In 2008, the company AirBedandBreakfast.com (Airbnb) was founded by Joe Gebbia in California, USA. By 2012, it has opened its international offices in London, Australia, Singapore etc. Its revenue grew 80% from 2015 to 2016 with a profit of $200 million in 2018. As estimated by Forbes, Airbnb is worth $31 billion bringing Gebbia, Chesky and Nathan to the limelight. For nearly 12 years, Airbnb has acquired immense popularity and gained the trust of travel enthusiasts across the globe.
The extreme success of this “unicorn” start-up has agitated some people due to valid reasons. The regions or tourist destinations, where Airbnb is highly active and more in number, have limited availability of long term lets. Many times, the neighbours complain against loud noises, improper behaviour of tourists and lack of courtesy towards the fellow neighbours. Social media sites and online platforms like airbnbhell.com are filled with the negative remarks of the hosts, guests and neighbours, but the positive remarks also exist which allows the show to continue.
In London, more than 70,000 homes are registered under Airbnb and it requires some laws and regulations to keep the matter in check. The mayor Sadiq Khan decided to initiate a registration scheme for short term rentals that must be limited to 30 nights a year. But this seems impossible to implement. In 2018, City Hall recorded that 2.2 million guests rented for temporary periods, adding 1.3 billion Euros in the local economy. According to James Murray, Deputy Mayor of Housing, “In principle, a good balance can be struck. Londoners can make a bit of extra money by renting out their homes, and visitors can have more options for places to stay. But that does have to be balanced against protecting long-term rented housing in London and the impact on neighbours of people coming and going. In some areas, the balance is not being struck.”
Source: London Post
Airbnb accepted the Mayor’s call and tried to follow the strict compliance policies. According to a spokesperson of Airbnb, “a good partner to the places in which our hosts live… We have already collaborated and worked with over 500 governments to help hosts share their homes and follow the rules.” He also added, “We always welcome working with local authorities and partners on how we can ensure hosting and home-sharing continues to grow responsibly and sustainably, and help spread the benefits of tourism to local families, small businesses and their communities.”
Source: Business Insider
Even though Airbnb has achieved extreme popularity in various locations abroad, it has gained momentum in India in recent years. Airbnb entered the Indian market in 2016. As recorded in 2018, Airbnb in India has witnessed a growth of 115% and over 30,000 listings across the country. More than a million Indians have travelled in Airbnb globally, and the domestic user base was all set to embrace this new aspect of lodging and hospitality.
In partnership with local state-run tourism agencies, Airbnb has successfully built a community in the domestic market. Chris Lehane, Head of Public Policy and Communications of Airbnb, said that the company has targeted to reach a billion people on the platform by 2028 and that India is seen as a profitable market for the steady expansion of the company. India is one of the fastest-growing economies in the world with travel topping the priority list of a large number of middle-aged people and the expanding 400 million-plus millennial.
The Indians have hosting and hospitality ingrained in their DNA, their inclination towards “Atithi Deva Bhava” (Guest is equivalent to God) has driven the steady growth of Airbnb in India. Airbnb has signed an agreement with the North-Eastern Tourism Council to incorporate the home renting system in the seven states of the North-Eastern part of the country. The picturesque landscapes in the lap of the Himalayas serve as a perfect holiday destination for thousands. It has also signed a Memorandum of Understanding (MoU) with National Skill Development system, in an agreement with Prime Minister it has decided to create a database of 50,000 hosting entrepreneurs for penetrating in the underserved parts of the country.
Source: Pinterest
Both in India and globally, Airbnb has been witnessing steady expansion. As per a report by KPMG, “individuals select Airbnb accommodation both for leisure and business purposes. Bookings through the platform increased significantly by 68,9% over the past year. The net room occupancy rate in 2018 amounted to 52%; lower compared to the average of 70% of hotels and other hospitality establishments.”
With the Internet explosion and booming digitization, there has been a subsequent increase of peer-to-peer platforms, whereby the buyer and seller can interact directly, without any third-party interference. Airbnb has been one such platform where private properties are commercialized for long term or short term rentals, challenging the traditional hospitality sectors like hotels, motels etc. The rise of travel enthusiasts, travel bloggers, travel influencers across the globe cushion the expansion of Airbnb. It allows the tourists to travel light and enjoy the comfort of a home, not just a limited space of the hotel.
