Airbnb: Ready for AI, Given Its Ownership of Vast Customer Data and Ongoing Innovation

Our constructive view of Airbnb’s network position (source of its narrow moat) is not swayed by the potential risk of generative artificial intelligence bypassing the online travel company’s platform. We aren’t blind to the fact that large language models will increasingly have the capability to quickly return relevant travel content information to a user. However, we think that either the direct supplier or aggregated platforms like Airbnb will own the content these generative-AI search products draw upon. In our view, this customer data is essential to unlocking the promise of more-customized offerings and generating bookings in an AI world. Moreover, we believe that the alternative accommodation niche is particularly protected from the potential threat of mass-market AI/LLMs search products, driving bookings directly to large-brand suppliers. This specialized market is heavily fragmented and individually owned, unlike US hotels, where more than 70% of rooms are part of a brand. Also, Airbnb’s steadfast commitment to develop leading innovation will serve it well as it leverages its stout customer data and pristine financial position to train large language models for specific use cases across its platform. To this point, Airbnb is already using AI to provide customized search results for travelers and pricing recommendations to its hosts. AI is also being used to do background checks on guests and hosts to reduce discrimination and wrongdoing. Further, Airbnb is using AI to analyze the quality and accuracy of reviews and listing descriptions. Operationally, AI is helping engineers to develop products quicker, while automating customer service functions, which can lead to cost and innovation improvements.