71
FORTUNE.COM // JANUARY 2020
eventually find a winning formula
by simply offering the activities
à la carte. In 2017, the company
rebranded Trips as Airbnb Experi-
ences, under the leadership of
Joe Zadeh, and relaunched. Two
years later, there are about 40,000
Experiences in 1,000 cities and
towns. Since June, the company
has announced three categories:
Adventures, Animals, and Cook-
ing. Chesky says new categories
will soon launch “on an almost
monthly basis.”
Experiences remains a small
business, and there have been
rumblings that it still isn’t doing
as well as hoped. Tech news site
The Information reported that
through the first three quarters
of 2018, Experiences generated
$15 million in revenue, a tiny frac-
tion of Airbnb’s sales. This fall the
company confirmed reports that
Zadeh would step down as head
of Experiences once a successor is
named (which hadn’t happened at
press time). But Airbnb character-
ized this as a lateral move, not a
demotion, with Zadeh taking a
broader strategic role. Zadeh tells
Fortune, “We’ve gotten to a place
where I think there are people that
can take [Experiences] to the next
level.” And Airbnb says the product
is making strides: It says Experi-
ences bookings increased nearly
sevenfold year-over-year in 2018.
If the glitches get ironed out, Ex-
periences could give Airbnb a foot-
hold in a huge market. The tours
and activities industry—a category
that includes activities as diverse
as staid big-bus sightseeing tours,
freehand rock-climbing classes, and
songwriting seminars—will gener-
ate $183 billion in revenue in 2020,
according to estimates by travel
research firm Phocuswright. And as
cultural shifts lead more people to
prioritize experiences over material
goods, hospitality brands want to be
associated with more than pillow-
top beds and heated pools.
Indeed, this isn’t a new busi-
ness, and Airbnb faces established
competitors. Travel website
TripAdvisor offers more than
250,000 “Experiences” listings; it
brought in $125 million in revenue
from experiences and dining in
the second quarter of this year.
Booking.com and Expedia are
also players, and even big hotel
chains are in the game. Hyatt, for
example, specializes in health and
wellness experiences through its
“Find” brand. “Our guests tend to
be higher-end customers [focus-
ing] on their holistic well-being,”
says Hyatt CEO Mark Hoplama-
zian. “There are many meta-searchFEEDBACK [email protected]
sites that allow you to buy the
double-decker open-air bus tour.
For us, that’s not really providing
extra value.”
Beyond these players, though,
remains a fragmented ecosystem
of tour and activities providers—
most of which have little digital
presence. “One of the key features
of the experiences marketplace is
that about 80% of it is offline still,”
says Dermot Halpin, TripAdvisor’s
president of experiences and vaca-
tion rentals.
Reaching that untapped res-
ervoir is a big opportunity for a
company with Airbnb’s size, name
recognition, and tech savvy. In
October, Airbnb led a funding
round, worth $60 million, to invest
in Tiqets, a ticket-technology
startup that focuses on mainstream
attractions, such as museums and
landmark tours. The investment
signals Airbnb’s willingness to get
involved with the standard tourist
activities it used to shun, the bet-
ter to become a full-service travel
company. Chesky says Airbnb is de-
veloping an Experiences category
based around “landmarks with a
twist.” For example, he says: “What
if there was a different way to see
the Louvre, with an art history
professor? And what if it’s at night
now, without all the lines?”UBER
$69.7 B.
$51.3 B.
–27.7%
$22.4 B.
$14.3 B.
–38.8%
LYFT
$12.9 B.
$10.2 B.
–25.4%
$6.4 B.
$3.0 B.
–52.3%
SMILEDIRECTCLUB
$7.2 B.
$8.8 B.
+21.7%
PELOTON
MARKET VALUE AT
FIRST-TRADE-DAY CLOSE
CURRENT MARKET VALUE
CHANGE FROM
FIRST DAY OF CLOSE
SOURCE: BLOOMBERG; S&P GLOBAL
VALUES AS OF DEC. 16, 2019.
SEEKING TO BREAK AN IPO LOSING STREAK
Silicon Valley investors hope that Airbnb will buck a recent trend in which disappointing public-market debuts by tech companies have
outnumbered strong ones.