September 2024

Airbnb recently launched their “Airbnb for Real Estate” (A4RE) team to focus on multi-family buildings. Essentially, tenants now have the option to trivially host guests at their place with minimal effort, as Airbnb has systems in place to coordinate with the building management, providing an easy revenue stream for tenants.

Thought I’d do a little dive.

Airbnb = housing efficiency

Fundamentally, Airbnb can be viewed through the lens of housing efficiency. The nature of long-term leases and home ownership leads to a lot of empty, unused space going to waste. This lack in supply directly contributes to less choice when traveling and higher costs of housing, more relevant than ever in the US today.

Airbnb’s Solution

Airbnb's flagship service combats this by reducing the friction for facilitating short-term stays, increasing the supply of both short and long-term rentals and generally making both travel and hosting easier.

Airbnb for Real Estate reduces this hosting friction even further by working with multi-family buildings, making hosting more of a feature than a business venture requiring setup by each tenant.

This has multiple effects:

1. it increases the supply of available housing overall, boosting housing efficiency

2. it increases affordability, as frequently-traveling tenants can factor earnings in and opt for otherwise out-of-reach homes

3. it increases demand for the building, as visibility on Airbnb serves as marketing while the ability to rent a home out increases desirability both from an affordability and flexibility standpoint

Long-term vision & Roadmap

To achieve Airbnb's mission of "creating a world where anyone can belong anywhere", Airbnb for Real Estate needs to become:

1. viewed as safe -- for primary and family residences, hosts need assurance their valuables and homes will be safe from guest damage

2. low friction -- needs to be as simple as stopping the mail before a long trip

How do you get there? By starting with a more solvable segment and expanding.

Multi-family homes serve as an ideal beachhead, as they usually:

1. have some sort of centralized management
2. have multiple homogenous units, which operators can amortize learnings and operations across
3. are in highly-demanded destinations

Point #3 is particularly key, as Airbnb's two-sided marketplace needs to be carefully balanced during this roll-out. If hosts don't see demand, they're less likely to host -- and if guests don't see a good selection, they're less likely to book, leading to a churn loop.

Starting with multi-family homes in highly-desirable areas provides an excellent wedge to eventually win the rest of the casual hosting market.

From there expansion into either:

• single-family homes in high-demand areas
• multi-family buildings in lower-demand areas

seems like a reasonable next step, until finally expanding to single-family homes in lower-demand areas, vacation homes, temporary lodgings like vans/RVs, or anything else that houses humans reliably.

Competitors

Competitors for Airbnb as a whole can be grouped into two main categories, supply-side and demand-side.

Competition on the supply-side includes:

• Vrbo
• Vacasa
• Booking.com

The demand-side additionally includes housing outside of rental marketplaces:

• Hotels
• Hostels
• Couchsurfing.com
• Expedia

For Airbnb for Real-Estate, specifically focusing on services that enable residents to short-term host (so supply-side) yields only one existing non-Airbnb option I could find:

• Pillow (acquired by Expedia)

The rest are either defunct or powered by Airbnb:

• Niido (powered by Airbnb)
• Stay Alfred (now defunct)
• Zeus Living (now defunct)

Lacking any insider knowledge, the multiple failed companies after years of operations signals to me a potentially difficult market operationally.

But there were unusual catalysts (such as covid), and seeing as Airbnb was an investor in Zeus Living I'm sure they have more relevant insights.

My larger takeaway is that competition is less of a worry than providing a high-quality experience while keeping operationally profitable as they scale.

User feedback

I called a friend of mine who owns a multi-family building and he mentioned they don't currently use Airbnb for real-estate, but had hesitations regarding his belief that short-stay renters do more damage and generally cause more problems.

So I went online to do some research, there were positive takes from tenants:

and negative ones (as expected):

But the most insightful came from the building managers, who seem aware of the growing desire for flexibility and value prop:

Overall this suggests that building managers are probably the best foothold, given the clear value of attracting residents, but that introducing such a program to already-existing tenants will likely be polarizing.

(side note: I tried to do something tangentially similar to this before by creating a value prop for bars to attract more patrons by publishing their music, but was much less successful than Airbnb 😅)

GTM Strategy

If I were designing a GTM strategy for A4RE, given the above I’d focus on three areas:

1. partnering with multi-family building owners

2. engaging tenants to host

3. marketing this concept as a desirable perk

1) Partnering with building owners

First step is finding property managers and owners in high-demand urban areas that:

• want to attract more residents
• are open to short-term rental in exchange for additional revenue
• are willing to build their resident culture around this

My guess is this will be buildings looking to attract younger, digital workforces looking to cater to the next generation of remote workers.