Coming back to India, Airbnb has been pinning hopes for steady growth in the domestic market. Nathan Blecharczyk, the co-founder and chief strategy officer of Airbnb said in 2019, “India operations are ‘set up for success’ with 78% local growth overall and a fourfold growth in its business travel segment in the past year. The company has about 45,000 listings in India, with Goa being its most popular market at 6,000,” as reported by Economic Times. Nathan added that he did not see any competition with the homegrown Softbank aided Oyo, as this digital space has given scope for everyone to grow. Innovation and efficient business models have aided its growth and helped it to make a strong position in the market, without being threatened by any of its predecessors. In 2018 Airbnb clocked above $1 billion; hinting at its consistent relevance in the changing market conditions.
Why will I let other random people stay at my house? Is it safe? Is it trustworthy? How to judge the authenticity of the guests? How will I get my payment and how to fix the rates of my house? These questions often arise in the minds of the house owners, and Airbnb gives the answer to all these queries. Without proper documentation and proof of authenticity, the proposal is not carried forward. Even the guests can have questions like, is it safe? How will be the owners of the house? Will there be any caretaker?
Airbnb again suits all the answers and takes care of both the guests and the owners of the house. Livemint reported one such event, where the house owner had to face a lot of trouble, but Airbnb took care of everything. “ Shiv Sharan, a 45-year-old photographer based in Mumbai, was in for a bit of a shock when he let a ‘family of 12’ rent his Kerala-style bungalow in Puducherry for a birthday party. ‘My caretaker told me that close to 60 people showed up at the house instead of 12,’ said Sharan. His house is listed as one that can host 15-20 people. ‘I had to pay for professional cleaning after the party cleared out,” he said. Fortunately, Sharan was able to recover the cost from Airbnb, which addresses such issues.’”
The initial focus on Airbnb India was to focus on the domestic travel of the Indians, but arriving in the domestic market, it observed a different scenario. Rising travel buffs and middle-aged tourists brought a new direction in the strategies of Airbnb. It observed huge potential in the domestic market and started concentrating on the same. As per Nathan, “We see robust growth, especially in the domestic market. Domestic travel grew 78% just in the last year. That’s the future opportunity. Out of the total addressable market of India, three-fourths is domestic travel. Our trend is heading in that direction.”
Joe Gebbia, Brian Chesky, and Nathan Blecharczyk decided to transform their loft in an area that can fit an air mattress and where breakfast can be offered. This was done to host travellers coming to San Francisco for a design conference. Airbnb generated from this simple idea and now it’s a billion-dollar company. The platform now offers accommodation options ranging from villas, bungalows, castles, tree-houses, beach houses, heritage villas etc. This innovative approach of Airbnb prioritizing the wishes and convenience of people has been the major growth driver for this start-up.
Imagine to swing on a sea-facing balcony at a reasonable price, and getting to know courteous hosts of the house. With Airbnb, tourists can take a break from the one-room space of hotels and highly professional (and sometimes unprofessional) services at higher expenses. The company has harped the correct tune for the price-sensitive domestic user base but keeping the quality in mind. The Bollywood actors like Saif Ali Khan and Kareena Kapoor have promoted Airbnb and that has also proved to be an effective marketing strategy of this American start-up.
Source: JustViral.net
Everything has been in favour of Airbnb, until the recent outbreak of Coronavirus. It has affected all the business sectors across the world, including India. The tourism and hospitality sector has incurred huge losses in this critical situation. Domestic and foreign travels have limited, hitting Airbnb adversely. Due to the strict cancellation policies and refusal to refund, Airbnb has attracted negative remarks from loyal customers. As reported by Economic Times, many agitated passengers have expressed their anger via Twitter, citing the company’s refusal to refund is inhuman and that it is actually forcing the travellers to travel to their planned locations, in spite of the massive outbreak. One user wrote, “Looks like we have to actually get COVID-19 to get a 100% refund from @Airbnb. Talk about mixed incentives.” while another one posted “No corporate social responsibility? You’re forcing people to take their trips and possibly spread COVID.”
It seems like Airbnb is desperately trying to save the business during this pandemic. But by doing so, it has actually welcomed the wrath of the loyal travellers, and that may jeopardize the business growth in the long run. No one knows when this crisis shall pass, as of now, the world is at a red alert.