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Airbnb raises $1B at $31B valuation, became profitable in 2016

342 pointsby sloanesturzabout 8 years ago

27 comments

jliptzinabout 8 years ago
I used to use airbnb quite often (as a traveler), but I have to say it&#x27;s lost its appeal for me. First, it&#x27;s really not much cheaper than a hotel in most cases (some cases more expensive). Second, it&#x27;s a hassle when you&#x27;re on vacation to have to arrange in advance a specific time to pick up the keys to the place. Then, what happens if you happen to lose the keys (happened to me once)? What happens if it&#x27;s in the middle of the night in a foreign country? This could be a nightmare. On top of that, you&#x27;re expected to leave the apartment like you never stayed there or face bad reviews (even with a $100+ cleaning fee)! Seriously, one time I got stuck with a terrible review because I left a dirty pan in the sink (had to rush to the airport, I figured the $100 cleaning fee would cover what minor things I had left behind, but guess not).<p>So now I&#x27;ve pretty much gone back to hotels. You can come any time of day or night, not have to worry at all about losing keys, and you can leave the place a raging mess if you have to (though I am usually a very clean person). Airbnb makes the whole travel experience far more stressful for me.
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kilroy123about 8 years ago
I&#x27;m not surprised to see Airbnb became profitable. They&#x27;ve expanded everywhere. I nomad around and always use Airbnb, I&#x27;ve booked places on several continents.<p>However, I&#x27;m definitely feeling the effects of their growing pains. For example, many people have bought places to only rent on Airbnb full-time. Most of these people suck at being an hotelier. It&#x27;s clear people get lazy and are just trying to make money.<p>Think about how many hotels you&#x27;ve stayed at that were less than stellar? It&#x27;s hard to have a good hotel with full-time staff. It&#x27;s much harder when it&#x27;s just you on the side, renting some place. I&#x27;ve been to many horrible Airbnb&#x27;s that I had to checkout of early, and go find a new place last minute.<p>Unless, they fix this and get more people to review honestly. I think they&#x27;re going to run into a lot of problems.
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sloanesturzabout 8 years ago
A shame that they didn&#x27;t raise this money through an IPO. I&#x27;m afraid of how long unicorns are staying private: it&#x27;s a big bummer for their employees and early investors. It&#x27;ll be a tough sell for early employees of the next batch of unicorns if Uber, Airbnb, Palantir, Dropbox, etc. stay private for 10-15 years or more!
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xbetaabout 8 years ago
My experience tells me Airbnb is in big trouble.<p>Last year around Nov, I tried to book a Lake Tahoe cabin for 2 families (1 is mine, another is a friend&#x27;s) for a simple trip for our young children.<p>I booked via Airbnb few days in advanced. The day before driving to Tahoe, we even called Airbnb to confirm that the listing is OK. The host accepted, but didn&#x27;t answer to any of our questions.<p>The next morning when we woke up, we packed everything, then out of bad habit, I opened up the app and checked again. I was caught on surprised that the host cancelled, just 4 hrs before our suppose arrival time. We were very shocked and pissed. I was booking for a friend&#x27;s family and it was very embarrassed. I immediately contacted Airbnb support, and all they call do for me was to give me $100 back for my NEXT reservation. And they couldn&#x27;t do anything about my existing. I thought they would put a penalty on Airbnb&#x27;s host who cancelled on us in less than 24 hrs, but they said they don&#x27;t have such policy. I was upset because I knew they had such policy for the renter. They also mentioned the best they can do is to find me the next 10 houses to book in the similar location, but cost 3x more as it is bit last minute. They did not anything else to help me.<p>I was very upset and went to Homeaway.com and found something immediately, even cheaper than the original reservation I had with Airbnb.<p>My story was a clear first-hand witness on how I believed Airbnb failed at customer service, and will be very difficult to become a successfully company.
