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Airbnb valued at $13B ahead of staff stock sale

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Re: Airbnb valued at $13B ahead of staff stock sale

#41

Post by rokhayakebe »

hnnewguy wrote: post #34
devinmontgomery wrote: post #25

Earlier quoted context omitted.

>Remember: These valuations aren't for what a company is currently worth. Otherwise, there's no point to investment. They valuations are for where they see the company going, and more probably, growing past. Nit pick: a valuation is what a company is currently worth. That current worth us just based on anticipated future cash flows.

> Nit pick: This isn't a nit-pick, it's a very important point that is sometimes overlooked by the less financially-inclined. So often people will argue for some obscene valuation based on the fact that the company is growing rapidly. Well, the whole point of a valuation model is to capture these elements and estimate a price you're willing to pay today for all that future growth. Of course, that's way easier said th…

VC: "I am going to buy these goods at $1,000 because that is what they will be worth in the future."

You: "Great, how much will you sell them for when they are worth that $1000"

VC: "$2000"

You: "And who will buy it at that price when they worth only half"

VC: "Let Wall Street worry about that"

Re: Airbnb valued at $13B ahead of staff stock sale

#42

Post by Throwaway12830 »

smackfu wrote: post #32
supergirl wrote: post #11

Earlier quoted context omitted.

what about future competition? what's to stop 100 other people starting similar websites?

The more relevant question is, what business plan is going to let someone with a similar website attract customers? You have to find a weak point in Airbnb. Maybe focus on particular underserved cities. Maybe only allow amazing properties and aggressively poach them from Airbnb. Maybe try to enforce a common high-end experience by providing hosts with branded physical goods. Maybe piggyback on an existing hotel brand…

Agreed. However, no one is going to compete with Airbnb anytime soon. To compete, you can't just be a little better, you need to be a lot better. Reason being, people have accounts on Airbnb, they have feedback, and they're familiar with the experience. If a slightly improved HN is released by someone tomorrow, we don't all jump ship, because we're invested in the current community. For us to leave, it would need to profoundly improve on the experience or offer incredible content. Likewise, to compete with Airbnb you would need a completely different approach or business model, or have a selection of apartments that are far beyond Airbnb in quality and affordability.

Airbnb pushes out updates frequently, their site offers a great experience to the user, and they have a solid team of developers that stay ahead of the game. They're going to be here for a while.

Re: Airbnb valued at $13B ahead of staff stock sale

#43

Post by netcan »

grandalf wrote: post #31
JonFish85 wrote: post #28

Earlier quoted context omitted.

"Furthermore, as much as there are local law issues in places like NYC against them, I don't anticipate those lasting long or having a large effect on their revenues." If this is true, it will also apply to their competitors, right? Either the prices of Marriott will fall if/when they stop charging some crazy-expensive taxes on their guests, or AirBnb will have to start paying/charging for those taxes. One way or ano…

You are partially right, but the main value of AirBnB is that opens up a larger supply of rooms. Hotel prices often fluctuate wildly -- a room may cost $59 one week and then a few weeks later cost $299 because a trade show is in town, etc. Cities like New York have an insufficient supply of hotel rooms to meet demand. There are often no hotel rooms in NYC available for last-minute booking for under $400/night. With A…

AirBnB also does something that I'm not sure how to generalize in a term. It allows operating at a different scale. Replacing 5 500 person businesses with 2500 1 person businesses can unlock all sorts of efficiencies (the same is true of the reverse).

AirBnB can allow individuals to do the work of providing accommodation part time, after work, as students, working mothers, retired people. We often mention disruptive businesses making new markets displacing non-consumption rather than substituting competition. AirBnB does something similar on the supply side.

Also, since AirBnB basically unlocks the productive potential of real estate, there's an interesting financing angle. Individuals have the ability to finance the purchase of a house or apartment with mortgages on pretty good terms. There is no other financing product available to the common man en masse comparable to home mortgages, certainly not business loans. AirBnB can help turn that into a business.

