Airbnb’s limited foray into experiences helps everyone else

Airbnb’s limited foray into experiences helps everyone else

Airbnb’s IPO at the end of last year was an event that was anticipated to give the travel industry a much needed shot in the arm with some positive news.

In many ways it was, but for the experiences sector it didn’t quite happen as intended.

Airbnb’s S-1 filing, or registration statement, mentioned experiences but there was little meat on the bones, instead just some thin descriptions and not much about the business at all.

Airbnb launched Experiences in late 2016 with much promise and grand visions to transform travel. Its new “Trips” division would include transportation, dining and experiences, as well as accommodation with unusual experiences that could only be found on Airbnb.

Of course, a little matter of a global pandemic these last 18 months or so hasn’t helped but five years later and Airbnb remains an online accommodation marketplace, with around seven million active accommodation listings and just a little over 50,000 experiences.

While experiences booked were up 13% in Q4 2020 Airbnb faces some key questions about the future direction of the experiences unit.

Namely, can it be profitable while staying true to the model of small, local and unique? Or should it expand into more conventional tour and attraction products?

According to a report by Arival, Airbnb Experiences had far more impact on the tours and activities industry than it has on Airbnb’s own business.

The long game

As far as Airbnb and experiences are concerned the future is uncertain but what this has done however is bring alternative experiences into the mainstream.

Businesses had to rethink their approach to product design and marketing and this is where a raft of new travel industries are starting to benefit.

Following government de-restrictions across Europe, the ferries industry is showing signs of recovery. In many ways there are direct comparisons to be made between this and the experiences business, not least that many are transforming into a digital operation to meet traveler expectations and passenger volumes.

They, like every other business, need to look at sales volumes and where they can make additional revenue.

New touchless ticketing options and booking processes are allowing ferries to sell multiple products, including tours and activities as a package and operators like ForSea are now starting to build these into their mainstream operations now that they have systems that can work alongside platforms used by the experiences industry.

The hotel industry is forced to compete with OTAs strictly based on rate which leaves them with little opportunity to communicate the value of their product to potential guests.

To combat this they "sell on value" not on rate which means that they need an effective merchandize strategy. Spa packages, and theatre options work well but the big money is with add on local experiences as part of the property website offerings, in multichannel and seasonal campaigns.

This direct online channel offers limitless opportunities for the hotelier to present the hotel as a champion of the destination, where guests can explore everything the area has to offer.

By combining this with a strong website merchandising program and their value proposition, hotels are also benefiting from the digitalisation of the experiences industry.

Airbnb’s S-1 filing claims a total global market of $1.4 trillion. This figure based on an experiences market report from research firm Euromonitor.

Airbnb has captured a portion of the tours, activities and attractions sector, with the largest sub-sector being ticketed attractions, such as pleasure boats, museums and amusement parks. Attractions represent 46% of the overall figure, yet Airbnb does not sell tickets to any of these venues (although it did lead a $60 million investment in Tiqets).

There is no question that Airbnb’s impact on the experiences sector has been significant. Not least that it’s given the industry the jolt it needed to compete in today’s market with new platforms and sales channels.

The field is wide open for other travel businesses to take advantage.

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