Airbnb, Its Humble Beginnings To What The Future Holds For The Startup

In 2007, the two flatmates Joe Gebbia and Brian Chesky living in San Francisco couldn't afford to pay rent. The duo decided to turn their loft into an area that could accommodate three air mattresses. Coupled with the mattress and a night's sleep came the promise of a breakfast too. There was a design conference coming to San Francisco and the city’s hotels were entirely booked, so they came up with the idea of renting out three airbeds on their living-room floor and cooking their guests breakfast.

The following day they created a website, airbedandbreakfast. com; six days later they had two men and a lady sleeping in their apartment. They charged eighty dollars each a night. As they bid adieu to their guests, Joe and Brian looked at each other and knew that they had something bigger going on here. It was then that they recruited their former flatmate Nathan Blecharczyk who was a computer science graduate and a brilliant programmer, to turn their idea into an actual business opportunity, the idea of renting out apartments that already existed meant that there was no capital investment required to buy properties rather it acted as a platform to connect apartment owners with tourists, to come rent their apartment for their planned trips, it is comparable to the e-retailer eBay which acts like a platform connecting large businesses to consumers directly by charging them a small fee for their service. From here on, it was a difficult two years ahead until “Airbnb finally picked up a $600, 000 seed investment from Sequoia Capital in April 2009.

Chesky describes it as going from only eating leftover cereal to "ramen-profitable”. ” this got them to completing their web interface and they were finally ready to launch globally; the company had also integrated a payment gateway into their web interface that allowed users to make payments through the website itself at the time of making the reservation. It charged up to 15% as a service fee for matching the apartment owners with the users, of which the host was charged 3% and the user 6-12% varying on different factors. “By 2011, four years after the first air mattress guests, Airbnb was already in 89 countries and had hit 1 million nights booked on the platform. It also finally won the break-out mobile app award at SXSW-South by Southwest, an annual conglomerate of film, interactive media, and music festivals and conferences in Austin, TX — despite having tried to launch there three years earlier. ”, by the end of 2011, the company stated that it had generated 5 million dollars in revenue and had grown at a rate of 400% over the last year and that it expected similar results over the next year.

Focusing on the consequences of the rapid growth of Airbnb, the company that has saved millions of people millions of dollars by offering cheaper alternatives to expensive hotel rooms during peak seasons and at times when hotel rooms tend to sell out, they have revolutionized the industry by keeping the hotel rates in check, though Airbnb has not impacted the hotel industry by a big percentage, it resulted in a decrease in 1. 3% of overall room reservations and has reduced hotels’ profits by 3. 7% in the US’ top 10 cities with the largest Airbnb presence. Escape and curiosity are what keep humans going. Increased frequency of escape through exploring unvisited lands and pocket-friendly experiences are among the top two things travellers are seeking. While the millennials are the ones that go for an Airbnb apartment over splashing out hundreds of dollars more for a hotel room and rather prefer spending that extra bit on say a new adventure or shopping for that matter.

“Airbnb has always defined its core audience, "head-first explorers", as a psychographic consumer segment that drives most of the Airbnb business. These travellers consider new ways to travel and local experiences as a core part of their identity. An attitude once seen mainly in younger millennials, extended to not just single travellers but head first experience at a more matured life stage with kids. The tendency to value experiences over things had become a global mindset that crossed geographies and demographics. ” “88% of global travellers list review sites as the most important influence on their travel decisions. ” While we have seen the flexibility of timings and ability to talk to a host who is a real person like you and me has given a boost, the biggest concern yet remains is that of security which is not allowing the curve to grow further. Airbnb succeeded to a lesser extent in some markets when they released their marketing campaign in Asia and South America to get the idea of renting an apartment instead of staying in a hotel in the minds of the locals. The top concerns of Airbnb were to address the security of both the hosts and its users, which led to letting the hosts be selective while confirming the booking and the users having to link their profile with a Google+ or a Facebook account.

With Airbnb, it’s different. When you stay with Airbnb you’re free of conventional tourist areas because you’re staying in the heart of a real, local neighbourhood. You’re grounded in the comfort of a real home, with space to play and cook. Welcoming, local hosts can teach you something new about the culture. When you stay with Airbnb, you don’t feel like you are visiting a place as a tourist, you feel like you live there. This proposition was extended to all countries and locally adapted. This was phase one in helping Airbnb eat into the market share of online portals such as Booking. com and websites allowing users to book homestays and the like. In certain markets like India involving the Bollywood celebrities to run advertising campaigns gave a massive boost to the revenue generated by India “The company, which entered India in 2016 and claims to have over 32, 000 listings in the country, said that its outbound travel from India has grown by over 185% in the last year. The big influencer campaign, which is being promoted on television, digital and social media, aims to drive awareness about the concept of home-sharing and bring Airbnb in the consideration set of Indian travellers going on International trips and vice versa. The company is estimated to be spending ₹50 crore on advertising. ”, “Indians are passionate about movies and stars have inspired travel. We see more and more travellers wanting to holiday like their favourite stars and put up at places they’ve opted to stay in. Going forward, we feel that influencer marketing will continue to play a critical role in our strategy and we will continue to look at engaging our audience with innovative content, ” said Amanpreet Bajaj, country manager, Airbnb India.

Nevertheless, it’s not just offering cheap rentals at various vacationing spots, Airbnb has expanded into offering experiential stays by offering high-end villas, boats farmhouses and the like in select cities and has managed to dent into the share of Hotels especially in luxury holiday destinations segment by offering cabins to condos to palaces and even entire islands is something a hotel just can’t give you, but yet this is a small bite. Though a large number of people, mainly the business travellers and those that are looking for the luxurious experience have stayed true with the well-known brands in the industry like the Marriott, Hilton or the Hyatt group of hotels. They are yet to create a need in the Business segment for those who are very evaluative and need spas, pools, buffets, Wi-Fi, 24/7 room service as basic hygiene and convert points of business stay into a personal holiday redemption.