As a privately owned company, Airbnb does not have to release financial figures in the same manner as publicly quoted hotel companies. However, last week Reuters ran an exclusive story revealing that the organisation was forecasting that its room nights would double in 2015 from the 40 million worldwide achieved in 2014.
And this is not all backpacker traffic.
Since the dawn of the information age we have heard the aphorism that the competitor you should fear the most is one that does not yet exist. Another glib comment is that the competitors to fear are those from outside your sector.
Technology has changed the way we live, work — and distribute — and that is why Airbnb, like Ryanair and easyJet before it, is able to make major inroads into the accommodation booking market before anyone even notices.
We probably didn't realise that using Ryanair and easyJet in our private lives led us to be confident in using it for business. As the case of Lufthansa imposing a DCC shows, we tolerate new business models from new players much more than we do from our traditional partners.
Hoteliers' business models vary between owning and managing a property, a franchise and a pure management contract arrangement. In all cases the hotel management is responsible for the guest rooms and services.
Airbnb is not a hotel company. It is a booking service that links those that want accommodation with those that offer accommodation. It does not drive revenue by sweating every square foot of its accommodation by having facilities for banqueting and meetings as well as food and beverage. Instead its revenue is purely transactional.
Continued belowAirbnb is growing its presence and taking more business away from hotels
It receives a commission of 3% from the host and 6-12% from the traveller for every confirmed booking. It is very similar to an estate agent in that it acts as the marketing window for the seller — it does not charge for marketing (the photographs and the listing). Airbnb only ever earns once a transaction takes place.
However, like an estate agent its responsibility is only for the transaction and not for the product.
The owners provide the services. When a hotel's ownership differs from the hotel group with the management contract the group with the contract will be responsible for all the services.
So Airbnb is effectively an OTA — making money as a consequence of the content it carries. And that is the key.
Not all of today's travellers are happy to stay in a room in an international hotel — some want the experience of living like a local (and the convenience of being near the business destination), others are travelling as a group and want all to stay together in a dedicated spot.
In July — a year after it started targeting business travellers - the company launched Airbnb Global Product Suite for Business, a product to target the corporate market which includes a central billing system and a dashboard for tracking travellers' spending and locations.
Although the companies it lists as customers sound more like a tour of Silicon Valley (Google, Twilio, Salesforce) than a broad customer base it, this housing option is clearly attractive to a significant part of the market.
Notwithstanding the local battles going on about taxation and regulation, Airbnb looks as if it's here to stay as a booking service.
Its challenge remains, as for any OTA, getting the content that corporate travellers — and travel managers — want.