AirBnB Is the Apple of Travel

Nadav Gur
The Startup
Published in
6 min readDec 8, 2020

It was early 2009, and we were seated in a conference room at a Tel Aviv office tower. Leaders from Israel’s cellular carriers and top mobile startups were seated around the table. Bo Ilsoe, a corporate venture capitalist at the world’s #1 cellphone company was giving a strategic briefing (Nokia, if you’re that young). It was less than 2 years after the iPhone’s launch, but the picture was already quite clear, and for Nokia, quite grim. Apple, with less than 10% market share, was projected to collect 90% of the profit in the global smartphone market.

Sure enough, within the next 3 years, iconic brands built over decades were relegated to the backbenches of the cellphone market — Nokia, Motorola, BlackBerry, and Sony Ericsson, to name a few. And Apple? Apple’s market cap soared twenty-fold since that meeting.

Airbnb has followed much of Apple’s playbook to date. Doubling down on these strategies can turn it from great success to a dominant juggernaut. Here’s why.

Key Tenets of Apple’s Strategy:

  • Vertically-integrated Distribution
  • Design-led Product Philosophy
  • Vertically-integrated Product
  • Visionary Storytelling and Likability

AirBnB is like Apple, Booking and Expedia are like… Microsoft

Since launch, AirBnB’s meteoric rise has been driven by the following strategies:

Vertical Integration 101: Want an AirBnB? Book it on… AirBnB

While vacation rentals always existed, and VRBO / HomeAway were both doing nice business off of this category, AirBnB allowed virtually anyone to become a host — and sell their inventory exclusively on AirBnB. From the consumer’s perspective, that meant that if you were looking for that product, there’s exactly one place you can get it — AirBnB.

Historically most of the travel industry is a marketplace where the same products — the same hotel rooms, flights and rental cars — are packaged and repackaged by a host of travel agencies (on or off-line), aggregators, consolidators… You can probably book the same hotel room / flight on 50 different websites and 1,000 different travel agents. Once consumers realized that, travel search became focused on price comparison, not product comparison, which led to the rise of the meta-search players — Kayak, Trivago, TripAdvisor (for awhile) and then - the 600-lbs gorilla — Google. The product is a commodity, all the consumer cares about is where they can get it $5 cheaper, which, in fact they may not be able to due to rate-parity agreements.

From a consumer perspective — that differentiates the product and defines the channel.

You booked an AirBnB on your iPhone — not a shared rental on your Apple smartphone

AirBnB maintained this strategy (almost) consistently. Unlike Expedia and Booking, where “private label” and API-based distribution is a significant percentage of the business, AirBnB does not distribute its inventory through 3rd parties. If you want an AirBnB, you buy it from AirBnB. This brand loyalty means AirBnB’s marketing expenses are markedly lower than everyone else’s:

  • AirBnB 2019: $538M on revenue of $4.8B — 11% of sales
  • Booking 2019: $4.97B on revenue of $15B — 33% of sales

In travel distribution, distribution is the product (after all — neither AirBnB or Booking actually furnish you with a bed or a breakfast). Therefore this strategy is the equivalent to Apple’s tight control of both their distribution channels (originally — Apple Stores, Apple.com, and exclusive relationships with wireless carriers) and their platform — Apple does not license its operating systems, restricts accessory manufacturers (MFi program) and its control over the App Store and iTunes is now the subject for anti-trust cases. If you want an iPhone, you get it from a channel Apple controls, and what you do with it / connect it to is tightly controlled by Apple.

Design-led Product Philosophy — Focus on the End-user

AirBnB’s Founder & CEO Brian Chesky is an industrial designer by trade. Not a software engineer, not a business major. Design thinking and end-user focus (with both guests and hosts in mind) were key strategies from the get-go.

Not so for the travel incumbents. Look at Booking.com or Expedia today and the sites still look like they were designed 15 years ago. Every inch of screen real estate is dedicated to eking out either slightly higher revenue (via conversions or ads), or more search-engine-optimization love.

Booking and Expedia are huge optimization engines built to solve the problem of converting traffic bought from a search engine to a profitable visit. In Booking Group’s current CEO Glenn Fogel’s words — “there is no one in the Priceline group who can tell you the lifetime value of a customer — we need to be profitable on the single transaction”. And while I’m sure much has changed in the nine years since we had that conversation, not very much of it is apparent in the products.

Just like Nokia and Motorola designed their products around the needs and desires of the wireless carriers, the travel incumbents design their product around the ecosystem partners — the hotel chains, the airlines, the white-label partners, the advertisers, Google and the other traffic sources. And while this helps them squeeze the last drop of the lemon, in the eyes of many consumers, it’s still, well, a lemon.

As appetizing as a hotel search on an OTA site.

Apple focuses its design efforts on the consumer with very little respect or heed to its ecosystem — whether it is the wireless carriers or competing tech platforms, and this is the philosophy AirBnB is following. Clean interfaces, flawless activation and onboarding, dazzling design. Apple’s devices and ecosystem are designed for optimal user experience — as long as you stay within that closed garden. Not sure? Try sending a picture from Messages to an Android user.

AirBnB seems to be executing on the exact same playbook. And if there’s still room for improvement, you can bet that their recent engagement of Apple’s design super-celebrity, Jony Ive will fill those gaps.

What’s Next? More Vertical Integration

Apple’s end-user focus and walled garden strategies have paid back in spades, propelling it from the 100th company in the S&P 100 in 2007 to #1, consistently since 2012.

Where is AirBnB destined? With the credibility of a public listing and the cheap capital it affords, expect to see further vertical integration — and adding new horizontals.

AirBnB will deepen its hold over hosts by providing them more services — from real-estate financing to physical supplies, devices and services to improve the properties and streamline the AirBnB guest experience. This is similar to Apple’s support for its developer eco-system — and its iron-fist approach to controlling the content on the App Store. Furthermore it will deepen its relationships with independent hotels, actual B&Bs and similar “alternative” accommodation providers—a natural extension of the product inventory. The desire not to stay in cubby-hole human beehives will stay with us for years or decades after COVID-19, putting traditional hotels at a disadvantage and leading to new lodging categories and probably also other uses for some of that real estate.

Expect AirBnB to enter and dominate new categories. It was already making some progress on Experiences pre-pandemic, utilizing its network of hosts to create products exclusive to its platform. Post-COVID, I will not be surprised if we will see attempts to create new categories by buying (or potentially simply financing) distressed real-estate assets — from lodging through retail to office-buildings. These may then be turned into new product revenue streams. Short / long term rentals, shared workspaces, new forms of entertainment / conference or even retail venues.

And, of course, with tight control over the booking and the product experience, AirBnB’s user-focused design culture is not done changing our world. In the travel distribution business, AirBnB has been breaking the mold since day one, and its DNA coupled with public-market resources is a recipe for continued disruption and growth. In Apple words, AirBnB is Thinking Different.

Apple’s iconic Think Different superbowl ad

Thanks to my teacher, Prof G, for inspiring this.

Nadav Gur is a serial entrepreneur who was the founder of two companies in the travel space — WorldMate (acquired by Carlson Wagonlit Travel) and Desti (acquired by HERE). He is the principal at NG Vanguard Enterprises where he works with founding teams and investors to make them 10% better.

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Nadav Gur
Nadav Gur

Written by Nadav Gur

I am busy electrifying. Founder / CEO of WorldMate (acquired by CWT), Desti (acquired by Nokia). Did time at a VC and a startup studio. Opinionated.

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