Airbnb's Latest Announcements: Hassle-Free Travel And Luxury Properties

Yesterday, Airbnb hosted a large keynote presentation, announcing two important additions to its product: Airbnb Plus and Beyond, as well as a number of smaller additions and changes.

According to the company, "Airbnb Plus is a new selection of only the highest quality homes with hosts known for great reviews and attention to detail. Every Airbnb Plus home is one-of-a-kind, thoughtfully designed, and equipped with a standard set of amenities — whether you’re in a private room or have the entire place to yourself.” At the launch, Airbnb Plus features 2,000 listings across 13 cities, with more to follow. To join Airbnb Plus, the hosts would need to submit an application, which requires paying $149 fee, and then satisfy the company's 100-point quality checklist.

Another service announced yesterday was Beyond, although it won't be launched till late spring, and the amount of information available so far is limited. As Airbnb puts it, Beyond will bring "extraordinary homes with full service hospitality" to the platform.

Besides that, Airbnb is now formally recognizing boutique hotels for the first time: while some hotels have been represented on its platform for years now, Airbnb never paid much attention to those. That is about to change, with the inventory now being separated into several categories that will include vacation homes, unique spaces, bed & breakfast ones and boutique hotels.

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In my opinion, those changes are extremely significant. They also provide us with the glimpse into the direction Airbnb want to head in the future. While it was the idea of a marketplace for people to rent their apartments to other travelers that made Airbnb into the company it is today, at some point it had to find a way to transcend the limitations of this niche, while also utilizing its strengths to expand into additional areas.

One of the key challenges for Airbnb to solve at the beginning was to convince people to put their trust into the platform, allowing the strangers to stay in their homes. Once Airbnb managed to overcome this initial mistrust, the ratings system allowed it to quickly scale the platform, with both the untrustworthy guests and hosts being filtered out by the market.

With Airbnb Plus, it's now taking this further, using its already established ratings system for the hosts (as well as the statuses of "superhosts", possessed by some of them) to identify the most promising rentals, and then work with their owners to ensure even higher level of comfort for the guests. This seems very smart, as it fully utilizes the existing advantages that come with Airbnb scale and its crowdsourced ratings, thus allowing the company to scale it fast, while also providing the guests with enhanced convenience.

The same goes for the idea of recognizing boutique hotels. In many ways, Airbnb is better positioned to serve this niche that the regular hotel booking systems, not to mention the fact that Airbnb only charges the hosts 3%, charging the guests with the rest, and doing that in a transparent way, while platforms like Booking.com charge the hotels 15 to 20% of the booking value. However, before now, finding the boutique hotels on the platform was slow and inconvenient, damaging the experience for the users. The introduction of separate categories for different types of inventory should allow to improve the user experience, and potentially help to attract additional hotels to the platform.

It's harder to make any definitive conclusions about Airbnb Beyond at this point. On the one hand, judging from the way Airbnb positioned it in the announcement, it represents a long awaited move for the company directly onto the hotels' turf, which significantly expands its total addressable market, and should also potentially allow it to better serve the entire spectrum of their clients' needs.

On the other hand, unlike with the Plus and boutique hotels, the expansion into the full service hospitality doesn't necessarily utilize the existing strengths of the platform, and it's also not a space the company has much experience in. In order to leverage its scale, Airbnb would most likely need to find local partners in each geography, and then figure out a way to ensure that it can provide a consistent and high quality experience the guests are accustomed to with the traditional luxury hotels. This can be a very difficult challenge to tackle, but at the same time, the sheer size of the hospitality industry makes the attempt worth the effort.

Uber International Growth Strategy

On February 16, the news leaked that Uber is reportedly preparing to sell its Southeast Asian business to Grab, in exchange for the stake in the company. This is the third time that Uber decided to abandon the efforts to establish itself as a leader in the region, choosing to join forces with the strongest regional players instead: in 2016, Uber China was acquired by Didi Chuxing, and then in 2017, Uber merged its Russian assets with Yandex.Taxi.

In both cases, Uber hasn't actually fully exited the markets, but received significant minority equity stakes in the newly formed entities. This allows it to benefit from future growth in those regions, while also freeing the resources to be invested elsewhere. Still, the fact that Uber is now about to abandon another market that was long considered to be one of the most promising in terms of its long-term potential, is telling: the war of attrition can become too costly even for the most well-funded companies, especially if they have to compete against the strongest regional players in multiple geographies simultaneously. And the fact that those players are often very well funded themselves, have a significant head start and a much better understanding of the local specifics, doesn't help.

To be fair, I don't think that it's all doom and gloom for Uber: merging with the leading regional players, instead of continuing to wage the often doomed war actually makes total sense. However, it also raises a couple interesting questions. First, Uber might find itself effectively locked in some of those entities, unless those companies become large enough on its own to make public offerings an attractive option to achieve liquidity. If, for some reason, an IPO isn't an option, the only viable buyer for those companies will most likely be Uber itself. Second, there is a very real possibility that Didi would soon emerge as a truly global player, with its latest acquisition of 99 in Brazil only strengthening the case for it. If, or rather when, that happens, Uber will face a significant conflict of interest, being at the same time a major shareholder and a key competitor to Didi. This is, of course, not the first time in history such a conflict would emerge, but still, it would be curious to see how Uber would choose to deal with it.