Artificial intelligence has been a major discussion in travel over the last year, and that’s why the theme of the Skift Global Forum is Connection in the Age of AI.
25.08.2023 - 14:01 / skift.com / Brian Chesky
Booking.com does it and so do Amazon, Etsy and Alibaba, so why not Airbnb?
Airbnb co-founder and CEO Brian Chesky mentioned all these companies earlier this week when he discussed potentially launching sponsored listings and an advertising platform for Airbnb. He could have also referenced Google, Expedia, Tripadvisor and many others.
“I think it’s a massive opportunity,” Chesky said. “I think you could imagine easily adding a few equivalent percentage rates [points] of take rate if you were to scale that over time. I think there’s a lot of comparables like Amazon, one of the largest advertising platforms now in the world, Etsy or Alibaba or even Booking.com. This is a big part of their take rate.”
Take rates are generally the commissions or fees that a company collects for each booking. Airbnb currently charges hosts a 3 percent fee, and guests in the 10 to 14 percent neighborhood on average, although it varies.
Skift Research estimated that if Airbnb debuted an ad platform in 2024 — Chesky told Morgan Stanley tech conference attendees “it’s absolutely on the horizon” — it could start slowly in its first year with around $317 million in revenue, or around 0.5 percent of gross bookings, and grow to a $1.25 billion business by 2026 at 1 percent of gross bookings. That business could soar to $3.7 billion by the end of the decade at 3 percent of gross bookings.
This would mean that Airbnb could boost its take rate 0.5 percent in 2024, 1.5 percent in 2026, and 3 percent in 2029, Skift Research estimated.
“And the bigger the platform gets, actually the more interesting monetization gets,” Chesky said. “Monetization is great at scale. So you want to get as much scale as possible. So we still feel like we’re still in land grab mode.”
There is plenty of land to grab. Booking Holdings and Expedia Group has multiple sources of ad revenue ranging from sponsored listings to metasearch cost-per-click advertising at subsidiaries Kayak and Trivago. Though Booking and Expedia reported $894 million and $911 million in advertising-related revenue in 2022, respectively, the actual revenue they generate from sponsored listings is likely much larger than this. Uber reported a more modest $500 million in advertising, while Amazon generated nearly $38 billion, which was 7.3 percent of total revenue, according to Skift Research.
Asked to comment on Airbnb’s plans Thursday, a spokesperson said: “We are always exploring new business ideas and continue to evaluate this opportunity.”
Reported Advertising Revenue on Travel and Tech Platforms in 2022
Booking.com states its sponsored placements start at $0.50 per click.
“Because most potential guests click on hotels from the first page of search results, we’ve reserved top
Artificial intelligence has been a major discussion in travel over the last year, and that’s why the theme of the Skift Global Forum is Connection in the Age of AI.
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