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beefmanabout 8 years ago
We haven&#x27;t had a recession in 8 years, and the postwar average time between recessions is 6 years.[1] The stock market&#x27;s overall PE ratio is well above average.[2] With Box and Snap, the market demonstrated it is starving for tech IPOs -- even if a company is losing money and entirely based on a millennial fad.<p>So why in the name of sweet baby Jesus would investors, founders, or anyone else delay an IPO at this point? Can anyone explain it?<p>[1] <a href="http:&#x2F;&#x2F;www.nber.org&#x2F;cycles.html" rel="nofollow">http:&#x2F;&#x2F;www.nber.org&#x2F;cycles.html</a> [2] <a href="http:&#x2F;&#x2F;www.multpl.com" rel="nofollow">http:&#x2F;&#x2F;www.multpl.com</a>
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rpearlabout 8 years ago
I&#x27;ve definitely had mixed experiences with AirBnB. When it&#x27;s genuinely someone renting a spare room on the side, it tends to be a neat experience; I had several of those traveling in Australia solo and it was a good way to get to know the area. I also had positive experiences in Rome and LA with similar arrangements.<p>When it&#x27;s just landlords short-term renting a furnished apartment on the side, the experience tends to be subpar. The worst experience I had was in Chicago, when it was clearly a condo owner breaking the terms of the HOA for their building--they told us to say that we were &#x27;just visiting&#x27; the occupants of the apartment, not to unlock the door if an actual resident was nearby, etc. The general feeling of &quot;sneaking around&quot; was unpleasant.<p>It&#x27;s a mixed bag--the original idea of home <i>sharing</i> is a great experience, but clearly not the most profitable aspect of their business. I wonder if they could figure out ways to support that better...
sperling75about 8 years ago
The hogging of VC funds by airbnb, uber, and many other not startups is super unhealthy for the startup ecosystem. The public markets will eventually punish these companies for valuations that lack transparency. Airbnb is on the way out with their current short term renting business in most large cities. It&#x27;s illegal and the quality of service is suffering dramatically. Supply side quality is on the way down. Demand side quality is terrible too. To justify their valuation they are opening up the gates to terrible customers. I get it, they may go into other markets with all this money like the long term rental business or tours business or airline flights.. maybe hotels? Reality is they are not going to be great or better at any of these things than the current companies in those markets and certainly not by any significant degree to own the market.
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xiaomaabout 8 years ago
Have their early employees been able to cash out yet or are they basically trapped into either losing their hard earned options from work done years ago or staying still more years at the company?
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ptenkabout 8 years ago
My AirBnB experiences have all been poor, despite staying exclusively at 4.5&#x2F;5 star reviewed properties. The lack of service isn&#x27;t worth the extra savings or superior hardware. Hotels are so much more comfortable due to the constant service&#x2F;follow up in case anything goes wrong.
mfringelabout 8 years ago
I&#x27;ll admit, I&#x27;m pretty amazed that AirBnB has succeeded.<p>I never thought that injecting even more uncertainty into travel was a winning proposition, but they&#x27;ve clearly found a willing market.<p>Perhaps a better way to look at it is &quot;There was an underserved market that had a higher tolerance for uncertainty, and AirBnB seized the opportunity.&quot;
swampy61about 8 years ago
I&#x27;m finished with Airbnb as the places get shabbier with each booking. Linens are threadbare, kitchens have dirty&#x2F;stained pots &amp; utensils and suddenly 4-6 flight walk ups without a mention in the listing. Zero customer service to boot. I&#x27;ll pay the few dollars extra for a hotel.
saycheeseabout 8 years ago
Airbnb&#x27;s growth as it relates to stays to per a night has been 500k since at least 2014 and as recent as mid-2016. In 2015, they stated they wanted a million stays per a night by 2016.<p>Any reason to believe Airbnb is really growing?
rampage101about 8 years ago
I helped my parents rent an AirBNB where the people owning the house were still living there but it said nothing about this in the ad. After the owner gave us the keys, a few hours later somebody opened the door, and I seriously thought it might be a robber or something. Turns out it was the son of the owner who was living there, and basically my parents were renting a single room inside of their house. It was very uncomfortable for everyone.
