company valuation of more than a mind boggling US$30 billion, citing the justification was to take ‘advantage of the unexpected sharp recovery in its business after the Covid-19 pandemic roiled the travel industry’.
If the prediction materializes, it will become one of the largest and most anticipated of all U.S. stock market listings during 2020.
The company said in July ‘that customers had booked more than 1 million nights in a single day for the first time since 3rd March’.
Vrbo, one of Airbnb’s biggest competitors, owned by travel conglomerate, Expedia Group, appeared to confirm this optimism, by reporting that they had returned to bookings growth in June.
Therefore now may be an opportune time for Airbnb to access the public capital it most likely ‘desperately needs’, while investors may be enticed to buy the IPO based on improving trends.
Airbnb’s chief executive officer, Brian Chesky, has publicly stated ‘we’re going to keep our options open’ regarding the listing, despite writing a letter to employees in May ‘that its business had been hard-hit and revenue for the year was expected to be less than half of what the company earned in 2019’.
Announcing at the same time that Airbnb was letting go nearly 1,900 staff members or a quarter of its workforce worldwide.
No-one can doubt the phenomenal growth of Airbnb from its humble origins in 2007 when the initial three partners rented out a spare apartment loft space with inflatable air mattresses serving as beds, until it currently boasts representation in 191 countries across the globe.
Quite remarkable when you consider the United Nations lists of total of 193 member states worldwide.
Speculation has remained rife for years on what the overall Airbnb influence, negative or positive, has been on the traditional hotel and other accommodation sectors across all major markets.
The much respected Smith Travel Research performed a study across 13 global markets and their conclusion may have surprising reading for some.
- Airbnb occupancy was the highest in markets where hotels had high occupancy.
- Hotel occupancy was significantly higher than Airbnb occupancy.
- Airbnb guests typically stayed longer than the average hotel guest, with roughly half of Airbnb room nights coming from trips of seven nights or longer.
- Airbnb’ share of business travel was substantially smaller than its share of leisure travel.
- Hotel average daily rates (ADR) were generally higher than Airbnb rates.
Experts commonly agree that any real comparison is viewed a bit like apples and oranges, but if you look across our region, despite the emergence of Airbnb, annual average hotel occupancy has remained fairly stagnant for a decade.
This is, perhaps, an area where a great deal more evaluation is needed and while our Government has the use of a greatly underutilized abundance of salaried civil servants, they may consider it a suitable time to research and produce more accurate local results that could prove invaluable in effective marketing strategies.