From Air Mattresses to a Household Name: Airbnb's Growth Strategy
From Air Mattresses to a Household Name: Airbnb's Growth Strategy
Airbnb adopted a multi-channel marketing strategy: an effective combination of social media, word of mouth, promotions and an affiliate program that ran until 2021.
What to expect
Continued Growth and Innovation: Expect Airbnb to keep growing rapidly, innovating new ways to connect travelers with unique accommodations worldwide.
Regulatory Challenges: Watch for ongoing legal battles as Airbnb navigates regulatory hurdles in various cities, demonstrating resilience through strategic approaches.
Unique Marketing and Communication: Airbnb maintains its unique marketing strategies, leveraging user-generated content and storytelling to engage travelers and differentiate its brand.
The Airbnb ABNB 0.00%↑ story begins in 2007, when Brian Chesky and Joe Gebbia, roommates, were struggling to make ends meet in San Francisco. Faced with the challenge of paying rent, the two entrepreneurs came up with a unique idea: turn their home into a makeshift bed and breakfast. With an inflatable mattress, a hospitable spirit, and the auspicious promise of a home-cooked breakfast, the duo hosted three guests and launched a venture that 15 years later would become an $8.4 billion business.
How did a modest business that started with inflatable mattresses become a disruptive force in the world of hospitality and tourism? Today, Airbnb has more than 7 million active listings worldwide, spread across more than 100,000 cities and towns. Its ubiquity around the world has made it a major player capable of challenging the hotel industry, radically transforming the way travelers interact with their environment.
The long race to the top: Challenges and insights
The success of the founders' start-up venture back in 2007 sparked a realization: there was a potential business model in helping people find short-term accommodations in unique and personalized spaces.
Chesky and Gebbia teamed up with Nathan Blecharczyk, an experienced software engineer, to co-found Airbnb in August 2008. The name "Airbnb" stems from its original focus on providing air mattresses (the "air" in Airbnb) and breakfast (the "bnb" part) to guests.
In the early days, Airbnb faced its fair share of challenges. Many investors were skeptical, and the concept of staying in strangers' homes was met with apprehension. The venture wasn’t getting off the ground, although the company was offering lower prices than hotels and struggling with revenue close to zero. As the young start-up was desperately trying to increase bookings, a change in marketing strategy was made.
Airbnb piloted a new professional photography program that involved going door-to-door taking professional photos for all of their listings in New York City. From repetitive, flat, low-quality listings, Airbnb's postings went on to capture the best of each property listing, and the effects were almost immediate and the company's monthly revenue doubled. For Airbnb, at the time this no-cost photography strategy for hosts was a leap of faith that hit on the key to transform a great business idea on paper and turn it into a successful product that actually sells in the market.
By 2011, Airbnb had gained significant traction, with users from around the world embracing the platform. As Airbnb expanded its reach, it adapted to a global market by offering a diverse range of accommodations, rather than just affordable options. The hosts themselves encouraged this diversity by seeking to stand out for their uniqueness.
While Airbnb's journey was marked by rapid success, it also faced regulatory challenges, criticism, and legal battles in various markets. Many major cities around the globe had their mishaps with the temporary accommodation platform. San Francisco, New York, Berlin, and Amsterdam are just some of the cities that banned or limited Airbnb's operations over the last few years, resolving their disputes in the legal arena. Airbnb adapted through a boots-on-the-ground strategy and a large investment in its legal team which currently has over 200 lawyers and a multi-million dollar budget to fight its legal battles in the US market alone.
Whenever there is municipal legislation regulating the use of housing as temporary rentals, you can take it for granted that Airbnb will be in court defending its interests. And why is that? Airbnb does not want to give in to any legal battle, and this strategy responds to a very simple reason: the value of this company (like any other) is subject to future expectations. And when Airbnb opens its books each quarter, investors are always eager to know whether its future growth will be curtailed by a stricter regulatory environment, especially when it is now that lawsuits are setting precedents.
But how did this company manage to grow so exponentially? Well, regarding its strategy to gain new users, Airbnb adopted a multi-channel marketing strategy: an effective combination of social media, word of mouth, promotions and an affiliate program that ran until 2021. This mix is similar to that adopted by innovative service companies such as Uber and DoorDash to gain a foothold in the market. Of course, if it works, why change it?
However, one detail worth noting about this company is its careful communication style. Airbnb relies heavily on user-generated content, strategically choosing images captured by its guests and hosts. This not only provides an authentic view of the accommodations but also adds a personal touch to the brand, telling a compelling story about the culture and experience of a place.
Along with the use of positive testimonials, the communication reinforces the transformative nature of the Airbnb experience, encouraging users to immerse themselves in the local culture rather than being passive tourists, as they convey in their slogan "Don't just go there, live there". A lovely message for one of the companies most responsible for the gentrification problem that many cities around the world are experiencing today.
Entrepreneurship beyond accommodations
From a simple air mattress in a San Francisco apartment to a global phenomenon, Airbnb's journey is a beacon for aspiring entrepreneurs. The company's founders navigated challenges with creativity, resilience, and an unwavering belief in their vision. Airbnb's impact on the world of entrepreneurship goes beyond accommodations; it symbolizes the potential for innovative thinking to redefine norms and create lasting change. But, what can we take from this story?
Even the best business ideas fail if companies can't effectively communicate and market to their customers. A billion-dollar business could have died in the cradle if the company had not invested in professional photography for its listings.
Choose your battles wisely, and strike hard. Airbnb understood that the future of their business would be in the legal arena and that it was necessary to have a foothold in this area.
Let your customers be your best marketing tool. Many will think that Airbnb's main business is properties, when in reality it is people. The company understands this phenomenon and uses its members and customers as its best advertisement. It encourages them to generate content and sells its services as a unique experience that allows the reach of its network to grow organically.
