Airbnb is expected to complete its much anticipated IPO before the end of 2020 and Wall Street analysts are understandably excited, while hospitality industry experts worry that access to cheaper capital would allow Airbnb to increase its share of the current ultra-weak travel demand at the expense of hotels. This year Airbnb's US adult user base is expected to fall 60.0% to 17.0 million, the first time of negative user growth (eMarketer). No wonder, the company's valuation plummeted by 58% to $18 billion in a desperate coronavirus-driven fundraising in April 2020 from its previous high of $31 billion. Due to increased competition, its market share in the U.S. is expected to decrease to under 70% by 2022 from the current level of nearly 73% (eMarketer). The question is, how big of a threat to the hospitality industry, if at all, is Airbnb's upcoming IPO?

Dori Stein
Dori Stein
Chief Executive Officer, Fornova

The imminent IPO of Airbnb can be seen as both a threat and an opportunity for the hospitality industry. The prospect of its continued expansion is a timely warning to hotels that there's no room for complacency when it comes to monitoring all competitors and responding to threats.

Airbnb can already be considered to be the largest hotel chain in the world by room count. With more than 7.4 million rooms worldwide and 247 million guest arrivals during 2019, they are effectively competing with every hotel in the world and covering all tiers. Now,with access to a billion-dollar investment, there's no doubt Airbnb's dominance will grow, attracting a greater share of flight visitors to its platform and potentially putting it on an even footing with rivals Booking and Expedia.

But, while the rise of Airbnb can be seen as more bad news for hotel chains who risk losing their share of vital business travelers to the vacation rental giant, the IPO could be a welcome boost for boutique hotels who will be eligible to list their inventory on the site and improve their visibility. Read my full article here.

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