Owner-operator setups have all sorts of other little efficiencies over more hierarchical monolithic setups. Hotels have huge overheads. A lot of those are like airline or airport overheads in the sense that they're inherited from a world where hotels were originally designed for the rich (the gentry in the case of hotels) and then redesigned for the "discerning business traveler".

Re: Airbnb valued at $13B ahead of staff stock sale

#44

Post by rokhayakebe »

smackfu wrote: post #37
rokhayakebe wrote: post #35

Earlier quoted context omitted.

Expand, please.

The hotel business has the separate concepts of "operator" and "owner". The operator is the brand you know. The owner is some property ownership company that contracted a particular operator to build and run their property. The branding is so thorough that you generally don't see any indication of the actual owner, except in the rare cases where a property changes brands. Just take a look at this list of the top 25 h…

Interesting, I only heard of 1 of out of those companies previously.

Re: Airbnb valued at $13B ahead of staff stock sale

#46

Post by jonknee »

quaunaut wrote: post #8

I always see these people commenting on how they don't see the value in Airbnb. I've gotta say, after staying at a few places, I don't see the value anywhere else. * Hilton Worldwide has yearly revenues of $9.7b. * Marriott International has yearly revenues of $11.8b. * Best Western has yearly revenues of $6b. Now, I don't know what their current revenues are. Based on how many people from all over the US I've spoken…

Well, those hotel brands you cite are all legal businesses. Airbnb is illegally operated in most of its large markets. The illegal risk is currently put on the backs of its hosts, but that could easily change (either way--there could be a legal breakthrough with upside for Airbnb, but it's a municipality by municipality grind).

That makes the value quite hard to pin down, a bad court case or two could severely harm Airbnb. It's not likely that there will be a court case that makes tax paying and code abiding hotels illegal, which makes hotel chains much easier to value.

Re: Airbnb valued at $13B ahead of staff stock sale

#47

Post by pyrophane »

quaunaut wrote: post #8

I always see these people commenting on how they don't see the value in Airbnb. I've gotta say, after staying at a few places, I don't see the value anywhere else. * Hilton Worldwide has yearly revenues of $9.7b. * Marriott International has yearly revenues of $11.8b. * Best Western has yearly revenues of $6b. Now, I don't know what their current revenues are. Based on how many people from all over the US I've spoken…

> Furthermore, as much as there are local law issues in places like NYC against them, I don't anticipate those lasting long or having a large effect on their revenues. The same way that if you're in Uber's way you get painted as being anti-jobs, Airbnb gets to say the same thing. And that's in the few places that have them.

I don't see the law in New York city going anywhere. If anything, it is only going to be enforced more aggressively. While it isn't clear that that will be enough to dissuade everyone who is currently operating one or more illegal hotels using the service, I would not be surprised if the vast majority of the "entire place" listings currently found on Airbnb in NYC disappear over the next year as it becomes an increasingly risky thing to do. Of course, I don't imagine that having a huge impact on Airbnb's operations overall unless many other cities do the same thing.

Re: Airbnb valued at $13B ahead of staff stock sale

#48

Post by netcan »

JonFish85 wrote: post #39
grandalf wrote: post #31

Earlier quoted context omitted.

You are partially right, but the main value of AirBnB is that opens up a larger supply of rooms. Hotel prices often fluctuate wildly -- a room may cost $59 one week and then a few weeks later cost $299 because a trade show is in town, etc. Cities like New York have an insufficient supply of hotel rooms to meet demand. There are often no hotel rooms in NYC available for last-minute booking for under $400/night. With A…

"Hotel prices often fluctuate wildly -- a room may cost $59 one week and then a few weeks later cost $299 because a trade show is in town, etc." You don't think this will happen with AirBnb, similar to "surge pricing" with Uber? Continuing with supply & demand, at times of great demand, prices will rise no matter if it's a hotel or AirBnb, even if there is a great deal more supply, there will always be huge bursts of…

Regarding low-mid range, This isn't my experience at all. My experience is that for certain types of travel (eg, meeting friends for a weekend in some fun city) and AirBnB apartment is more fun, IE higher quality than any normal hotel option. Obviously if you compare a midrange apartment to a rockstar suite in a 5 star hotel AirBnB doesn't win but for most fair comparison I value the apartment more than the hotel.