Tiktaalikabout 8 years ago
I wonder if they’ll still be profitable as more and more cities become aware of the negative side effects of Airbnb use and implement various sorts of bans on types of commercial Airbnb activity.<p>A researcher at UBC estimated that commercial operators were responsible for generating 77% of Airbnb revenue in Vancouver. The City of Vancouver is planning on legalizing Airbnb, but will ban commercial operators that rent out entire residences. This will likely significantly reduce the amount of commercially operated Airbnbs in the city and this could result in significantly less revenue that Airbnb generates from Vancouver.<p>If this researchers’ numbers are at all reasonably accurate, and other cities have similar levels of commercial activity, and the trend of cities banning commercial operators catches on, that would be a major impact on Airbnb revenue.<p><a href="http:&#x2F;&#x2F;www.theglobeandmail.com&#x2F;news&#x2F;british-columbia&#x2F;vancouvers-top-airbnb-earners-are-commercial-hosts-research&#x2F;article30324477&#x2F;" rel="nofollow">http:&#x2F;&#x2F;www.theglobeandmail.com&#x2F;news&#x2F;british-columbia&#x2F;vancouv...</a>
omurphy27about 8 years ago
I spent 12 months as a digital nomad in SE Asia and AirBnB was a godsend for me.<p>If you&#x27;re checking in at some place you&#x27;ve never been to in the middle of the night, then of course a hotel is a better option. Likewise if you can&#x27;t be bothered to tidy up a bit before checking out, then a hotel is the way to go. Personally, for short stays, like a few days or a weekend, I&#x27;ll go with a hotel. But for anything of a week or longer, AirBnB is terrific.<p>Through AirBnb I was able to book very nice condo apartments, with awesome amenities (rooftop swimming pools, brand new gym facilities etc) and very gracious local hosts who showed me things I never would have been able to discover on my own. Moreover, with AirBnb I don&#x27;t have to worry about landlords ripping me off like I would if I actually signed a rental contract in a foreign country.<p>I think most of this criticism is rather petty. AirBnb isn&#x27;t a hotel or hostel replacement and it isn&#x27;t supposed to be.
ganfortranabout 8 years ago
If they are already profitable, why raise money again?
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nstjabout 8 years ago
&gt; That&#x27;s EBITDA profitability, according to the Wall Street Journal, meaning that expenses like taxes are not included [0]<p>So it&#x27;s profitable - as long as you exclude such meaningless items as &quot;interest, tax, depreciation, amortisation&quot;. Nice.<p>[0]: original post.
yueqabout 8 years ago
Expedia&#x27;s market cap is at 19B today. 31B is much more valuable than it.
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mosselmanabout 8 years ago
So when we say &#x27;$31B valuation&#x27; what does that mean in real money? Lets say that I am the founder of airbnb, how much of that money could I get when I sold the business?
bedheadabout 8 years ago
I booked a spare room in London a couple years ago in the Mayfair neighborhood, a quite expensive area. The woman who owned the flat wasn&#x27;t the one in the photo, and a number of things about the flat seemed rather odd. Long story short, she was a prostitute.
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taytusabout 8 years ago
And they are still being called a startup...
beedogsabout 8 years ago
Another company that shouldn&#x27;t be allowed to exist.
