As the economy has started to reopen and vaccinated global citizens look to scratch their travel itch, the tally of just how much damage the global pandemic caused the travel sector is just now becoming more clear.
Across the segment globally, it has been reported that 62 million jobs were lost; in the U.S., that number hit 5.6 million. Contribution to GDP globally was roughly cut in half — from 10.4 percent in 2019 to 5.5 percent in 2020. No corner of the sector was left out. Airbnb CEO Brian Chesky described the early days of the pandemic as “the most harrowing crisis of our lifetime” in an email to employees.
And yet, while other travel firms continued to struggle for the rest of 2020 and into the early days of 2021, the Airbnb story played out a bit differently. After an initial dip, bookings began surging on the platform through the end of 2020. Airbnb went public on Dec. 9 with a blockbuster IPO that saw its share price double on the first day of trading.
So what was behind the counter-cyclical activity that kept Airbnb connecting consumers? There are several nuanced answers to that question, Airbnb’s Global Head of Payments Sam Shrauger told Karen Webster when he sat down for the ConnectedEconomy™ series discussion last week. Overriding all of the answers is one simple, highly anecdotal reason: People really wanted to get out of their houses, but not necessarily into a hotel.
“Many people were just tired of working remotely in their own homes, and if they were going to do it for a long period of time, they wanted to do it somewhere other than their home,” Shrauger remarked.
It was a trend that Shrauger said that he and the team at Airbnb had observed before the pandemic but was clearly intensified as a result of it. More so than before, people were thinking of living, working and having fun as “one” — a phenomenon that Shrauger said doesn’t appear to be abating.
Consumers, he said, have rewired the connective tissue of their lives to better enable them to function — and survive — during a great disruption. They are looking for a different, fundamentally simpler, much more connected ecosystem to exist and transact in.
The Power Of Underlying Payments Strength
Powering this shift is payments, something that may not be the “flashy” part of the Airbnb experience, but they are, no doubt, a very critical one. Enabling “pay in” for consumers who are booking properties in more than 200 countries and territories and who use one of more than 40 currencies to do it, expect that payments will work smoothly.
Enabling the “pay out” to hosts is much more complex. Ninety percent of Airbnb hosts are people; more than half are everyday people who want to rent out a spare room or a part of their home to add to their household cash flow. Providing a safe, reliable and accurate payout to those more than 4 million hosts operating in those 200+ countries and territories who accept those more than 40 currencies is one of the reasons that Chesky gave Shrauger’s global payments operation a shout out on its Q4 2020 earnings call.
“We have created the system that provides both sides of that transaction, the ability to experience payments the way that [each side] wants to,” Shrauger said.
It’s become increasingly complex as Airbnb continues to add more functionality to the platform, making the guest/host experience richer, rewarding, and personalized. For instance, when guests are booking experiences along with their stays, they want their “tab” to reflect all of those experiences, not a series of one-offs. Shrauger quoted Airbnb data that suggests that 80 percent of Airbnb hosts offer those types of recommendations for their guests — 50 percent of whom follow through with them.
Longer-term bookings, such as those Airbnb has seen increasing over the course of the pandemic, can run into the tens of thousands of dollars. Features such as Payless Upfront allow guests to break up the payments for their stays so that part of it is paid in advance at the time of the booking with the balance paid out later, more similar to the hotel booking experience that guests are used to.
Rewriting The Future Of Travel
No one has a crystal ball to know with real certainty what comes next for the travel industry, domestically or internationally, even as the industry remains ever hopeful as demand begins to slowly pick up.
That the industry is and will be different, Shrauger noted, is certain; what exactly that will look like is still very much under construction. Regardless, Airbnb remains true to its mission — helping guests connect to neighborhoods where they can “like a local” outside the city centers and experience the restaurants and shops and attractions far removed from the usual “tourist traps.” Shrauger said that more than $117 billion in direct host earnings had been created on the Airbnb platform since its inception — money that otherwise wouldn’t have found its way into the bank accounts of the everyday folks who have turned demand for their home into cash.
In many ways, he noted, payments is the foundation of Airbnb’s business because “payments is trust.”
For a global marketplace such as Airbnb to exist and function efficiently, it needs to inspire trust — in the platform, in the host and the payments experience. Trust, Shrauger said, for how the money moves, trust that the policies are what they say they are, that the properties are what they say they are and that if problems arise, there’s trust that Airbnb is there to help intermediate between the guests and the host.
That trust, enabled by the Airbnb payments experience, Shrauger said, is an important cornerstone for the connections their platform makes possible between Airbnb, the guest and host — and the many value-added experiences that exist today and will likely evolve further in the months and years to come.
“The foundation for everything we do is trust — it’s trust that we’re going to meet their needs today and be ready to meet the ones they or we haven’t even thought of yet that will arise tomorrow.”