Which is better is a matter of taste, I suppose. A lot of people love hotels. I don't. But, for the price ranges that cover 80% of rooms in most cities, I think it's hard to claim that AirBnB is only better value at the lower tiers. There are some awesome places at the 'sold my company to google' price ranges.

Re: Airbnb valued at $13B ahead of staff stock sale

#49

Post by johnnybazooka »

netcan wrote: post #43
grandalf wrote: post #31

Earlier quoted context omitted.

You are partially right, but the main value of AirBnB is that opens up a larger supply of rooms. Hotel prices often fluctuate wildly -- a room may cost $59 one week and then a few weeks later cost $299 because a trade show is in town, etc. Cities like New York have an insufficient supply of hotel rooms to meet demand. There are often no hotel rooms in NYC available for last-minute booking for under $400/night. With A…

AirBnB also does something that I'm not sure how to generalize in a term. It allows operating at a different scale. Replacing 5 500 person businesses with 2500 1 person businesses can unlock all sorts of efficiencies (the same is true of the reverse). AirBnB can allow individuals to do the work of providing accommodation part time, after work, as students, working mothers, retired people. We often mention disruptive…

There is a fundamental problem with your argument.

The condos and apartments people rent out on Airbnb are built by developers.

So as Airbnb becomes more popular, developers will recognize the ability for tenants to profit from renting out units. In response, they will try to capture that profit on the front end by raising the selling point of the unit.

Practically, the increases in property value Airbnb generates will ultimately flow back to developers, and make housing less affordable.

It's a double whammy for the people that are buying units and not renting them out, because they now have to more for units that don't want to rent out.

Edit: Also, the U.S. real estate stock depreciates by 3% annually, so it ultimately will have to be replaced with new units.

Re: Airbnb valued at $13B ahead of staff stock sale

#50

Post by grandalf »

JonFish85 wrote: post #39
grandalf wrote: post #31

Earlier quoted context omitted.

You are partially right, but the main value of AirBnB is that opens up a larger supply of rooms. Hotel prices often fluctuate wildly -- a room may cost $59 one week and then a few weeks later cost $299 because a trade show is in town, etc. Cities like New York have an insufficient supply of hotel rooms to meet demand. There are often no hotel rooms in NYC available for last-minute booking for under $400/night. With A…

"Hotel prices often fluctuate wildly -- a room may cost $59 one week and then a few weeks later cost $299 because a trade show is in town, etc." You don't think this will happen with AirBnb, similar to "surge pricing" with Uber? Continuing with supply & demand, at times of great demand, prices will rise no matter if it's a hotel or AirBnb, even if there is a great deal more supply, there will always be huge bursts of…

I think you misunderstand the mechanics going on with surge pricing.

In SF on new year's eve, getting a yellow cab can take up to an hour (or more). One year it took me nearly two hours to get a cab to go home. There is way more demand than supply so there is a huge queue.

With Uber's surge pricing, the price simply goes up to help supply meet demand. You can book an uber at 2x or 5x surge pricing and count on it showing up a few minutes later, and count on getting home at a reasonable time.

The best part, however, is that it's in Uber's best interest to have surge pricing happen rarely. Nonetheless, it's a great way to attract new drivers. Want to make $500 on New Year's eve, sign up to be an uber driver and drive from 12:30 to 3am and benefit from surge pricing.

This opens up a larger pool of drivers, which in turn increases supply and reduces the price.

There are certainly price fluctuations with AirBnB too, however increased supply makes the spike less pronounced.

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