Even as regulations are being placed on alternative accommodation around the world, Airbnb is entering a second travel vertical – tours and activities – with its November 2016 launch of Trips.
And as with the accommodation space, it raises many questions – what kind of impact will it have on existing tours & activities players, and what about local tourist guide licensing laws that require locals to be certified before being allowed to take tourists around their cities?
On the face of it, Airbnb is well positioned to make a significant impact on the tours and activities market with the potential to rank amongst larger players like Viator. However, its tactics are markedly different.
It sidesteps the pressure to scale by recruiting as many already-existing merchants onto the platform – a potential death sentence for many startups in the tours and activities space who are unable to stock a sizeable enough inventory.
Tapping into the traveller’s desire to experience travel as though they were living like a local, Airbnb reimagines ‘tours and activities’ by empowering hosts to create their own ‘Experiences’. It follows in Airbnb’s campaign to help travellers “live there”: a natural progression from allowing visitors to experience living in a local home.
Multiple industry players, including Kei Shibata (CEO, Venture Republic), René Frey (CEO, Insight Guides) and Andrew Tan (head of content acquisition, BeMyGuest), remarked that Airbnb’s migration into various travel verticals is no major surprise. After all, it is an established brand name, it has a wide reach of local hosts, an impressive user base, and the money.
It stands out from typical tours and activities offerings, which tend to focus on exclusively tourist experiences. Frey commented that (similar to Insight Guides’ launch of their own online experiences), it would likely encourage traditional tour operators “to think beyond the usual, offer better services and deliver a better [product]”.
All it really had to do is set up and embed a new marketplace onto their already successful platform, which is what we are seeing now. However, Airbnb’s moves are not without obstacles.
Airbnb Trips includes Experiences, connecting travellers with local hosts who specialise in unique activities
Challenges of scale and supply
One key challenge that Tan foresees is Airbnb’s ability to manage demand with supply. Working on the assumption that many Experience hosts are usually individuals sharing their passion and skills on a part-time basis, audience capacity and schedule availability are limited.
“Guests who seek out a particular experience may not be able to book it and… their uniqueness means guests will find it hard to find an alternative. On the Hosts’ end, they will not be able cater to a big number of guests, or provide [a truly consistent] level of service… which means at least for this moment, the business potential is limited and for some of them, unsustainable.”
One thing Airbnb has done right is make all their Experiences instantly bookable. “It is just about the most important criteria for all products in the online booking universe, travel industry or otherwise… guests will love this feature while other [tours and activities] platforms will no doubt be envious of all the available ‘inventory’,” said Tan.
What’s the difference between an Airbnb host and a local tour guide?
Burning questions remain: how will Airbnb navigate tour guide licensing laws? Surely venturing into another vertical means confronting another set of rules and regulations that threaten to hinder the company’s progress. For example in Singapore, a valid General Tourist Guide license is compulsory for anyone seeking to charge for tours in the city.
How do smaller players already occupying the space perceive a goliath like Airbnb entering their territory? Companies like BonAppetour and NoshTrekker, who each provide culinary experiences designed by local hosts, will inevitably run in direct competition to Airbnb.
The crudest competitive argument would be that smaller players will have to prove themselves by providing a better quality and differentiated service to both consumers and hosts on their respective platforms.
Yet, Frey doesn’t seem too flustered by the competition. He asserted that in order for other players to stay competitive, “every company or startup must have a sharp model that they can defend… Be agile, be alert, work on your product and user journey and make sure your model is still [a relevant] one.”
Founder Brian Chesky at the launch of Airbnb Trips last November
Yet, Airbnb’s ambitions don’t end there. Rounding off helping travellers achieve the experience of ‘living somewhere’, it has partnered with companies like USA-based Resy, enabling people to make restaurant reservations in-destination. It has also partnered with Detour, providing audio walking tours.
Soon, they will move into flight booking territory. Whether they will continue to partner with dominant companies in other regions is uncertain, but it seems likely.
Suddenly, an alternative lodging company has metamorphosised into something resembling a new breed of OTA. The company is rapidly and assertively making moves to tackle just about every step of the customer journey – planning and even accompanying them throughout their trip.
Beyond the actual booking process, Airbnb Trips is introducing ways to enable users and local businesses to organise ‘meet ups’ to allow the user community to interact in real life… something many millennials turn to other apps like Tinder to do.
Unsurprisingly, it has adopted machine-learning technology, keeping recommendations as personalised as possible – an attractive feature for any traveller in the digital age.
Of course, big promises are nothing without delivered results. Nevertheless, Airbnb’s latest actions and current plans are frankly very impressive. Yes, they present a threat to the ‘little guy’ – grassroots startups with keen eyes on tackling the same space.
However, they also present a significant threat to traditional OTAs who have perhaps gotten a little too comfortable with their own status quo. Airbnb isn’t just taking on accommodation, it is taking on travel in its entirety. And, it is doing it while keeping the power in the hands of its user community.
