Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

The way I understand it, the biggest threat to Airbnb's model are local governments starting to clamp down on this kind of (usually unlicensed?) subletting. I'm curious how the high valuation factors this risk.

Of course, I suspect the high valuation means Airbnb is planning to expand to hotels and travel in general?

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#6

Post by olivercameron » Mon, May 30, 2011, 5:19 PM UTC

alex_c wrote: post #5

Congrats to AirBnB! The way I understand it, the biggest threat to Airbnb's model are local governments starting to clamp down on this kind of (usually unlicensed?) subletting. I'm curious how the high valuation factors this risk. Of course, I suspect the high valuation means Airbnb is planning to expand to hotels and travel in general?

Isn't the point of Airbnb that you don't stay in a hotel?

Edit: By hotel, I mean generic hotels like Holiday Inn's. I'm just going by their mission statement: "We are a community marketplace for unique spaces".

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#7

Post by rst » Mon, May 30, 2011, 5:19 PM UTC

Techcrunch says, "On any given night in New York there are more people staying in homes via Airbnb than there are rooms in the biggest hotel in Manhattan." For comparison: Starwood Hotels (whose brand names include Westin, W, Sheraton, and others) has more than 20 hotels in New York (some quite large), and a market cap of about $11.3 billion.

FWIW, Airbnb's commissions are 9-15% of the rate (3% from the host, 6-12% from the guest) according to their hosting FAQ[1]; no idea how that compares to typical hotel profits on a room listing...

[1] http://www.airbnb.com/help/topic/hosting

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#8

Post by drm237 » Mon, May 30, 2011, 5:22 PM UTC

olivercameron wrote: post #6

alex_c wrote: post #5

Congrats to AirBnB! The way I understand it, the biggest threat to Airbnb's model are local governments starting to clamp down on this kind of (usually unlicensed?) subletting. I'm curious how the high valuation factors this risk. Of course, I suspect the high valuation means Airbnb is planning to expand to hotels and travel in general?

Isn't the point of Airbnb that you don't stay in a hotel? Edit: By hotel, I mean generic hotels like Holiday Inn's. I'm just going by their mission statement: "We are a community marketplace for unique spaces".

I assumed it was to get the best deal on a bed. If it's in a hotel room, fine with me. Some probably do it just for the experience though.

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#9

Post by olivercameron » Mon, May 30, 2011, 5:25 PM UTC

I think a lot of startups put too much weight on what an investor thinks of their idea. Airbnb is a prime example of carrying on in the face of rejection, even if people are saying "it's a stupid idea". I know a lot of founders who, after being told by many of the Valley's finest angels that their idea is no good, would just give up.

It just goes to show that you can create a $1 billion company, even if no one really gets it in the beginning, and in my eyes at least, they are actually justifying it (making a lot of money in a lot of different places).

Re: Airbnb Has Arrived: Raising Mega-Round at a $1 Billion+ Valuation

#10

Post by waterlesscloud » Mon, May 30, 2011, 5:26 PM UTC

olivercameron wrote: post #6

alex_c wrote: post #5

Congrats to AirBnB! The way I understand it, the biggest threat to Airbnb's model are local governments starting to clamp down on this kind of (usually unlicensed?) subletting. I'm curious how the high valuation factors this risk. Of course, I suspect the high valuation means Airbnb is planning to expand to hotels and travel in general?

Isn't the point of Airbnb that you don't stay in a hotel? Edit: By hotel, I mean generic hotels like Holiday Inn's. I'm just going by their mission statement: "We are a community marketplace for unique spaces".

No, the point is to rent spaces to people.

When you look at them that way, a billion may be low.

I was confused when I first heard of them, I thought they were just planning to be what they are right now- spare private room rentals to travelers. But then they explicitly stated a desire to directly disrupt the moribund hotel industry by offering services that make hotel room pricing more dynamic. Hotels are dynamic now, you can almost always negotiate the rate lower, but the vast majority of people don't know that, or don't want to try. If airbnb can somehow automate a chunk of that process, there's money for every in the transaction. I think that's a hard problem, but solvable.

If they also move into subletting and temporary event space and so on... Big markets.