Downtown Los Angeles was, until recently, an area more famous for Skid Row, but regeneration has brought trendy bars, foodie markets, and the likes of Urban Outfitters and Ace Hotels, creating a spot that feels not a million miles away from Shoreditch.
This was the backdrop for multi-billion-dollar startup Airbnb’s biggest product announcement in its eight year history: it will not only provide you with a place to stay in someone’s home, but will cater for your hunger to live like a local in whatever city you visit. How about learning truffle hunting in Florence? Or doing a cheese (and wine) crawl through Paris?
Also new are curated guidebooks offering recommendations from people in the know and host’s hidden gems. How about finding out where world famous pro-surfer Kelly Slater says it’s cool to hang out in LA?
Soon to be added to the app will be integration with flight bookings and other services such as car booking and grocery delivery for weary and hungry travellers and you’ll also be able to book restaurants directly through the app. Airbnb wants to own the whole journey.
It’s a savvy move as a growing body of research indicates that millennials are more interested in experiences than material things. Ahead of a highly anticipated IPO, investors are likely to be pleased that Airbnb is chasing more of this growing millennial cash.
So should travel firms with their generic package tours, flight booking sites and online trip review firms be worried?
“I do think that the better way to look at it, is not so much are we going to take their business away, it’s more like how is Airbnb, by using technology and having a passionate community, how are we innovating in a way that’s going to force other companies to rethink how they’re doing business,” says Airbnb’s global head of hospitality Chip Conley who has been working closely with co-founder and chief executive Brian Chesky to create experiences for the initial launch in 12 cities around the world.
“Sign us up to that role,” he says enthusiastically.
“Generally people tend to look at these things as a zero sum game. And similarly with our home sharing, some of our most vibrant markets in the world are in markets that are seeing record hotel revenue growth.
“But I don’t think it’s so much on a competitive pie chart basis – who’s got what slice of the pie,” says Conley, himself a former hotelier.
Of course, the disruptor wants to be seen as a facilitator, but the majority of established industries are not necessarily embracing of such change – and neither are regulators.
It was probably no accident that the San Francisco-based company decided on LA as the location where hundreds of evangelical super hosts descended for the huge “Festival of Hosting” event where the new plans were revealed: this is where Airbnb faces one of its battles with officials.
While untangling how to regulate the gig economy will likely be a long and slow process, it’s not gone unnoticed that a new line of business, although two years in the making according to Chesky, is no bad thing amid such scrutiny.
But, experiences as a percentage of revenue is still “to be determined” says Conley. Certainly not everyone will want to book experiences as well as a place to stay, the company expects.
And it’s unlikely that this will be the last diversification for Airbnb and other sharing economy platforms.
“Every day online platforms are discovering new ways to match buyers and sellers of goods and services,” said Fiona Greig, director of research at the JP Morgan Chase Institute.
Rob Vaughan, senior economist at PwC said: “As many companies in the sharing economy mature, they will likely offer a broader range of services across several product lines. This form of experimentation is likely to encourage dynamic new business models to evolve.”
But he warns that becoming a travel giant – and Conley has previously said he wants Airbnb to become a travel “superbrand” – is not all plane sailing.
“The risk of this transition is that sharing economy platforms lose their authenticity and source of differentiation against corporate organisations, which they begin to look increasingly like,” he said.
Based on the cheers and whoops of super hosts at Chesky’s keynote, there’s little sign of that happening anytime soon.