Airbnb, the online platform that converts rooms into a revenue stream, is tipped to go public in 2015. The company – which has revolutionised the way that people book travel accommodation – now offers more rooms than many of the world’s largest hotel groups. It has been so successful that in a number of cities, including New York, it is facing legal challenges.
Booking somewhere to stay is an activity that people are increasingly comfortable doing online. The rapid growth of mobile technology in particular is transforming travel and tourism not just in terms of bookings but also in terms of customer service and consumer behaviour. Consequently, investors are pouring large sums of money into the travel technology industry.
Airbnb has experienced hockey stick growth
Valued at $2.1 billion in 2012, Airbnb’s most recent $475 million funding round in April 2014 saw the company’s valuation soar to $10 billion. A valuation of this magnitude makes it worth more than leading hotel groups such as InterContinental Hotels and Hyatt.
Airbnb, which was founded in 2008 by two designers with spare space in their apartment to share, acts as a digital marketplace for accommodation. The company’s online platform enables property owners to monetise their assets while giving travellers and tourists access to accommodation that is cheaper than more traditional accommodation.
Such is Airbnb’s success that a Barclays research report projects that by the end of 2016, ‘the room-sharing platform could boast 129 million room-nights per year’. Currently, Barclays estimates that the figure is around 37 million room-nights.
The ‘always connected’ consumer is creating new opportunities
Airbnb’s success has much to do with changes in customer expectations. Today’s ‘always connected’ consumers want to be able to find and book travel and accommodation simply and immediately. They expect to receive real-time services from travel companies and accommodation providers, and convenience and accessibility are key.
More often than not, finding a place to stay and booking it is done online; the internet has greatly increased the range of travel products for consumers to choose from.
At the same time, it has enabled small travel suppliers such as independent hotels and B&Bs to expand their product distribution and reach new audiences.
There’s increasing demand for travel technology
As Airbnb has demonstrated, technology has made it possible for householders to monetise their spare bedrooms by putting them in front of a far larger audience than they could otherwise hope to reach.
Other travel tech suppliers are focusing on small accommodation suppliers such as B&Bs, small hotels, campsites, and self-catering holiday homes. The internet has helped to create exposure for these types of businesses but many of them still rely on a diary, a calendar on the wall or an Excel spreadsheet to manage their bookings.
Even B&Bs need to offer an Amazon-like experience
However, today’s consumers expect the experience of shopping online for travel and holiday accommodation to be as smooth and efficient as their Amazon experience. To satisfy these expectations, small accommodation suppliers need to be able to display their room availability online in real time.
That’s why more and more hotel and B&B owners are investing in online booking software solutions to maximise their chances of filling their rooms by offering consumers real-time availability and the opportunity to book and pay online.
Now, a smooth and seamless online booking process matters just as much as the fluffiness of the pillows or the quality of the cooked breakfast. Increasing numbers of accommodation owners are waking up to this fact and are seeing the results on their bottom line.
There’s room in our next opportunity for you
This week we’re launching a travel-tech investment opportunity that offers consumers the real-time availability they demand, and accommodation owners a simple and intuitive way of managing bookings and taking payments online.
If you’re already a SyndicateRoom member login now or join to find out more about this investment opportunity. Mark Aldridge, CEO of Better Capital LLC, and Henry Catchpole, who ran Suffolk Life for 13 years before selling it to Legal and General for £68 million, have already invested.