Thursday, February 16, 2017

Airbnb Buys Luxury-Retreats

            Just this week, Airbnb purchased a Canadian competitor, Luxury Retreats, in Airbnb's attempt to expand their rental services company. This push is an attempt to widen their approach on an international scale, so that they can give the public an alternative to staying in hotels. It’s been reported that the deal costed at least $200 million, which speaks to the size of Airbnb. In fact, Airbnb was “valued by investors at $30 billion, indicated it wants to become something closer to a full service travel site.” (Bensinger) Airbnb has high expectations, and the private company is going to push as far as they go, meaning that services other than sleeping will soon be fabricated.
            This purchase addresses how limitless Airbnb’s opportunities can rise. I think that Airbnb is going to be one of the most successful traveling sites the next generation will offer. This purchase was a phenomenal idea for the company, because people are going to start purchasing Airbnb’s over hotels. Most hotels offer the same accommodations. One room at most hotels consist of a room with a bathroom and a television. Obviously, some hotels have other accessories that help them stand out, but the general idea of a hotel is pretty straight forward. With Airbnb, they now offer beachfront properties in places like Barbados, as well as spacious apartments in Beverly Hills.
            People live for experiences. Airbnb offers experiences. If a potential customer decides between an Airbnb and a hotel, they’re going to choose the experience. Each city holds unique places for rental, and an Airbnb can help someone feel like they’re at home versus being on a trip in a hotel room. Airbnb also has investments in restaurant sites, which means that they’re diverging out into many sectors.  Airbnb has also been trendy for college students all around the United States. Airbnb becomes extremely popular during the summer and on spring break. Instead of having students, who have little money, purchase low-end hotel rooms, they can pull their money together as group to purchase an Airbnb for the week.

            One of the only possible downfalls with Airbnb is that they can be terribly expensive. According to the article, after this purchase of Luxury Retreats, Airbnb now has “access to luxurious listings like a nightly $27,000 Vienna Villa.” (Bensinger) This seems incredibly expensive for anyone who is traveling. Many people also believe in brand recognition, and this will be hard for Airbnb to develop. Names like the Four Seasons, Ritz-Carlton, Hyatt, Marriot, and other names are so well known that customers trust their customer-service and consistency. Due to Airbnb’s diverse number of places that they offer, they will struggle to develop the customer-relationship that customers need in order to feel comfortable choosing Airbnb every time.  At the same time, as I said before, there are Airbnb’s that are cheap and this means that loyalty may stagger. Overall, Airbnb can reach out to multiple crowds in many ways, which makes me optimistic for their chances in the future.



Justin Friedlander said...

I read this post about Airbnb growing into a more formidable and unique company and was astounded by how it outlined the company’s possible future. I agree that Airbnb is quickly becoming a great representation of the as one of the next generation’s most creative business enterprises. Hotels can offer common amenities such as on-site dining and luxury spas and fitness centers, but these are often part of the standard for major chains such as Hyatt, Marriott, and Best Western. This post cited Airbnb’s lack of brand recognition might be a major weakness to the business; I believe it completely the opposite. Airbnb is much more than a rental service. Airbnb allows people to offer their homes around the world for any tourist or visitor to make use of for reasonable pricing. In addition, Airbnb has section completely devoted to experiences for people looking to enjoy the culture of wherever they are visiting. Experience include scuba diving in the Great Barrier Reef, cooking with a professional chef, and golf lessons for two. In many ways, Airbnb effectively combines hotel booking and concierge service into a more effective package than most hotels can. Overall, I believe Airbnb’s present lack of recognition will not last and the potential of their business model will only allow them to grow to greater strength than the major hotel businesses.

Sam Norton said...

Last month, I read that the 35-year old CEO of Airbnb hinted that the home-sharing site may launch an initial public offering in 2018. Airbnb is valued at about $31 billion since it launched in 2008. Brian Chesky, the CEO of Airbnb, was quoted as saying that “the company does not need money. The only reason to go public is to give investors’ immediate liquidity.”
Airbnb expanded earlier in the year when it bought Canadian competitor, Luxury Retreats. Over the next few years, Airbnb is targeting a new area of travel, China. It changed its name to “aibiying”. But the company has stumbled slightly because the name is not easy to say and many Chinese people have reacted negatively. In an effort to crack the Chinese market, Airbnb has about 80,000 listings and foresees the size and potential growth of the Chinese travel market. Chesky believes the market is anybody’s. He says “it looks like an open playing field.”
The biggest advantage that Airbnb has is its global platform. As more Chinese travel abroad and stay in Airbnb properties, the more likely they are to use it when they go home. The Chinese who have used Airbnb believe it is a more established brand that is better equipped to protect hosts in case of problems or accidents. The only problem that the Chinese see for the company in China is not domestic competition nor cultural barriers, but potentially stricter regulations. Even though Airbnb has requested users to register their ID cards, the government may think this is not enough and constrain its development by setting more restrictions.
Airbnb is a company for the digital age. It is a company whose platform is an app and website that connects people seeking lodging with renters who have listed their personal houses, apartments, guest rooms, etc., on either platform. Travelers can book accommodations around the world online or from a tablet or mobile phone.
Airbnb is popular because it is inexpensive to run; it does not have to build or maintain hotels or hotel staff. I believe that Airbnb is a company that is easy to grow quickly, because there is no need for a physical office in every country, just consumers with a smartphone. Despite rival companies and regulatory issues, Airbnb has the potential to be one of the hottest upcoming IPOs. With billions of dollars in investments already, a thriving rebranding, and its rising popularity among travelers, Airbnb’s IPO is one to keep an eye out for.