The Experiences Factor
I recently co-hosted the Lux Travel Chat on Twitter, and we discussed what people are looking for in terms of experiences, to connect with local culture. Turns out, this is a high priority for most of you, so it’s no wonder programs like Airbnb’s Experiences or EatWith dining packages are booming.
As travelers continue to strive for authentic travel experiences, apps and companies have been popping up with local offerings, and in some cases these small businesses are getting snapped up by the big guys looking to connect (See the recent acquisition of Trip4Real). Experiences is Airbnb’s most significant effort to become an end-to-end travel seller. The platform displays a slick grid of options like classes, walking tours, and hikes all led by locals. Not only is the company showing you where to stay, now they are showing you what to do. Travel industry analysts say people are increasingly looking for niche tours that align with their existing interests but still allow them to experience another culture — a cooking class, an architecture tour, a historical neighborhood walk. And they’re spending money to do it.
This, along with Homes and Restaurants (which is born from a partnership with reservation-making app Resy), all fall under Airbnb’s “Trips” umbrella, a product which launched in 2016. For example, Experiences in New York City range from photoshoots in iconic parks to graffiti walking tours to a session with a vintage personal shopper. This expansion of offerings is not to fill a hole in the market, but an opportunity for Airbnb to provide a more centralized platform for tours, something that hasn’t been done yet. It also could be a way for the company to diversify revenue as they face more and more regulatory headaches with thousands of listings being pulled from the site. Airbnb’s company motto once was “Live Like a Local,” so they need to double down now.
According to Airbnb’s own reports, the company’s step into services has been largely successful. CEO Brian Chesky said in January Airbnb Experiences is growing much faster than Airbnb Homes did and receives 1.5 million bookings on an annualized basis and about 1,200 host applications per week. In February, the company released a report saying bookings increased 2,500 percent over the last year and they plan to offer Experiences in 1,000 cities by the end of the year. Experiences a competitor to not only tour sites, but event and class sites like Eventbrite or Meetup, and there is TripAdvisor’s Viator, Fat Tire Tours, and Peek, along with other local guides who don’t use aggregating platforms.
But others sources paint a different picture: that the company’s biggest project launched since its genesis is floundering. A Wall Street Journal article highlighted a host who listed a night sky photography class on the platform but promptly quit after averaging only one customer a month. According to a pymnts.com article, Airbnb has lost more than $100 million pursuing the project. My own Experience host said Airbnb gives many free passes away to his class, perhaps another sign the service isn’t in demand.
But the company is still charging forward. In January Airbnb sank another $5 million in the program, seeking to add 200 more US cities to the roster. The company predicts it will make $200 million in Experiences revenue in 2018, despite the fact that it only made $10 million in 2017. Just this month, the company announced that a second Los Angeles office will serve as the Experiences hub.
As Airbnb expands its hospitality services, the industry they disrupted is feeling pressure to adapt as well. According to a report by Skift, more than 50 percent of luxury consumers in the US are more interested in connecting with local people and culture than they were just three years ago. And 60 percent of luxury travelers said they want travel experiences that their friends may not have thought of. Even those using luxury amenities want personal, local experiences.