The pitch to building owners would be something like:

• increase the building's visibility via Airbnb listings
• provide both tenants and yourself with an additional revenue stream
• future-proof by appealing to the younger generation's more flexible nature while still building a community

2) Engaging tenants

Next step would be to encourage tenant participation via:

• educational campaigns: periodic presentations, clear onboarding materials, all highlighting the ease of management and potential revenue streams while addressing concerns about property damage and complexity
• incentives: encourage adoption with reduced fees or starting bonuses for first-time hosts
• excellent support: having dedicated customer support for tenants entering the program is key to building trust

3) Marketing

Finally Airbnb would want to drive more general demand for hosting as a desired feature for tenants.

The angle they can take is highlighting the flexible lifestyle, additional revenue streams, and the ability to afford nicer homes -- most likely appealing to millennials/gen-z and remote workers.

Some channels:

• SEO - can target keywords related to housing un-affordability touting this as a solution, remote work, and digital nomads
• Influencers - travel bloggers, digital nomads, and remote working lifestyle influencers would be my suggested initial angle here
• Paid digital ads/billboards -- while always careful with marketing spend that can't be directly measured, the consumer nature of this offer makes it a good candidate for Facebook ads, re-targeting, billboards, etc.

Overall would be much less of an intent-based offer and more an awareness campaign, so measuring traffic from articles that lead to building partners would be the best bet, but much less revenue-direct than measuring immediate bookings from the main Airbnb page for example.

Success Metrics

1. building partnerships - the number of multi-family buildings onboarded
2. tenant engagement - how many tenants are hosting
3. tenant engagement percentage - percentage of multi-family buildings that host (at all or regularly)
4. booking demand - monitor guest bookings in these properties
5. revenue - revenue growth for both airbnb and building partners

Risks

Regulatory headwinds - accommodating the many state and municipal codes would be non-trivial, and rules could change at any moment.

To mitigate, they’d need to stay ahead of regulations, initially focus on cities with favorable policies, and proactively work with city governments to establish hosting frameworks. Ideally Airbnb can help lead the creation of these policies.

Tenant resistance - if introduced to a building with existing tenants, opposition to noise, property damage, and general disruption will be a valid complaint. Education on the preventative measures like insurance, screening policies, or even discounts on rents might mitigate this.

Marketplace imbalance - if supply outpaces demand too quickly, it could lead to host dissatisfaction and a churn loop. Carefully balancing rollout to ensure healthy marketplace dynamics would be a must.

Operational complexity - Coordinating, cleaning, and managing support for the many different buildings is a large task operationally. Streamlining/automating as much as possible, using third-party cleaning and maintenance services, and standardizing processes across properties would help ensure consistent service levels.

Trends and Moonshots

Gen-Z workforce

Gen-Z entering the workforce is likely the most relevant trend, as they've grown up with housing un-affordability, remote work, and digital nomad-ing, and on the whole value experiences and travel more than owning things.

This is a trend that aids the tenant-hosting feature on the whole, and would likely be a key part of the pitch to building owners.

Humanoid robots

The eventual expansion from multi-family buildings to single-family homes will be tricky, if only because of the decentralized nature of such housing.

Each house is often different and unstandardized, and will need:

1. a way to detect and prevent misuse by guests

2. a way to rectify damage and clean

The current solution is human labor, which works if a location has many nearby locations with which to centralize/amortize the cost (like multi-family buildings), but what about out-of-the-way rural locations or vacation homes?

While I’m not one to blindly parrot "AI will solve all our problems", once we get any reasonably-capable humanoid robot (say from Tesla, The Bot Company, NEO, or Figure) -- this genuinely solves an enormous blocker.

Robotic house-cleaner is the obvious first use, more long-shot is an in-accommodation butler to prevent any misuse (maybe the incentive of a robotic butler provided in exchange for a watch dog preventing rule breaking -- a classic privacy-convenience tradeoff, with appropriate privacy settings of course).

Self-driving cars

Another trend that's been noted are Waymos being used as makeshift office-space:

As self-driving cars become more prevalent and the ability expands to larger and larger vehicles, my prediction is people will begin using them as makeshift lodging.

Why pay for housing when you can just drive around for 8 hours until you wake up?

Since the ability to sleep while the car drives also increases the distance one can live from their work, we can expect workers to also be okay commuting further as self-driving capabilities improve.

Whether Airbnb plans to eventually expand into office space, or offers RVs and vehicles as an accommodation, the self-driving factor may eventually come into play for both from a consumer trend, pricing, or risk standpoint.