Without question, Airbnb has built a leading brand of our time. Capturing the hearts of consumers requires a vision, not just a business model, and the vision of ‘belonging anywhere’ has won the imagination, and custom, of millions. With brand being so critical in a travel industry otherwise dominated by google search, a fundamental question surrounding the Airbnb IPO is: just how powerful is the Airbnb brand? Moreover, can it retain consumer loyalty and attract yet more consumer attention to continue growing in the face of changing demand and competition?
Brand is power – how much do Airbnb have?
Brand matters in the travel industry thanks to Google’s stranglehold over search. A huge proportion of travel spend begins with search, and this fact makes Google the most valuable player in the travel industry. In 2017, when Expedia and Booking spent $7.2B on Google advertising, Skift valued Google’s travel business at $100B. By 2019, their spend had grown 50% and exceeded $11B. More telling, Expedia and Booking’s spend increased even as their CEOs made reducing dependence on Google a strategic imperative.
Airbnb website traffic at IPO
Airbnb stands alone as the one travel company that has not relied on Google. 67% of Airbnb site traffic is direct. The main direct competitors to the Airbnb brand, Expedia (46%) and Booking.com (41%), rely much more heavily on search engines.
How many consumers reach a website and how they get there serves as a strong indications of an online brand’s health. The power of Airbnb’s consumer relationships was illustrated by their COVID response. When bookings collapsed, Airbnb slashed marketing spend. Yet, marketing cuts ahead of the Airbnb IPO saw overall traffic largely unaffected, and direct traffic up from 55% in April to 65% in August. Customers that previously came through paid campaigns instead came directly to Airbnb.
And even in the face of this marketing reduction, Airbnb still increased traffic by 159% over this period. By comparison, Booking.com remained reliant on marketing investment, so its direct traffic share shrunk from 43% to 40% but its total traffic increased by 327%.While Booking.com looks to have the run on overall traffic, you should note that as this is a comparison of .com domains, and Airbnb alone employ different top level domains for different countries, for example .co.uk, this is not representative of Airbnb’s total traffic.
Airbnb share of supply at IPO
Considering listing shares, our Venn diagram demonstrates the Airbnb majority share of alternative accommodations listings, and also its superior exclusivity over rivals. If owners choose one place to list, it’s most likely to be Airbnb.
In the US, as Airbnb listings have continued to climb, those listed solely on competitors have fallen. However, the proportion of Airbnb exclusive listings has also been slowly falling.
Looking at the US up to the end of 2019, we can see that listing exclusivity has in fact fallen to 65%. And this pattern holds true for almost every nation we analysed. In the line chart below, we can see that exclusivity has climbed only in Mexico and Singapore.
We might be seeing slight declines, but all is not lost. Below illustrates the number and exclusivity ratio (number of platform exclusive listings/total platform listings) of listings by platform for a number of these countries. Airbnb commands the most listings, and the highest exclusivity ratio in each, giving it a commanding market share globally.
Airbnb share of bookings at IPO
And what of Airbnb’s other, more limiting, consumer? Guests appear to be choosing Airbnb over its competitors, and travelling more frequently.
In September this year, we calculate that Airbnb took 68% of all bookings on our top 3 OTAs. Of those, 33% went to listings exclusively listed on Airbnb. Booking.com, the closest competition for reservations, counted 25% of the total.
Below shows Airbnb guests’ frequency of trip through the platform. Putting aside the incomplete and anomalous 2020, users taking 5+ trips annually have grown to represent almost one fifth of total Airbnb trips. Single annual trips do however still account for double that share.
Can the Airbnb brand continue to attract new consumers?
While Airbnb’s brand has carried the company to this pinnacle of success, how powerful a growth engine will it continue to provide? We have shown that Airbnb is retaining its guests and share of reservations well but the next question is whether they can continue to grow.
First time guests of Airbnb were rising (prior to 2020) along with total trips, albeit with the share logically dropping.
Currently, a respectable one third of Airbnb trips are made by first time guests. Moreover, the pandemic has jumpstarted this share and potentially set Airbnb on a more positive trajectory of user acquisition.
A strong indicator of an online brand lies in how many consumers reach their website and how. Airbnb have managed to increase both their overall site traffic, and direct traffic in the face of budget cuts.
Airbnb’s dominance in terms of inventory and booking power is also irrefutable. Hosts and guest alike prefer Airbnb but can the unique brand position continue as Airbnb broadens its offering and faces more direct competition?
Ultimately, despite its scale, new travellers continue to discover Airbnb every year. The evidence suggests that Airbnb is far from exhausting its core market.