"We are pausing our efforts in Transportation and Airbnb Studios, and we have to scale back our investments in Hotels and Lux[ury Properties]", says Airbnb's CEO Brian Chesky. Airbnb is responding to Covid-19 by going back to its roots.
This is the "nice" move, focusing on the needs of Airbnb's mom-and-pop hosts.
But does it put Airbnb on a sustainable path? Not to mention, help sustain its multibillion valuation?
The company originally thought that hotels and "travel" more broadly is the key to its growth. Home-sharing is tough, and other competitors such as Booking.com and even Marriott International were already closing in.
By re-focusing on homes, Airbnb is looking to go deeper (into housing) instead of wider (into travel / flights / lux).
Housing is a huge opportunity, but a completely different business, so Airbnb is basically upping the ante. Admitting: we can't become a travel giant, BUT we might be able to become a housing giant — assuming the housing market becomes more flexible (it will) and that Airbnb can become a force within it (tough).
To make housing work, Airbnb will have to "get its hands dirty" and deal with real estate, to a far larger extent than it probably assumes or wishes to.
For reference, Have a look at what Common are doing with their Noah and Kin brands. Bringing more flexibility and direct marketing to housing is not simply a digital play. It requires much more involvement with the physical product. It also requires dealing with real estate design and operation.
I assume CEO Brian Chesky has something in mind. So, I withhold judgment and will wait and see how the company plans to address — or work around — these challenges. I hope they succeed! There's a huge opportunity on the spectrum between a "hotel booking" and a "residential lease".
In the mean time, Chesky (and you) can read all about the coming convergence between housing and lodging, what it entails, and how to pay for it in this acclaimed little book. All the smartest venture & real estate investors already read it. Did you? Get your copy here.