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.
- 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.
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.
|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.
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