How people get to a travel destination hasn’t changed much in recent decades, but where they stay once they arrive is transforming rapidly.
Technology has given many people the ability to rent out their own homes, or even a room in apartment through services like Airbnb and Expedia-owned HomeAway. In separate sessions during the GeekWire Summit 2016, Expedia CEO Dara Khosrowshahi and Jeff Jordan of Airbnb investor Andreessen Horowitz spoke about competition in the market and the effects these companies are having on travel.
When Jordan first learned about Airbnb years ago, he thought it was one of the stupidest ideas he had ever heard, primarily because he likes his privacy and the concept of renting a room in an apartment or renting out his house didn’t sound appealing. But after hearing Airbnb co-founder Brian Chesky speak at a conference years ago, he “went from a complete skeptic to a complete believer in 29 minutes.” In Airbnb, Jordan saw the next eBay, where he previously worked.
“It’s a different vertical, but it’s a community-driven model that started with a quaint little idea that seemed small, and the community took it and expanded the idea,” Jordan said.
Since then, Airbnb has gone global. The company recently raised $550 million out of a $850 million round, which would value the company at around $30 billion. Jordan thinks Airbnb will go public at some point, but right now the company is biding its time.
Jordan said Airbnb is in every major city in almost every country in the world, with a few exceptions. The company recently expanded to Cuba, and now it is the largest accommodation provider in the country, Jordan said. And about a quarter to a third of all people who travelled to Rio de Janeiro for the Olympics or World Cup stayed in an Airbnb because all the hotels were full.
Airbnb, with its “Live Like a Local” ad campaign, has positioned itself as the alternative to hotels. Expedia sees its HomeAway vacation rental service as a complement to its hotel business. When Khosrowshahi goes on vacation he usually brings his family, which includes four kids and in-laws. In that case, he prefers to rent an entire house.
Khosrowshahi said Expedia has begun integrating HomeAway listings into Expedia. Depending on the type of trip someone is booking, Expedia will display a different array of results. Someone going to New York alone for a night is likely on a business trip, so Expedia recommendations will be hotel-heavy. But a week-long trip, with a bunch of people tagging along is likely to trigger more entire home-type listings.
Khosrowshahi said vacation rentals like HomeAway and Airbnb have been around forever. But today, technology makes it easier to find different kinds of accommodations.
“We spent the last 15 to 20 years wiring up independent and branded hotels. Now we are just wiring up all these vacation homes so they can be searched and booked incredibly efficiently,” Khosrowshahi.
Jordan and Khosrowshahi agreed that Airbnb are likely to stay in their respective wheelhouses. Jordan doesn’t expect Airbnb to get into the hotel business, and Khosrowshahi doesn’t expect Expedia to start listing single rooms in a house or apartment.
“We’ll see five years from now how much is sharing versus whole homes,” Khosrowshahi said. “I think sharing, while it gets a lot of headlines is probably a smaller percentage of the pie than renting the whole property or apartment.”