‘It's going to be a bigger part of your life' – Airbnb revamps app with tours and luxury services in push beyond rentals
The expansion comes as Airbnb's core rentals business has seen slowing growth
After more than a year of teasing expansion plans beyond home rentals, Airbnb launched an overhauled app that's not just for homeowners and travellers, but also for personal chefs, hair stylists, trainers and tour operators to offer their services widely.
The company, whose name is synonymous with holiday stays, revealed its new Services offering and relaunched its Experiences tour-booking product at an event on Tuesday in Los Angeles.
It has vetted providers to offer 10 categories of in-home services, including personally cooked meals, prepared food items, full-service catering, photography, spa treatments, massages, personal training, hair, makeup and nail appointments.
The services can be reserved anytime even without a vacation booked, and many of them include "an entry offering below $50," Airbnb said.
The new Experiences business touts a trimmed-down list of nearly 20,000 tours and cooking classes, curated for quality and uniqueness with an average cost of $66.
Think of an Aran sweater knitting class in Ireland, a tour of the restored Notre-Dame cathedral with an architect from its restoration team in Paris, or a ramen-making class in Japan led by an award-winning chef.
And similar to the branded stays it promoted last year, Airbnb will offer limited-time celebrity-led experiences, like playing football and having Kansas City barbecue with Chiefs quarterback Patrick Mahomes (places are allotted by a draw, and judging process here).
"What if people monetise their biggest asset in their life, which is not their house probably, but their time? That's exactly what we're doing with the launch of Services and Experiences," said Chief Executive Officer Brian Chesky in an interview ahead of the event.
"What it means is Airbnb is not just a marketplace for vacation rentals. It's a global community in the real world where you can travel and live anywhere and you can certainly use Airbnb every week now in your own city. It's just going to be a bigger part of your life."
The ambitious expansion into new business lines, which Chesky has previously said would bring in $1 billion or more in annual revenue, comes as Airbnb's core rentals business has seen slowing growth following a post-pandemic travel boom.
Earlier this month, the company provided a weak financial outlook for the second quarter, citing softer travel demand in the US stemming from broader uncertainties about the economy.
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Airbnb has been compensating by seeking growth outside the US. This has included running region-specific marketing campaigns and adding more local payment methods in Latin America, Europe and Asia.
A focus on quality
Services will be available in 260 cities at launch, with Experiences starting in 650 cities. Airbnb will take a roughly 15pc commission fee from providers for each booking, in line with the rate it charges homeowners, according to Chief Business Officer Dave Stephenson.
But these new products would require more than one or two years to scale before they reach a network effect, Chesky said last year. That's partly because Airbnb intends to vet every provider manually for quality - it said its services providers have an average 10 years of experience and many are renowned in their field.
This is in contrast to how it runs the home rental business, where anyone can host. The lower bar of entry for homeowners has led to saturation in some markets in recent years, prompting Airbnb to take steps to cull low-quality listings.
"We don't accept things that we don't think will sell," Chesky said in the interview. "We want to make sure we can stand behind them."
The company will "probably manually vet them forever," he added. The process will get more efficient, he said, in part thanks to existing systems used to verify hosts' identities.
It will also use third-party services for background checks and internal tools to validate professional certifications and licenses.
The promise of curation differs from some of the leading travel experience marketplaces, such as Viator and GetYourGuide. TD Cowen analysts estimate each of those brands generates annual $3 billion in gross bookings by selling tickets to landmarks, sightseeing tours and activities.
"We're not forcing the guest to weed through hundreds or thousands of random experiences to find a thing that works," said Stephenson, who leads a global team of hundreds of staff identifying and onboarding unique activities and services within each city.
"We're going to have a large inventory, but we're going to have the best, and you're going to have high confidence that when you go on an Airbnb experience related to the Eiffel Tower, it's going to be fantastic."
Airbnb has learned a lot from their mistakes from the first attempt at Experiences in 2016, where there was "too much of a focus" on non-tourist endeavours, said Douglas Quinby, co-founder and CEO of travel activities research firm Arival. The reality is that a lot of travellers still want to wear a beret and get a croissant under the Eiffel Tower, he said.
There are also "positive signs" about Airbnb's willingness to engage with tour operators, relaxing a prior policy that prohibited hosts from mixing Airbnb guests and those from other platforms, as well as building software connectivity to other booking systems, Quinby added.
Future Possibilities
Investors may be surprised by the lack of a car rental service, something direct competitors Expedia and Booking.com offer and that Chesky said was under consideration, in a 2023 interview with the Financial Times.
Stephenson said it's still early days for the newly expanded platform, but suggested the company could add car rentals over time.
"They're not as unique as some of these services and experiences that we're starting with," he said of car rental services. "But what I'm excited about is we've built a foundation that can enable that in the future."
Longer term, Chesky sees the expansion as a way for the company to collect more data on users' travel habits and make better in-app recommendations, with a touch of social networking.
Later this year, Airbnb will let users see other guest profiles before they book an experience, and message other participants during or after the activity to stay in touch.
All that user activity will help produce travel inspiration content on the Airbnb platform in the coming years, sometimes with the help of AI, Chesky said.
The vision, he said, is a digital version of a promotional travel magazine that Airbnb used to print before the pandemic prompted it to scale back some non-essential endeavours.
"I think the profiles and the community and the relationship we have, especially our guests, is probably the biggest asset we're going to have," Chesky said. "I want to basically use technology and AI to get people off devices into the real world."
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