By Adrian Loveridge
If I had mentioned the name Airbnb a few months ago, I wonder, hand-on-heart, how many people could claim that they knew much about the company.
Perhaps hardly surprisingly, as not that long ago it sold novelty cereal boxes to stay afloat, now to emerge as a major threat to the hotel industry and “‘close to becoming one of the world’s most valuable startups”.
Adrian Loveridge has spent 46 years in the tourism industry across 67 countries, as a travel agent, tour director, tour operator and for the last 24 years as a small hotel owner on Barbados. He served as a director of the Barbados Hotel and Tourism Association, and as chairman of the Marketing Committee. He also served as a director of the Barbados Tourism Authority and is a frequent writer on tourism issues
If quoted plans materialise, private-equity firm TPG and boutique investment advisors, Dragoneer Investment Group, who are already in advanced talks, will raise capital to put a value on what has been described as “the upstart home-rental site” of US$10 billion.
Mutual funds are being sourced through the strategic research platforms of entities including T Rowe Price Group and Fidelity and are also in discussion to join the group.
To put that it context, the combined share worth of Airbnb would equate to US$2 billion more than the entire InterContinental hotel chain.
Last month, Airbnb reported that “reservations were growing fastest in more exotic locations including Barbados, Marrakesh, the Bahamas and Greek islands”.
It demonstrates graphically that travel was one of the first industries to be transformed by ecommerce during the first dotcom explosion.
Quoting from the Financial Times, “Airbnb’s rise has been meteoric. Founded in 2008 by roommates who rented out beds to help pay for their San Francisco loft, the company said at the end of last year that it had hosted more than 11 million guests in 34,000 cities and 192 countries around the world.”
Not bad for two guys who inflated airbeds in their apartment, when all the hotels were sold out during an international design conference taking place in the city. They called it AirBed and Breakfast.
Few need reminding that tourism is a constantly evolving global industry that, especially over the last two decades, has placed an ever increasing dependency on technology for growth.
But what is interesting about Airbnb is that they have built a massive enterprise by allowing seemingly ordinary people to rent out their homes or even spare bedrooms.
In January, when their CEO Brian Chesky learnt that Marriott International, one of the largest hotel groups in the world, planned to add 30,000 rooms to its property portfolio in the coming year, he defiantly boasted, “We will add that in the next two weeks.”
In a more recent interview he said, “We don’t even pour concrete” or “manage the hotels.”
Despite a down economy, when consumers typically travel less, some analysts believe Airbnb’s frequently lower prices will make it a more attractive alternative to hotels.
So they could well become the world’s largest “hotel”, or perhaps better described as “alternative lodging” chain, without owning a single room.
Established hotel groups are expressing concern regarding the lack of regulation over Airbnb’s lodging inventory. Locally, in theory, all accommodation providers on Barbados who meet certain criteria are legally obliged to register and be licensed.
This is critical to maintaining the reputation of the destination.
In practice, this is not universally enforced and raises many questions concerning the level of safety and insurance.
Hopefully this will radically improve, if the Barbados Product Authority becomes an efficient operational reality.
One thing for sure, our tourism planners should take a few minutes to log onto www.airbnb.com
and study what a myriad of accommodation options are on offer.