Airbnb’s Path to Becoming the Amazon of Travel

Airbnb (NASDAQ: ABNB) not only offers rentals on their platform, but it also has limitless untapped opportunity to offer more experiences and activities alongside travel booking. In this clip from “Ask Us Anything” on Motley Fool Live, recorded on March 23, Motley Fool contributors Matt Frankel, Jose Najarro, Jamie Louko, and Jon Quast discuss Airbnb’s addressable market opportunity and how it could become the Amazon (NASDAQ: AMZN) of travel.

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Matt Frankel: It invented its space, and the thing I like most about Airbnb is that its addressable market is literally every home in the world. Its addressable market opportunity is short-term vacation rentals, long-term vacation rentals, which not only that, anything that you could sell that’s adjacent to those products, they’ve started selling experiences on their platform. For example, if you book an Airbnb in Florida, you can book a snorkeling trip to go along with it. So experiences are one thing. Restaurant references are another thing that they could potentially do. Because I know every time I stay at an Airbnb, I want to know what the best local restaurants are. Pretty much anything you could refer travelers to in the world is their addressable market opportunity and it’s so big, it’s tough to even quantify. They say just between short-term, long-term, and experiences, that’s about a $3.4 trillion annual market today. Before all this inflation, Airbnb room rates are up 20% year-over-year. So this is a multi-trillion dollar market opportunity, and Airbnb is by far the leader in this space and they’re just going to continue to grow. I can see them being like the Amazon of travel.

Jose Najarro: Definitely Matt, thank you. Jamie and Jon, anything you want to share real quick? Then, I have a few questions here on Slido.

Jamie Louko: I just want to hop on board of what Matt said. I really think that those experiences unlock such a large opportunity. In prep for this, I was going through Brian Chesky, the CEO, a couple of months ago on Twitter (NYSE: TWTR), posted a tweet saying, if we could improve something on our platform, what would it be? I was reading through some of those and some of the recommendations that users wanted to increase those experience partnerships was really impressive. Not only those like restaurants and things like that but I saw partnerships with local gyms, partnerships with national parks, other touristy activities. Really the potential on that front is limitless. I do tons of things here at home and when I go on a vacation, I’m going to want to do those touristy things, but I’m also going to want to, for example, go to the gym. The gym is not something that I skip on my vacation. I’m going to want to go there. If I’m not in a hotel and don’t have that gym that’s right there for me, I want to be able to find some place that I can go have a temporary gym membership. If Airbnb can partner with something like that, I see it as like what Domino‘s (NYSE: DPZ) does, you order a pizza and then they say, “Hey, would you like anything else with this order? Do you want the dessert? Or do you want a trip to national park? Do you want a temporary membership to a gym that’s a mile down the street?” Things like that and just gaining those partnerships. It’s less of a vacation and more of just living there for a week and being able to integrate yourself with the world around you. I think it has tons of potential and would make the platform multiples more valuable than it is right now.

Jon Quast: I’d really concur with that. I’d love to see almost a hybrid Airbnb, Tripadvisor (NASDAQ: TRIP) product. Tripadvisor is a great product in many ways when you’re planning a trip, except I don’t really do anything else there [laughs] when I’m on Tripadvisor other than just reading what some other people wrote about certain things and things to do in the area, but I would love if that feature was directly in Airbnb and provided the opportunity to book things directly and where it made sense.

Najarro: I agree with you there, Jon. The only time I ever open up either something like Yelp (NYSE: YELP) or Tripadvisor is when I’m away in travel and usually at an Airbnb. For them, if they were able to have that there, I might be able to give like a stronger reason to use the application. Or maybe if there was a pretty cool event and that was on the application and they showcase, hey, there’s this event coming up in this location and there is this many Airbnbs around this location, could also be another way of optionality that they can grow.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jamie Louko owns Airbnb, Inc., Amazon, and Domino’s Pizza. Jon Quast owns Airbnb, Inc. Jose Najarro has no position in any of the stocks mentioned. Matthew Frankel, CFP® has no position in any of the stocks mentioned. The Motley Fool owns and recommends Airbnb, Inc., Amazon, Domino’s Pizza, TripAdvisor, and Twitter. The Motley Fool has a disclosure policy.

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