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?

Peter O’Connor
Peter O’Connor
Professor of Strategy at University of South Australia Business School

With a more explicit mission to maximize value for shareholders as a result of going public, Airbnb will move quickly to leverage its powerful brand and extensive online audience to realize its potential as a mainstream lodging platform. 

With choice and availability of inventory the key issues for attracting and servicing today's travel customers, the company will have to find a way to incorporate traditional forms of accommodation such as hotels and B&Bs alongside its current, primarily sharing economy, inventory. Peer-to-peer rentals alone will simply not be enough to cut the mustard!.

Thus my prediction is that Airbnb will rapidly transform itself into an online distribution channel for hotels, increasing competition for the existing global OTAs and providing more choices for consumers. And as such, I welcome this move as an opportunity, not a threat, for the hotel sector.

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