Airbnb’s Leading Alternative Accommodation Platform Sales Remain at Peak Levels

We think that Airbnb’s ABNB global online travel agency, or OTA, position will strengthen over the next decade, driven by a leading alternative accommodation network (source of its narrow moat) of over 4 million hosts and cumulative 1.4 billion guest arrivals since its start in 2008 through 2022. We think this network advantage will be supported by generative artificial intelligence investment and expansion into the experiences vertical over the next several years. Also, Airbnb is positioned to benefit from the ongoing shift to mobile bookings, witnessed by Airbnb being a top-10 iPhone travel app in 100 markets versus 25 for Expedia and 152 for Booking Holdings, according to App Annie on Aug. 3, 2023. Further, we expect some durability in remote working to enhance long-term travel demand.

Mitigating our otherwise favorable view of Airbnb’s network position in the online travel growth industry are competitive, regulatory, and structural cost threats. We expect Expedia and Booking’s investment into the vacation rental industry to intensify during the next few years. Also, focused entry into the OTA market from Google, Alibaba, Amazon, and others could double the current handful of players that have dominant scale, leading to a meaningful impact on profitability. That said, replicating Airbnb’s network would require significant time and expense, and we expect most of the aforementioned operators to deploy a metasearch model (which doesn’t control hotel relationships) versus directly competing against Airbnb’s OTA model (which does control hotel relationships). Beyond competitive threats, Airbnb’s core alternative accommodation faces opposition concerned with the industry’s impact on society (resident quality of life), safety (adhering to codes), and economics (cost of living). Regulation could place requirements (such as sharing personal information with local governments) and restrictions (such as the number days a listing can be rented out) on hosts and guests that reduces demand and elevates cost. And in addition to these regulatory costs, servicing individual vacation rental hosts can lift expenses compared with that found in the traditional accommodation industry.