Travellersrestabout 8 years ago
Airbnb is a &quot;disruptor&quot; apparently and a Unicorn. What did they disrupt? The housing market for sure in certain cities. 90 day booking restrictions for example (London), banned in Berlin etc.<p>The Airbnb service startups now have limitations on their business plans and on the ground issues, residents abuse and legal challenges. This is disruptive and not necessarily a good thing.<p>Airbnb has opened up new tourist routes and brought income to airlines and local businesses, so the economic contribution has been interesting.<p>But what is the real message. &quot;Live like a local&quot;. I know personally that even if you live in a foreign land for several years it&#x27;s hard to live a like a local. Its smart marketing, the offer of shared spaces and local people. This was the shared house approach it all started with. This is long gone. Head off to airdna.co and check out the stats on whole apartments. It&#x27;s a misnomer and still carries through in the press.<p>Is it better than a hotel? Depends: If its more space and similar price then maybe, always depends on this vs location, its quality, is it really licensed or allowed, and how convenient is entry.<p>You can of course have parties that hotels may frown on! Hotels have front desks, are quality controlled and for most business people so much more convenient with bars and breakfasts. They also tend to have well organised support and be in convenient locations, You can always use Uber to get a cheap taxi though...Uber and Airbnb, neat merger.<p>As this thread shows all the latter can be a problem and hence the &quot;SuperHost&quot; status.<p>Do Airbnb love Super Hosts? Yes of course. Reviews pay booking dividends . But Super Hosts don&#x27;t always let their places all year and being smart cookies realise being paid at checkout, being charged a commission and the guest paying up to 12% extra could mean more money in their pocket if they did it direct.<p>Many are direct marketing too and certainly doing rebookings direct. Do Airbnb see this as a problem? Of course, they want 24&#x2F;7 and all the margin. This is why they hate leakage and try to force instant book and convenient cancellations. This is also guest centric and owner impossible for so many. The two are hard to equate. Booking.com&#x27;s mantra &quot;Most rooms with free cancellation&quot; is the killer, but does NOT apply 90% of the time to their rental inventory. Clever marketing again!<p>Airbnb also want to ensure quality inventory and no come-back. Hard with a thousands of unstandardised accommodation. Bad review police-ing is expensive!<p>Do Airbnb want to be in the main holiday rentals seasonal space? Yes, they just bought Luxury Retreats for $200m, but even this is a slippery fish as these are mainly managers and owners who market everywhere and want&#x2F;need maximum margin. It&#x27;s an unusual play but maybe just paying to understand the market more. Trying to forcing any form or control on these properties may well see further industry rebellion.<p>Add in the Trips launch and other revenue streams and you can see strategically they realise a zenith is approaching on the main models and which company needs so much litigation?<p>Best prices? Lots of comments on this. The best price is always likely to be direct, price parity slipped out the backdoor years ago. The &quot;Guest Service Fee&quot; is not charged direct. Imagine paying $2000 and then seeing a further $200+ as a service fee. Look under the question mark at checkout, it&#x27;s their fee not the accommodations. This is beginning to annoy people (a lot).<p>They could often just book direct with a little searching. It may take 10 minutes, and that&#x27;s $1200 per hour work! Even lawyers struggle to get that!<p>The big brands: Expedia (inc HomeAway), Booking.com, TripAdvisor, Airbnb, essentially offer the same thing and thousands of properties are advertised on all of them simultaneously as they sit out front and use the guest fees to pay Google Search (the real controller).<p>The smart guests are using them to identify great places and then phoning and emailing direct (using Google again) but saving money and getting more information.<p>Ref: <a href="https:&#x2F;&#x2F;www.smarthosts.org&#x2F;posts&#x2F;BnTAS2ujKWfNw47TW&#x2F;airbnb-s-getting-a-lot-of-negative-comments-on-a-popular" rel="nofollow">https:&#x2F;&#x2F;www.smarthosts.org&#x2F;posts&#x2F;BnTAS2ujKWfNw47TW&#x2F;airbnb-s-...</a>
nakedrobot2about 8 years ago
This feels like another example the new gilded age, where the spoils of capitalism stay at the top.
maxxxxxabout 8 years ago
They should stop calling companies like Airbnb &quot;startups&quot;. They are big companies now and should be treated as such.
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rs86about 8 years ago
1b @ 30b is very weird.
curiousDogabout 8 years ago
Does this mean they&#x27;re about to IPO? I should probably interview with them ASAP then.
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