ABNB IPO: why Airbnb could overtake Booking.com

Airbnb is set to publicly list its shares during its next IPO in December 2020 at a valuation of $ 30 billion. Compared to other travel giants like Reservation.com ($ 83 billion) and Expedia ($ 17 billion), this valuation may seem high at first glance. However, Airbnb could become the biggest, if not the biggest, travel agency in the world, which means that Airbnb’s stock could actually be undervalued compared to its potential.

Abstract

  • ABNB’s competitive advantage is its lead in supplying properties hosted by single owners unlike properties managed by professionals. Same The reservation does not seem to have caught up well because its alternative accommodation still seems to consist largely of “apartment-hotels” managed by professionals and operated by owners of several dwellings.
  • By using this unique offering, ABNB has built one of the strongest brands in the travel industry. Google search for Airbnb has already overtaken the search for Booking in the world.
  • COVID-19 pandemic may have helped ABNB consolidate its position as a synonym for travel and establish itself as the long-term leader of the travel industry
  • ABNB has the opportunity to be the leading destination site for all travel matters. It should be easier to integrate traditional travel activities like hotels, flights, and car rentals than it is for traditional OTAs to incorporate replicas of ABNB.
  • Compared to BKNG’s valuation of $ 80 billion, ABNB at $ 30-33 billion could offer an attractive advantage to investors as ABNB catches up and Ultimately surpasses BKNG as the world’s leading travel provider

Why Airbnb’s Unique Competitive Advantage Among Single-Family Home Owners

Airbnb’s real strength is its unique portfolio of real homes that its users can rent. These are single owner properties whose full time jobs don’t consist of renting out their homes and maximizing their income. They have a deeply emotional connection to their properties and they want to be able to rent them out to people they can trust. Their priority is not to make sure their homes are occupied 24/7; it’s to keep their homes safe while making money at the same time. Airbnb is able to meet this need through its two-sided Hosts and Guests Notice Network, which allows both hosts and guests to confirm. Reservation.coms with the certainty that they will not have any unpleasant surprises.

A typical Airbnb ad displays reviews of properties, hosts, and even guests

On the other hand, other travel agencies like Reservation.com have not been able to replicate Airbnb’s success. For example, a quick search for vacation homes on Airbnb and Reservation.com for alternative housing reveals that Reservation.comMuch of the alternative accommodation portfolio of s consists of “apartment-hotel” type properties operated by professional multi-owner owners whose full-time job is to operate properties and maximize income. In fact, while Reservation.comGlenn Fogel CEO has discussed several times the importance of building more traction with “single-family home owners” for several years, it’s hard to find the types of homes you find on Airbnb that are owned by individuals. While Reservation.com To touted a great success in its expansion of the alternative accommodation business, even beating Airbnb on some numbers, it appears to be made up largely of professionally run “apart hotels”, as opposed to actual homes. This Reservation hasn’t provided any hardware updates on their efforts on this front to mean anything, it may be that what Airbnb has built is indeed difficult to replicate, even for an industry juggernaut.

