San Francisco - Airbnb is on a mission to be more than a
home-sharing platform. It wants to be a flight booker, an itinerary
planner and a vacation-home manager. To become a global travel behemoth, Airbnb
is considering a combination of acquisitions and partnership deals to quickly
grow its portfolio, according to three people with knowledge of Airbnb's
plans.
The company's targets are in luxury tourism, airfare
aggregation, group payments and guest-management, said the people, who asked
not to be identified because Airbnb hasn't authorized them to speak
publicly. Airbnb is also focused on doing deals in China and India, the people
said.
Airbnb declined to comment on specifics of its business
plans. "We are always looking to provide our community with access to new
and different options, but we have no announcements to make," Nick Papas,
a spokesman for Airbnb, wrote in an e-mail. One of the people said acquisitions
are not a material part of the company's strategy and that Airbnb does not
believe it needs to rely on acquisitions to grow.
On Thursday, Bloomberg reported that Airbnb's board
met to approve the purchase of Luxury Retreats, a vacation-home management
company in Montreal. The sale is expected to garner no more than $300 million
in cash and stock. Airbnb is also in the process of purchasing the
group-payments company Tilt. Airbnb declined to comment on the deals because
they are not yet public.
New product categories would generate alternative revenue
sources for Airbnb. Over the last few years, after pressure from regulators,
Airbnb agreed to place limits on how long hosts can rent their homes to travellers
in certain cities. Officials in London, New York, Amsterdam, San Francisco and
Barcelona have claimed Airbnb’s short-term rentals violate local zoning laws
and displace long-term residents. The policymakers continue to seek laws that
could place considerable restrictions on Airbnb’s money-making ability.
Airbnb became profitable in the second half of 2016, when
revenue at the company increased more than 80 percent that year, Bloomberg
reported. Airbnb expects to remain profitable in 2017. Since launching in
2008, the home- and apartment-rental company has raised $3.1 billion in
capital, and still has nearly all its funding, three investors said. The
investors asked not to be identified because they have signed non-disclosure
agreements.
Identity shift
The company's identity shift is already underway. Last
year, Airbnb began selling unique travel experiences, like hat making tutorials
in London and coffee-roasting expeditions in Cape Town. In November, the
company announced it had a flight-booking tool and an itinerary-planning
feature in the works. The trip planner, it said, would give users personalized
travel suggestions based on their location and past behaviours. In order to
deliver on the ambitious project, two of the people said, Airbnb is looking
to partner with or acquire a travel search engine similar to competitor
Priceline Group’s Kayak.com.
"Airbnb has dominated in the urban-rental market but
still has lots of room to grow in vacation rental markets, where Expedia's
HomeAway is stronger and the average transaction value is significantly
higher," said Douglas Quinby, an analyst at the travel industry research
firm Phocuswright. Quinby, who expects Airbnb will pursue its initial public
offering over the next 12 to 24 months, said Airbnb will need to use that time
to drive growth in new product categories, such as vacation rentals and
business travel, as well as new geographies, to justify its private market
valuation of $31 billion.
Read also: Airbnb to lose £325m in London bookings
Airbnb CFO Laurence Tosi has been a driving force behind
the company's newfound profitability, the investors said. Tosi, the former
CFO of Blackstone Group LP, joined the startup in 2015 and quickly built a
finance and development team composed of former Blackstone colleagues and
directors from Goldman Sachs.
The investors said they don't expect Airbnb to spend the
nearly $3 billion it has sitting in cash. Airbnb is in the process
of negotiating a deal to buy the group payments company Tilt for just
$12 million in a combination of cash and stock, said an investor in one of the
companies. Tilt was last valued by investors at $400 million. Airbnb and
Tilt declined to comment on the acquisition.
In October, Airbnb considered purchasing the
flight-booking website Skyscanner, said two people familiar with the matter.
Airbnb declined to bid on the Scottish startup, which ultimately sold to Ctrip
International. for $1.7 billion. And in August, Airbnb held meetings to acquire
the Chinese home-sharing site Xiaozhu.com. The talks got serious by November,
but in December, Airbnb determined the company lacked the high-end appeal it
sought for its Chinese expansion. Airbnb and Xiaozhu declined to comment.
—With assistance from Kiel Porter and Lulu Chen