airbnb officeAirbnb is reportedly in talks to raise up to $500 million at a $10 billion valuation, which would make it worth slightly more than publicly held Expedia.

The six-year-old San Francisco start-up epitomizes the sharing economy, by allowing people to rent out unused rooms in their home — or entire islands and castles — to anyone looking for a place to crash.

The Wall Street Journal was the first to report the funding negotiations, detailing that private equity firm TPG is likely to lead the round. If successful, Airbnb will become one of the richest young tech companies around.

Based on the most recent information available, Airbnb operates in 192 countries and has more than 600,000 current listings. Hosts set a nightly rate, and Airbnb collects a percentage of the payment. It does not disclose its revenues.

Airbnb specializes in unusual places to stay, like this Airstream in Spain.
Airbnb specializes in unusual places to stay, like this Airstream in Spain.

While being able to raise that kind of loot is impressive, Airbnb will be under the gun to find a lucrative way of investing the cash to create enough value for investors when it exits. One challenge that it faces — which will no doubt be expensive — is the company’s fights with public officials, who are asking whether it is violating local regulations.

These setbacks are common for companies in the sharing economy, with other start-ups, like Uber, Lyft and Sidecar facing increased scrutiny around the globe.

The sheer size of the round makes this deal outstanding, but what’s potentially more startling is how Airbnb will rank among its publicly held peers once the deal is compete (of course, negotiations can always break down and the deal may never materialize). 

Check out how a $10 billion valuation compares to some of the leading hotel chains and booking sites’ current market caps:

Expedia: $9.8 billion.

HomeAway: $3.9 billion.

Wyndham Worldwide: $9.3 billion.

Hyatt Hotels: $8.43 billion.

Priceline: $68.6 billion.

Orbitz: $878 million.

Comments

  • Mike

    who?

  • MichaelTompson

    Sharing economy is a myth. Whoever invested will get a harsh wake up call when this whole business model collapses. But I suspect they – by that time – will be far off in some offshore zone counting the post-IPO billions.

    • Billy Bob

      Move out of latte land. I’ve seen people in Central Asia and Europe using the service. Hotels are horrible, out of date, and are stuck in a 20th century mindset.

      • MichaelTompson

        AirBnB claims to be the biggest hotel brand. Don’t be naive. Meet your new master, same as an old one but this time even more illegitimate, even less regulated, more cartel-like, and paying far less taxes and fees to your local economy. Sure you will save a buck on that 1st floor uninsured bedbugs ridden condo but only to pay 10 more down the road. This business model is flawed and only naive social media readers will blindly support it. Sad but critical thinking seems so passe nowadays.

  • Greg

    Priceline, 68 Billion? Wow…

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