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Wednesday, May 25, 2016

Airbnb's Enormous Success is Bigger Than You Think

Posted By on Wed, May 25, 2016 at 1:19 PM

But on a global scale. - FRED NOLAND
  • Fred Noland
  • But on a global scale.

In 2009, Airbnb’s second year of existence, the San Francisco-based hotel alternative facilitator boasted 3,000 listings worldwide.

This year, Airbnb offered a staggering 2.3 million housing units to rent for a day, a week, a weekday — which means its inventory grew at a faster clip than the entire hotel industry. As in all hotels, everywhere. 

In North America alone last year, Airbnb added 229,000 listings to its stock compared to the hotel industry’s 139,000 new rooms, according to a recent study by 7Park Data, a mobile app data miner, that was featured in the San Francisco Business Times.

And for good measure, consider that the world’s second largest accommodations company is now Hilton — worth 25 percent less than Airbnb, which is currently valued at $25.5 billion.

That’s some serious cheese for an 8-year-old tech company, even if it’s not that surprising. After all, Facebook, Twitter, Instagram, Uber, and many others are worth ungodly sums of money despite all of them being 10 years old or less.

One reason for Airbnb’s success is undoubtably its wide reach, which means people can save a lot on accommodations versus a hotel booking (check out this chart from annoyingly named travel company Hipmunk). But another big reason, maybe the most important, is that Airbnb’s only hiccups so far are in the political arena, and even those efforts seem too cumbersome to enforce without the help of Airbnb itself. In essence, its growth is unchecked.

It also doesn’t help that Airbnb, being so lucrative, now has gobs of money to use to thwart future efforts to restrict its business model.

Of course, this is all just a byproduct of the region’s success. The Bay Area is the only population center in the U.S. that has seen a rise in patents since the the mid-1970s, which is a measure of innovation — that all important word bandied about by everyone in the gig economy.

In 1976, the Bay Area accounted for 4 percent of the nation’s patents. By 2008, that number reached 16 percent, which is tops in the U.S. and nearly double that of second-place New York.

But back to Airbnb. The company's growth is simply staggering. How much longer can it continue? Its own success may slow itself down: in New Orleans, after the company put out a press release boasting how  many hosts were renting out rooms for Jazz Fest, local government decided to push back on tougher regulations. (Though we all know how the tougher regulations are going in S.F., which is to say, not at all.)

One would think the ceiling is coming soon. Then again, one might think a business idea borne from an air mattress might not be a good idea. Instead, it might not have a ceiling at all.
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Max DeNike

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