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Airbnb Doubles Down On Its Experiences Feature With A $5M Investment

Airbnb wants to be an “end-to-end” travel company. Can Experiences bring it even closer to that vision?

Airbnb Doubles Down On Its Experiences Feature With A $5M Investment
Cape Town Experience [Photo: courtesy of Airbnb]

Airbnb says it will inject $5 million into Experiences, the company’s take on tours and activities, expanding the offering to 200 locations in the U.S. The plan is to bring Experiences to smaller markets around the country.

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Since launching the new product in the fall of 2016, Airbnb has cultivated 4,000 Experiences in 50 locations globally, 1,000 of which are in the U.S.

This small but dedicated funding for the initiative shows that Airbnb believes this component of its offering may be a gateway to achieving its ultimate goal: to be an “end-to-end” travel company.

Experiences is a key initiative for Airbnb CEO Brian Chesky, who is incredibly focused on evolving his company from a marketplace for renting other people’s homes into a multidimensional travel company. Experiences offers an array of options for travelers, from microbrew beer-tasting seminars to bespoke bike tours of off-the-grid neighborhoods.

Experiences also has the benefit of having higher profit margins for the company than Homes.

“In the U.S., the average earnings for someone who hosts experiences 9 times per month is $6,200 annually while the average income for someone who is able to host more frequently, 15 times or so a month, is an upwards of $24,000 annually,” the company noted in a blog post today. On average, Experiences hosts charge anywhere from $25-$150 per person for a single activity. Airbnb takes a 20% cut of that–but gets only a 3-5% cut of earnings from home rentals. That said, Homes are of course a much bigger business for the company.

Chicago [Photo: courtesy of Airbnb]
The doubling down on Experiences provides a peephole into how the company will likely innovate down the road. Experiences leverages Airbnb’s community of hosts and bolsters its ability to develop new communities. Not all the hosts on Experiences had previously opened up their homes on Airbnb. The company had to go out, find talent for its new Experiences platform, and help develop programs that would jibe with its existing home-rental clientele. It has been a very hands-on process.

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One question to consider as Airbnb charts a path toward becoming a public company is how it might  build out other travel features for its users. On the one hand, it could be a hub for other travel utilities that already exist. Airbnb has done this already through its partnership and investment in reservation booking app Resy. But a greater opportunity, or so the company seems to think, is creating new ways for community members to share resources, or for small, independent operators to delight intimate gatherings of travelers. It will be especially interesting to see how that might unfold at Airbnb for flights, cars, or other aspects of travel.

San Francisco [Photo: courtesy of Airbnb]
In the meantime, the company tells me it is looking for smaller ways to grow its reach. Airbnb wants to incite travel. How can it provoke the members of its platform into taking a short, nearby trip? A really compelling Experience in a town two hours away might inspire a free spirit to take off for the weekend. It’s not for nothing that Airbnb spent the better part of 2017 updating its app to look more like a guidebook, with suggestions for parks to visit, bars to trawl, and dishes to sample.

A Morgan Stanley survey from last year suggested that adoption of Airbnb was tapering off in the U.S. Adding more travel Experiences to its app might inspire more occasional users to travel more often and turn them into Airbnb superusers, thereby driving more revenue for the company.

About the author

Ruth Reader is a writer for Fast Company who covers gig economy platforms, contract workers, and the future of jobs.

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