Breakout

Airbnb Looks to Disrupt Travel Industry

Breakout

A new wave of hospitality is sweeping the multi-billion dollar travel industry. Thanks to the internet people aren’t just ditching their travel agents, they’re ditching traditional resorts and hotels too.

Airbnb is one of the start-ups leading the revolution. Their website connects travelers with locals. So instead of staying in that high-priced hotel, you can stay in an actual house or apartment.

CEO Brian Chesky says they’re not re-inventing the vacation, just bringing back an old trend. “People keep thinking this is some bold new idea,” he says, “but actually up until 100 years ago, or say World War II, when people traveled staying in a home was actually very normal.”

Chesky and his friends/co-founders, Joe Gebbia and Nathan Blecharczyk, stumbled on the idea six years ago when they couldn’t pay rent.

“An international design conference was coming to San Francisco,” Chesky recalls, “all the hotels were sold out and [I said], what if we created a bed and breakfast for the conference. Unfortunately I didn't have any beds but Joe had three air beds. We inflated them and we called it the 'Air Bed and Breakfast.' We ended up hosting three people from around the world, we made enough money to make our rent, but more importantly it was like we got to travel without leaving our home.”

Airbnb's Rapid Growth

A year later a company was born. Airbnb listings have grown from 10,000 at the end of 2009 to 300,000 across 192 countries today. Those listings include everything from posh New York City apartments to tree houses in Costa Rica to Igloos in France.

Customers pay right through Airbnb’s website and the company takes a cut before paying the owner.

But the journey hasn’t been easy. The company had a tough time finding early financial backers and faced legal and safety issues from the start.

“We grew so fast that our operations and our technology dealing with trust and safety hadn’t caught up to our growth yet,” Chesky admits. “We made massive leaps in trust and safety but we’re not even like 10% of the way to where we want to be one day.”

As they’ve expanded into new regions, they’ve found that different cities have different laws and different buildings have different codes. For example, if you don’t own your home you may not be allowed to rent it out to another occupant due to housing laws that pre-date the digital revolution. “[The laws] were made for a different time and in many cases it's not actually cut and dry. They're often times uncertain or fragmented,” says Chesky.

So while Airbnb urges users to pay attention to local laws and their terms and conditions, it continues to be an on-oing challenge. It’s one Chesky says they intend to combat with education. “When we go to a city we want to educate them on what we do and how to partner because ultimately we want the city to be better off because we're there and regulations are in place to protect consumers.”

Start-Up Philanthropy

Last October when Superstorm Sandy pounded New York City, the company’s online platform proved it could help out in a big way.

“We had hosts reaching out to say ‘we want to host people, we're happy to take them in for free,’” Chesky says. “So we changed our platform so you could host people for free, we reached out to the city and said ‘ya know we have this site, we have thousands of people that can house New Yorkers that are stranded.'”

The CEO hopes it’s a sign of things to come for the company’s philanthropic efforts.

What's Next for Airbnb?

Now, as Airbnb looks to the future, they plan to cut a different path than some of their publicly-traded competitors like Kayak (KYAK), Orbitz (OWW), Priceline (PCLN), and Expedia (EXPE).

“We never even looked at our competition. Everything we do at Airbnb, we try to have the courage to do something very very differently," says Chesky. "We are just maniacally focused on creating the most amazing experience for customers and it really starts with a breakthrough idea."

The company won’t comment on the possibility of going public themselves. But what they do say is that they’re focused on growth in mobile and overtaking old guard hotels that have earned broad consumer trust – no easy task.

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