SUMMARY
India is an exciting new business market and could be one of the biggest growth markets in this decade: Airbnb CEO
The hospitality major is also looking to deploy its cash surplus to fuel international expansion, with a specific focus on India
As per Airbnb, private room hosts in India cumulatively earned INR 100 Cr last year
Hospitality major Airbnb’s cofounder and CEO Brian Chesky is betting big on the Indian market and expects the country to be the startup’s biggest growth market in the current decade.
“From a business perspective, India is an exciting new market for us. We now have 1,000 employees there, and I believe it will be one of the biggest growth markets, if not the biggest, in this decade,” Chesky told The Economic Times.
Noting that India is well poised to have the world’s biggest middle class in future, Chesky said that rising internet penetration and GDP would enable the company to build a ‘really important business’ in the country.
Fellow cofounder and chief strategy officer Nathan Blecharczyk also echoed a similar sentiment and said Airbnb is bullish on India and would continue to invest in the country. He told news agency PTI that India emerged as one of its fastest growing markets for the hospitality player in 2022.
As per Chesky, Airbnb clocked 70% growth in overall night bookings in India in 2022 compared with the pre-pandemic year of 2019.
The hospitality major is also looking to deploy its cash surplus to fuel its international expansion, with focus on India.
Despite Airbnb’s penetration in India being much lower than in mature markets such as the US, Chesky believes that the company is just ‘scratching the surface’ of what is possible in the country. He said there is no reason to think that Airbnb cannot be as popular in India as it is in the US.
“The real opportunity, I think, will be when the Indian middle class emerges, particularly younger travellers who want to experience the world…What I find especially exciting about India is its robust culture of hospitality. It is a unique aspect of Indian culture that I believe will only help to further our business growth in the country,” the CEO said.
As it scales up its operations in the country, Airbnb reportedly also plans to work with the central and state governments to shore up tourism in the country.
India: A Hotspot
In 2018, Chris Lehane, the head of public policy and communications at Airbnb, said India was one of the top three strategic markets for the company. In the past five years, a lot seems to have changed, from pandemic to geopolitics.
Amidst these changes, Airbnb seems to have kept its focus intact on India and now believes that India could become its biggest growth market this decade. But what is powering India’s rise as a potential big travel market?
While international tourists drive a significant chunk of travel business in the country, it is the rise of domestic tourists that has caught the attention of many. Leveraging this growth, players such as IPO-bound OYO and FabHotels have seen their fortunes soar. Now, Airbnb is also looking to cash in on this.
The rise in internet penetration and access to smartphones in the country is expected to result in a large number of Indians making hotel reservations online and planning their itinerary from the comfort of their homes. With disposable incomes on the rise, domestic tourists, largely comprising the burgeoning middle-class, are projected to drive the growth in the travel industry.
While the overall market is dominated by nearly 3 Lakh travel agents, the online platforms are looking to cut these middlemen to directly reach the customers.
While players such as OYO, Expedia, and Booking.com do anything between hotel aggregation to operating such properties, Airbnb allows hosts to list their properties on its platform, thereby slashing its capital expenditure and allowing it to focus solely on the experience.
What also works in favour of Airbnb is its niche properties situated across the length and breadth of the country. It also offers users the flexibility to list their properties on the platform anytime during the year.
With Indians opting more and more for intercity travels, Airbnb is eyeing capitalising this opportunity. To put things in perspective, intercity travel reportedly grew by 180%-200% year-on-year (YoY) by the middle of 2022 and crossed the pre-pandemic levels by the year end, as per industry experts.
In total, India saw more than 67.7 Cr domestic tourist visits in 2021 while the country accounted for 1.64% of the total international tourist arrivals in the same period. With more and more people looking to travel within the country or abroad, domestic travel is expected to make big strides and generate a big chunk of revenue for traveltech startups and hospitality players.
The Post-Pandemic Boom
Chesky’s comments come at a time when the hospitality industry is seeing a major surge after the pandemic. The US-based company reported a 40% YoY growth in revenue to $8.4 Bn while net income stood at $1 Bn in 2022, making it the most profitable year for it.
Launched in India in 2016, Airbnb is a peer-to-peer lodging platform that hosts a slew of accommodation options ranging from private rooms to villas in 100+ Indian cities.
The number of nights stays in private rooms listed on Airbnb India rose 80% YoY in 2022 while family travel on the India platform rose 90% compared to pre-pandemic levels. Local hosts cumulatively made more than INR 100 Cr from bookings with families in 2022.
As per the company’s findings, women hosts accounted for 30% of its overall host community in India, reportedly earning INR 100 Cr in 2022. Alongside, private room hosts on Airbnb India earned an aggregate INR 100 Cr last year.
In India, homegrown hospitality chain OYO also seems to have leveraged the pent-up travel demand as it turned cash flow positive in Q4 FY23 on the back of rise in bookings across all key geographies, especially in Europe.
The homegrown online accommodation market was pegged at $75 Bn in FY20. However, this is projected to soar to $125 Bn by FY27.
