Join Our Newsletter - Get important industry news and analysis sent to your inbox – sign up to our e-Newsletter here

Expansion of Airbnb’s hotel business may continue to take a back seat in 2021

By Globaldata Travel and Tourism 02 Mar 2021 (Last Updated March 2nd, 2021 10:00)

In Airbnb’s fourth quarter and full-year earnings call, CEO Brian Chesky reinforced his opinion that ‘unique properties operated by individual host owners’ is what his customer base wants.

Expansion of Airbnb’s hotel business may continue to take a back seat in 2021
Focusing on core services should allow Airbnb to continue on its path to recovery in 2021. Credit: ArthurStock / Shutterstock.

In Airbnb’s fourth quarter and full-year earnings call, CEO Brian Chesky reinforced his opinion that ‘unique properties operated by individual host owners’ is what his customer base wants. This opinion could hint as to what strategic direction the company is heading in for at least the short-term, and hotels may not be placed at the forefront.

Continuing to focus on core businesses

Chesky did state that hotels would be important for Airbnb in 2021, but he did not say a great deal regarding the importance of expanding its hotel business in the near future. What turned out to be a solid decision during the height of the pandemic in 2020, Airbnb scaled back investment in areas of potential growth such as hotels, transportation and luxury residences. This was a quick decision, showcasing strong financial discipline, which allowed the company to navigate more successfully through an extremely tricky 2020. All operating expense line items (excluding stock-based compensation and stock-settlement obligations) were down from a year ago in Airbnb’s full year 2020 financial results. This could be a trend which the company wishes to continue in 2021 and focusing on core operations, while temporarily neglecting areas of expansion could be a seen as a way to achieve this.

Nothing is promised in 2021, although vaccine programs are being rolled out across the globe and restrictions are being lifted, the Covid-19 situation could regress and travel flows could be halted as a result. Because of this risk, focusing on core areas of the business such as ‘improving the entire end-to-end experience of core services for both hosts and guests’ would be a safe a low risk strategic decision for this year.

The right decision

Focusing on core services, and not necessarily as much on hotels, should allow Airbnb to continue on its path to recovery in 2021. This year, it is likely that the global leisure market will carry on with the new-found trends of booking private, domestic accommodation which tends to be away from built up, urban areas. These trends play directly in to the hands of Airbnb’s core business, which provides an abundance of private forms of accommodation away from busy areas.

These travel trends have emerged directly because of concerns around the pandemic. 79% of global consumers stated that they are either ‘quite’ or ‘extremely’ concerned about the global outbreak of COVID-19 in GlobalData’s Week 11 COVID-19 Recovery Survey (fieldwork undertaken 2-6 December). Due to these concerns, it is likely that Airbnb’s core business will continue to experience a stronger recovery in 2021 in comparison to traditional hotel companies.

Up Next