My name is Tony Carne. I run Urban Adventures, a global local tours business that closely resembles Airbnb Trips, or as the global peer to peer accommodation powerhouse likes to say – “immersions”. So with that in mind, here’s my take on what the road ahead might look like for Airbnb as the business heads in a new direction.
If you missed it, Airbnb have just launched their first new product since they started out as a share economy option for home sharing. Of course the ride since then has been a meteoric one with the company now valued at around $30B.
The new product is a peer to peer play on Tours and Activities. Not really a new concept as many have tried but not many have stayed the course. Get Your Guide started out this way but quickly pivoted and are now out chasing Viator and Trip Advisor as a market place for professional activities providers.
Andy Samberg had a crack with friends over at Canary Hop before dead pooling but he is not alone there. The pool is littered with carcases of those who have attempted this route. So will this be different? Of course it will. This is Airbnb.
The ultimate failure of others is that they couldn’t build both sides of the marketplace fast enough. They all sourced some pretty unique and cool and PR worthy sexy product but they couldn’t match that up with people travelling in those destinations fast enough to keep the interest of the creators of that product or if they did get a hit, they failed to be able to offer a similar product in the next destination their new fan might be travelling – and then they were gone……
The results of this early fumbling was a pretty horrible experience (I know, I signed for all of them) on both sides of these new marketplaces because generally nothing was available instantly – it was all a conversation but as those of us deep in it know – most of these purchases are spontaneous and most people don’t want to have a conversation over a $50 purchase – they just want to get out and do it.
On the other hand ‘peers’ are somewhat flaky. It only takes a big concert or all your mates going out for a big night and suddenly you are also unavailable. People’s time is the not the same redundant asset as a spare bedroom. People easily find other things to do with their time. They don’t want to commit all their time in advance.
Airbnb will have this part sorted I’m sure. Their incarnations leading up to the announcement today did. They are a data driven business. They will know this. And they are starting slowly, with only 12 cities at launch. They hope to have up to 50 by next year.
The other side is quickly getting enough product to then satisfy the demand that Airbnb have at their fingertips. We for example work with professionals in 150+ destinations around the world, many with teams and we know how hard it can be to get the right people with the right product who are dedicated to their craft.
After a review last week we’ve let 4 destinations go this week who couldn’t meet our quality standards (our NPS is 71). And these were fully trained professionals. Admittedly our standards are high but it is a never ending work in progress.
We’ve outlived nearly all the P2P businesses and are growing strongly because in our instance our partners are building something for themselves – an asset they own, their own business. I can’t really see how that would work in the Airbnb world. In fact I’d say it couldn’t.
The questions they will need to overcome is how will they stop someone from getting bored if the work doesn’t come quickly enough or tired if it comes too quickly? These are the big issues we’ve solved through local ownership and which also sits super comfortably with our Responsible Travel first mindset. Local people, supporting local communities.
These businesses require not only outstanding customer service skills but also discipline. One way around it could be to only open the Immersions a couple of days in advance for booking. That’s maybe a bit risky but you are still hitting the biggest booking spike.
Someone committing to run an experience 2 or 3 days out will most probably turn up and run it. Running this way does however exclude the ‘planners’ – those who like to know well in advance what they will be doing on a given day.
It will likely leave some people without a spot on the activity they wanted, especially the Private and super specialised stuff which was mainly highlighted by Brian Chesky on Nov 17 like “Offroad Dirt Bike tracks of LA” (how many motor cross guys in LA are there looking to show people around?).
Every “no” to a customer is not a great customer experience. People generally won’t change their plans for experiences – we’ve learned this. They’ll just do something else. Actually it is the worst and has killed nearly all that have come before this in peer to peer tours. It is also not good to lose product.
An experience is unique (Samurai Sword expert in Tokyo anyone) – more unique than most apartments – so you can’t always just sub a new one in for one that is burnt out and you can’t just get a guy off the street to pretend he is Samurai for example – it instantly isn’t authentic and will be caught out. It is trickier than you think to keep something like this running smoothly and run it at scale.
One way around this scale and availability problem is to run group tours instead of Private so that everyone gets a chance – but how to you keep those at a level where value is maintained and the margins still worthwhile? You have to take on some risk.
We do it again through ownership. We take every customer and free sell to every customer through every channel – we never say no and sometimes that means a few hours of not earning what you might otherwise. We do that because we are small business owners growing a business we own. Our partners understand this is part of the asset building process.
Again it isn’t something I see an easy answer for in the Airbnb context – peers who aren’t building assets aren’t going to take a haircut on their rate so unless the parent company is going to guarantee minimum earnings for experience provider and suck up the loss in this instance I’m not sure how it would work.
The only alternative to this is crazy prices. Taking the hit is obviously not out of the question for a well-funded business. I guess we can expect some of this for a while and Airbnb should and probably will back themselves to achieve scale.
The other working alternative is to work with a hybrid of professionals and some more of the specialised peers. It still allows for fantastic locals showing authentic experiences. Professional is not mutually exclusive to cool, fun and backstreet. We prove that every day. It is what we do. Urban Adventures have been running “immersive trips” since 2009.
This model allows you always available product – still on brand and always happy travellers. There will still always be the odd hiccup – particularly on the peer side – there isn’t really a strong enough contractual bond to do anything about someone who leaves a customer high and dry but it could be smoother. Ultimately this is what Trip4Real were doing prior to their acquisition by Airbnb.
Other revelations were that Airbnb were going to join us in helping out Social Enterprises in doing Social Impact trips. Our In Focus product has obviously been going for a couple years and played a part in our winning the World Responsible Tourism Award for Engaging People and Culture in 2015.
There was also the very brief announcement of “Meet Ups”. There wasn’t much detail but maybe they are something similar to our Locals on Tap tours which we launched a few months back – time will tell but (it seems like a good idea).
Airbnb haven’t rushed into (all of) this. They’ve been experimenting around the edges for a long time now. They won’t fail here. Like they have with apartment and home stay accommodation they will bring the interesting neighbourhood experiences into the mainstream and turn on the demand. It is going to be a great ride. We can’t wait to see how it all unfolds.