Your options for finding a place to stay when on vacation or taking a work trip have increased significantly. And that’s thanks to one company... Airbnb.
Airbnb was founded in 2008 by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia. The company is headquartered in San Francisco, California and runs a global online marketplace and hospitality service that’s accessible through its website and mobile app.
The idea of Airbnb’s platform came like most great ideas… out of the desperation to pay rent. Brian Chesky and Joe Gebbia were roommates who weren’t able to afford their loft apartment, so they came up with the idea of putting an air mattress in their living room and turning it into a bed and breakfast. And the rest is basically history... with its usual trials and tribulations.
Airbnb has changed the way we approach making plans for potential trips. Before, you tried to find the cheapest hotel in the most convenient area, which could be very difficult depending on the place you were visiting. Most often, hotels are located near airports or major cities. Occasionally, you’ll find a cluster of hotels near highways for those taking road trips. Sometimes because of the location of a hotel, you’ll have to rent a car or find some type of transportation to get to your destination or fully enjoy your vacation.
In the end, getting away for a few days ends up being very expensive. Not to mention, the service you get at a hotel isn’t entirely personal. Hotels have protocols and, after all, are running a business so they need to keep rooms filled and money flowing in.
Airbnb’s platform offers something different with access to locations you’d only dream about visiting.
The company’s platform allows for hosts to put up rooms, apartments, houses, treehouses, etc., on a marketplace so other users can browse and determine if they would like to make reservations. Airbnb ensures security so hosts and guests can both feel trust from each other. Joe Gebbia has said Airbnb is specifically “designed for trust” and that the company provides a variety of safety mechanisms to make sure that trust doesn’t get breached.
Airbnb has come a long way since providing an air mattress to its guests in Chesky and Gebbia’s loft apartment. Last year, it rolled out Airbnb Plus. This option provides guests with high-end options for lodging. The homes and apartments included in Airbnb Plus have to pass a 100-point quality inspection and have amenities like faster Wi-Fi and upscale appliances.
The company is expanding globally and on different tiers with its new Airbnb Plus. It also launched a service called Experiences back in 2016, which allows guests to explore a location through activities run by locals like swimming with sea lions in Peru or learning how to make pasta in Rome. These additions take your trip and planning to the next level.
Airbnb has reported 6 million listings; among those listings include castles and treehouses. Those 6 million listings span across 81,000 cities in 191 countries.
The company could definitely face some challenges in the future. There has been a demand for the company to start following and setting forth regulations. Hotels pay tourism taxes, but Airbnb doesn’t. And there’s a lot of people who would like that to change.
Cities like Los Angeles, San Francisco, Las Vegas, and New York City have started to put regulations into place for private homes being used for travelers. Politicians, activists, and studies have shown that Airbnb is a significant contributor to the rising cost of rent in these major U.S. cities.
Airbnb also faces competition from other booking services like Booking Holdings Inc., trivago N.V., and HomeAway. Not to mention, the global hotel chain Marriott International Inc. has stepped into Airbnb’s realm with its very own home-sharing services. It plans to launch a platform that is offering 2,000 premium and luxury homes in more than 100 locations in the U.S., Europe, Caribbean, and Latin America.
Airbnb Goes Public
The time has come. This home-renting tech company is setting itself up for an initial public offering to go down in history. Unlike Uber and Lyft, Airbnb is profitable. This sets the company apart from those highly anticipated and highly valued IPOs that have had their stock plummet since going public.
In March, the company acquired the hotel booking site HotelTonight for a reported $400 million in cash and stock. Acquiring HotelTonight puts Airbnb in the right position to continue to expand its platform, giving its users access to HotelTonight’s boutique hotels around the country.
According to Crunchbase, Airbnb has raised a total of $4.4 billion in funding over 16 rounds. The company’s lead investors are JP Morgan Chase, Hillhouse Capital Group, TCV, and Alphabet’s CapitalG.
The company is a tough competitor for the hotels. In 2016, over 50% of Airbnb users chose the service as a replacement for a hotel stay. On average in the U.S., the price for a one-night stay in an Airbnb accommodation is cheaper than a hotel’s daily rate. Therefore, having more people choose Airbnb as the first option for a place to stay is going to steadily grow Airbnb's business all around.
Unlike some of the tech unicorn companies that went gone public in 2019, like Uber (NYSE: UBER) and Lyft (NASDAQ: LYFT), Airbnb sets itself apart by being a profitable company. TechCrunch reported Airbnb’s revenue was over $1 billion in the third quarter of 2018’s fiscal year.
Wall Street analysts are expecting Airbnb’s revenue to rise from $3.8 billion last year to $8.5 billion in 2021. That type of expected growth makes Airbnb attracted for investors.
Not only is it a profitable company, but it also has a future and is always thinking about how to grow and gain more market share.
This year has been shaping up to be an already very successful IPO market. Staying informed about upcoming IPOs could greatly benefit your wealth.