Alternative accommodation of <font>Booking</font>.<font>com</font> tend to be professionally managed serviced apartments “class =” ShortcodeImage – image lazyload “src =” https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600 , q_auto, w_1600 / v1 / booking_tpcq7k “srcset =” https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/booking_tpcq7k, https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/booking_tpcq7k, https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/booking_tpcq7k /res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_1600/v1/booking_tpcq7k 2x “/>
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<p>Typical alternative accommodations listed on <span>Reservation</span>.<span>com</span> tend to be professionally managed properties by owners of multiple homes</p>
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<h2>Airbnb has a huge and differentiated brand</h2>
<p>Thanks to this particular strength, Airbnb has been able to establish itself as a synonym for “vacation rentals” and “homestays”, just as Google has effectively replaced the word “search”.  When people go on trips together, they often call their vacation homes their Airbnbs, meaning “let’s look for an Airbnb” or “meet at the Airbnb”.  And, that mark is now getting bigger than even <span>Reservation</span>.<span>com</span>.  The comparison below from Google Trends for Airbnb and <span>Reservation</span>.<span>com</span> shows that global consumer interest, measured by the number of searches performed on Google for each brand, for the former has quickly caught up with the latter in recent years, and has even surpassed <span>Reservation</span>.<span>com</span> for the first time in 2020.</p>
<div class=
Google Trends shows that Airbnb consumer search has overtaken <font>Booking</font>.<font>com</font> in 2020 “class =” ShortcodeImage – image lazyload “src =” https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/graph_6_ncdsvw “srcset = “https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/graph_6_ncdsvw 1x, https://res.cloudinary.com/valuechampion/image /upload/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_1600/v1/graph_6_ncdsvw 2x “/>
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<p>Thanks to this brand power, 64% of Airbnb traffic arrives directly on its website by typing the url “<span>Airbnb</span>.<span>com</span>“in the browser, well above 43% for <span>Reservation</span>.<span>com</span>.  This is a huge competitive advantage for Airbnb due to the online travel industry’s historic reliance on Google.  It’s no secret that Google’s foray into the travel industry has <a class=very bad Reservation.com, Expedia and Tripadvisor for years, and the reason why Reservation.comThe stock of far outperformed the other 2 public companies, given its relatively lower reliance on the search engine. That Airbnb’s dependence on Google is even lower than that of Reservation.com a competitive advantage that can help the company grow into the world’s largest travel brand over time.
SimilarWeb data shows Airbnb relies much more on direct traffic than even <font>Booking</font>.<font>com</font>“class =” ShortcodeImage – image lazyload “src =” https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/graph_12_kdz16p “srcset =” https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto,h_1600,q_auto,w_1600/v1/graph_12_kdz16p 1x, https://res.cloudinary.com/valuechampion/image/upload /c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_1600/v1/graph_12_kdz16p 2x “/>
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<h2>COVID-19 may have helped Airbnb in the long run</h2>
<p>COVID-19 has destroyed the travel industry.  However, it may have helped Airbnb in the long run.  While people are avoiding conventional travel involving flights and hotel stays, travel during this pandemic has in fact become travel to an Airbnb.  This momentum combined with Airbnb’s branding power means that it has taken a greater percentage of consumers’ minds and is growing more organically.  Airbnb’s S-1 record confirms this: the company has consistently outperformed its competitors and has also rebounded much faster than others during this pandemic.</p>
<div class=
Airbnb has consistently outperformed its competitors, before and during the pandemic

But not only was Airbnb able to recover its business faster, it did so while reducing its sales and marketing spend by around 40% to 8% of its revenue. In contrast, the two Reservation.com and Expedia have continued to devote over 30% of their revenue to sales and marketing just to save what they can throughout the pandemic. This is certainly due in large part to the fact that consumers are looking for private accommodation away from the crowds, but it only confirms Airbnb’s lead in terms of the supply of privately owned real estate as well as the strength of the market. brand that it built as a destination website.

Airbnb has been able to recover its revenue much more efficiently than <font>Booking</font>.<font>com</font> or Expedia, even though it has significantly reduced its S&M spending when others couldn’t. “class =” ShortcodeImage – image lazyload “src =” https://res.cloudinary.com/valuechampion/image/ upload / c_limit, dpr_1.0, f_auto, h_1600, q_auto, w_1600 / v1 / graph_10_pcnr6c “srcset =” https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_1.0,f_auto_auto,ho_1600, , w_1600 / v1 / graph_10_pcnr6c 1x, https://res.cloudinary.com/valuechampion/image/upload/c_limit,dpr_2.0,f_auto,h_1600,q_auto,w_1600/v1/graph_10_pcnr6c 2x “/>
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<h2>What the future of Airbnb could look like</h2>
<p>As the pandemic worsens across the world this winter and conventional travel remains difficult, if not impossible for most of 2021, Airbnb could establish itself as the premier consumer brand in travel.  A possible consequence of this is that Airbnb becomes the travel destination. <span>Reservation</span>.<span>com</span> site that bypasses Google, just like Amazon has become the website people visit to shop.</p>
<div class=
Society Evaluation
ABNB $ 30-33 billion
BKNG 83 billion dollars
EXPED $ 18 billion
TRIP $ 3.5 billion

To do this, Airbnb will need to replicate OTA’s inventory of hotels, flights, and car rentals, among others. However, it will be much easier for Airbnb to do than for others to replicate Airbnb’s selection of single-family homeowner listings. Business entities like hotels, airlines, and car rental companies are almost entirely driven by revenue (and are pretty desperate for them right now), and will be more than happy to market their products to the huge Airbnb user base. On the other hand, it will be more difficult for owners busy with daily chores to manage multiple ads on different platforms. Instead, they’re more likely to want something that they can just trust and forget about because it works. Even before the pandemic, ABNB had grown much faster than traditional OTAs while investing in its brand. If ABNB executed this plan well, it could match or even exceed BKNG in size.

Nothing herein should be construed as a past, current or future recommendation to buy or sell any security or an offer to sell, or a solicitation of an offer to buy any security.

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