AIRBNB : A monopoly?

 I was just thinking of new investment ideas. Airbnb popped into my head and I saw a video(Neal Bawa) talking about property and Airbnb came up. It mentioned that there are almost a dozen other companies that make money by providing data analytics and automated price changes for properties listed on Airbnb. It got me thinking, here is a company that has gotten so popular. It doesn't even need to create the infrastructure to improve the app. A whole ecosystem just grows around it that supports and improves Airbnb's functionality. 

So who are the competitors of Airbnb? I tried googling it and what came up were more or less listing websites that catered to existing hotels. So are they actually competing against, Agoda, Traveloka, Oyo, Booking.com? These are websites that list hotels or budget hotels. Who are the other competitors? Hilton, Marriotte, Starwood. But these are hotel operators. They provide lodging, but really they are fundamentally different from Airbnb. Hotels tend to need hotel buildings, they have a dedicated facility area. Airbnb can be in any apartment building. It doesn't need a hotel building. There is no large staffing needed to be dedicated to the operation and functioning of the hotel. The host or "co-host", a new option in Airbnb, will handle it. At the size that it is. Airbnb has no near term competition to its market. It's a monopoly. There are over 7 million listings in 220 countries. Over 150million users(2024). It's growing like a weed. There are no realistic competition for it that is going for its market, which is really the owners of the property that it lists on its website. They are unlike the hotel operators who actually require staff to handle the operation. Airbnb's hosts are not their employees, in fact. The hosts pay a fee to use their app to list their properties (3%?). So there's no inherent staffing risks for Airbnb. IE: No staff overhead. It really is a case of supply pulling in demand. The more properties Airbnb hosts on its websites, the more people will visit it 

Airbnb can act like a cushion in tourist locations. In periods of high demand, people rent out their property and get a decent income. They are also competition to existing supply of buildings that are catering to tourists. However, unlike a budget hotel or a hotel. Their properties have multiple rental options. They can rent short term on airbnb, the owners can choose to stay in it. They are also able to rent it out as normal apartments or properties. The hosts for Airbnb, are inherently more durable than typical hotel operators. Hence this supply is able to operate in a larger number of locations, this type of supply can only go through a company like Airbnb (There are no other competitors). Airbnb does not take the market risk for the location. Say Bali becomes unpopular and tourists stop visiting it. The local hotel market collapses and there aren't enough tourists. Hilton or Marriotte may lose customers and suffer losses. Airbnb on the other hand is completely unaffected. They own none of the properties in Bali, They simply lose a portion of the income that they would otherwise have been able to make in Bali. The business of Airbnb goes along relatively smoothly as they have another 6.9million listings around the world that is providing income for them. If Bali as a tourist destination comes back. The Airbnb hosts will likely come back as well. However, if a hotel goes bust in Bali, how much would it require for the hotel to come back? Say it takes a 100million investment or a 500million investment for a hotel. There would be higher barriers to entry. Similarly, when the market goes bust. These hotel operators would lose a significant amount of capital as their properties lay empty while they have staffing costs(The hotels only caters to tourists, they are not renting it out long term as condominiums).

I was listening to a talk by their CEO and co founder Brian Sesky, and he was talking about the Airbnb experience. What would be a 5 star service, what would be a six 6 service. All the way up to 11 stars. Which is a ridiculous service where the customers are treated like the Beatles. People cheering. He talked about storyboarding the experience a customer should feel when visiting an Airbnb. If you like surfing, when you reach the apartment there will be a surfboard waiting for you or a list of the tourist spots near your property you can visit. It's more than a short term stay renting a room. I don't know how they are pulling it off at Airbnb, but I have been using it for my travels, and realistically, I like Airbnb because it is generally more affordable than a hotel. The apartments can be located in very central locations, a similar located hotel may cost twice as much. The experience has almost always been positive. It's a more affordable option, not everyone wants the hotel buffet or uses the concierge service.

This is really me vomiting ideas out before I shorten my investment idea. The bolded parts summarized below is essentially.

Airbnb is a monopoly in its business sector. There are no realistic competition for it that is going for its market, which is really the owners of the property that it lists on its website. It really is a case of supply pulling in demand. The more properties Airbnb hosts on its websites, the more people will visit it. The hosts for Airbnb, are inherently more durable than typical hotel operators. Hence this supply is able to operate in a larger number of locations, this type of supply can only go through a company like Airbnb (There are no other competitors).

The CEO and co founder Brian Sesky. Emphasizes the experiences of an Airbnb. I believe this is important, but based on my experience, its the ability to get an affordable stay in a central location. 

The revenue growth of Airbnb from 2014 to 2024 is as the chart below.

Revenue by year

There is operating leverage to this. Technology allows the user to simply deal with the platform, bypassing staffing needs. Technology drives down costs and the savings ultimately goes to the host and the consumer.

Here is a more detailed financial report from seeking alpha

An interesting item to note is that Airbnb was loss making in 2021, they made 1.8billion in 2022 and 4.8billion in 2023. These are in USD.

The CEO has mentioned that they intend to do something like Amazon, where the core used to be books before spreading out. I'm quite certain they can do this successfully. As a fifth of the bookings are 30 days and above. So the natural progression is to go after the long term rental markets(Speedhome on steroids?).