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Airbnb CEO: The pandemic will force us to see more of the world, not less

Airbnb CEO: The pandemic will force us to see more of the world, not less
  • Few months ago, Airbnb CEO, Brian Chesky was worried that
    consumers would not be willing to travel by aeroplane for a long time.
  • But now, Chesky sees the industry of travel and leisure as
    evolving, not dying but a lot will change.
  • Some of the things that Chesky thinks will not survive the
    pandemic are business travel, loyalty programmes and over-tourism in big cities
    that were tourism hubs before Covid-19.

In the first month of the pandemic, Airbnb faced a loss of U$1
billion due to cancelled bookings, leading Chief Executive Officer Brian
Chesky to declare: “Travel as we knew it is over.”

Getting on an airplane, he postulated, was not something
consumers would be ready to do for a long time, leaving travel plans to be
dictated more by safety precautions than whimsy. 

Fast-forward a few months, and his outlook hasn’t
fundamentally changed. But what once sounded like a cataclysmic doomsday
prediction has given way to a more nuanced view of how travel is evolving – not
dying.

A lot will change

“Some things will return, and some won’t,” says
Chesky, forecasting what travel may look like on the other side of
Covid-19. “It one day will be stronger than it ever has been. But
when it comes back, full force, it’s going to look different.”

Among the things that will be missing, he predicts: over-tourism,
business travel, and, to a lesser extent, loyalty programmes. 

Chesky also sees the rise of new and more varied
destinations to visit, including – yes – resilient cities.

The comments come at a critical time for Chesky and his company. Airbnb has
wrapped up its summer with an unlikely comeback story, having U-turned from a
90% drop in bookings and reporting US$400 million in adjusted second quarter
losses to notching a 22% year-over-year increase in consumer spending in
July and filing for its long-awaited initial
public offering
.

“On July 8, we had guests book more than 1 million
nights worth of future stays in Airbnb listings,” Chesky tells Bloomberg
Pursuits.

“It was the first time in four months – since March 3 –
that we hit that threshold.” (The number is similar to an average day’s
sales in the first 90 days of 2019, during which Airbnb booked 91 million
room nights.)

This doesn’t mean that Airbnb is out of the woods.
Company-provided data show that while travellers are booking almost twice
as many remote stays as last year, home rentals in urban markets – Airbnb’s
bread and butter – are still struggling. For US annual Labour Day holiday
taking place on 7 September, high-density destinations are making up just
20% of the site’s bookings, down from 40% last year.

Other statistics released by the company as part of a fall
trends report indicate that long-term rentals are still in demand, even as
summer breaks wane—and that spontaneous stays, planned just a few days
before departure, are on the rise—no surprise, given the unpredictability of
 travel restrictions across the world. 

But Chesky has a lot to say about the future of travel that
can’t be captured by sheer numbers. What we’re seeing, he says, “is a
massive revolution” that’s “changing the face of travel forever. Some
people are waiting for the world to get back to what it was. But change rolls
forward – not backwards.”

But travel patterns will affect travel destinations
differently. Tourism-reliant, fly-to destinations will need to diversify
their economies in the short term to weather a protracted drought in
visits, while overlooked spots near big cities will continue to experience
success.

But in the long term, everyone stands to win, Chesky argues.
Spreading travellers to more destinations, rather than concentrating them into
a few lucky resort spots, he says, “is more sustaining than people
think,” in spite of our collective pre-Covid-19 proclivities. 

The Future of Cities

“It used to be that the vast majority of people would
travel just to a handful of cities – you know, the big, iconic, international
capitals,” Chesky begins, referring to such selfie-stick-saturated tourism
hubs as Amsterdam, New York, and Venice, Italy. 

The well-documented phenomenon of over-tourism, he
says, has finally found its tipping point. Not only are these crowded
destinations inaccessible to cross-border travellers, but they run counter to
the what people now crave: nature, space, and room to breathe (without the
threat of aerosolized droplets from a stranger less than six feet away).

“The genie is out of the bottle,” Chesky says. “People
are now discovering small towns, small communities. They’re discovering
national parks, falling in love with the outdoors, and realizing they can go to
all sorts of other places. This is an irreversible trend.”

If 20 cities previously made up a majority of Airbnb’s
business, none of them now captures more than 2% of the company’s bookings – and
consumers are spreading out almost evenly to thousands of small and rural
destinations instead. That spells opportunity for Airbnb, which features plenty
of unique, rural home rentals on its platform – particularly in markets that
don’t have enough density to be served by large hotels.

Some hotel brands are positioning to compete with
Airbnb on that front. Take Getaway House, whose accommodations outside 13
major cities are more like secluded cabins, or Loge Camps, an
outdoorsy brand that renovates motels near naturally pristine settings. 

So where does that leave cities?  

“Definitely, this is not the death of cities,”
Chesky asserts. But the short term does involve a steep climb. “Here’s
what’s going to happen: People will migrate away for the coming years, and
then prices will go down. Then, a new generation will discover cities as more
liveable and more affordable, and it will probably lead to a renaissance.”

Looking in a Crystal Ball

In the long term, Chesky sees trouble for one sector in
particular: business travel. This comes at no small cost to Airbnb, which
has for years marketed itself to corporate travelers and companies as a
convenient, money-saving solution. 

“Even when the world gets the pandemic under control,
business travel won’t come back the same way,” he states, adding that
people will simply have fewer reasons to get on a plane when remote work has
facilitated so much collaboration from afar. That’s a problem for the
industry: Business travel has typically represented the lion’s share of
profits for airlines and hotels. It’s also one for Airbnb, though to
a lesser extent. If companies aren’t paying for trips, consumers won’t be
racking up points as they used to, says Chesky. “So, that whole
[loyalty] game is kind of changing, too.”

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