Airbnb was the talk of the travel industry this week as it went public after delaying its first attempt at an IPO in early 2020 amidst the travel restrictions that Covid had imposed on the world. But despite the reduced demand for global travel, there was no sign of any reduction in demand for Airbnb's stock, as trading opened at $146 per share, valuing the company at ~US$85 billion—roughly 110% higher than where the investment banks had priced it.
This price values Airbnb at nearly the same price as the Marriot, Hilton, Accor and Hyatt hotel chains combined. And while Airbnb might be a very different type of accommodation business, it is not alone in its category. Brands like Tripping.com, VRBO, OneFineStay and many others offer travelers the option to stay at people’s homes, exactly as Airbnb does, but without nearly the same cachet. So, what makes Airbnb different? Why the 110% price premium?
The simple explanation is brand.
In its short life, Airbnb has developed brand recognition and strength that all would envy. Its fame and reputation extends beyond its customer base, to the point that the word Airbnb has become a verb used simply to mean renting a house (in the same way that Google is a verb meaning to search for something). In that sense, Airbnb doesn’t just exist within their industry, it defines the industry. The brand is a moat in and of itself. How Airbnb got there, and what it does to keep that position provides a window into what today’s and tomorrow’s consumers expect from brands.
The product is the brand, and the brand is the product
Belong Anywhere. It’s a purpose, it’s a mission. It’s also Airbnb's product.
As digital becomes the dominant channel for discovery and engagement, brands must recognize that their product is not just what they sell, but the service that goes around it. Consumers see every interaction as connected and part of a single relationship and promise.
Consider the Airbnb journey: communication, website or app, stays and experiences, ratings and reviews. Existing principally in digital, Belong Anywhere brings these touchpoints together as an active expression of the brand, bringing it to life through a service design language that is simultaneously accessible, inviting and educational.
The product is as accessible as the brand promise. From a helpful experience-design on the website/app to working with hosts to ensure guests are well received and are even offered guidance in how best to experience their destination in ways that go beyond the guide books, there is no touchpoint with Airbnb that doesn’t serve to reinforce a sense of belonging.
Lesson 1: Digital has connected brand communication (perception development) and product experience (experience fulfilment) to the point that they are one and the same in the mind of consumers. Modern brands must therefore carefully architect their service models to ensure that every touchpoint helps to reinforce their values and story, because today’s brands are only as strong as their weakest link.
The brand story is owned and told by real people
In 2019, Airbnb launched a new campaign called That’s why we Airbnb. It didn’t get the notoriety of some of the brand's previous marketing work, but it did something that many brands talk about, but few truly succeed in doing. It put the brand into the hands of customers, telling real stories. It wasn’t glamourous, it wasn’t polished, it was quirky. It showed travel in the way people really discover a city, and while not perfect, I would challenge anyone to say it doesn’t look authentic and fun.
While many brands talk about authenticity, they fail to recognize that this means being unafraid of showing your imperfections. Airbnb doesn’t show its most glamourous homes in this campaign but instead highlights places that the majority of its audience can afford. The brand shows the flaws, the quirks. And it lets real people celebrate them.
Lesson 2: Your brand is no longer what you say it is. In this age of social media and always-on communication, what people say about you will reach a broader audience and will have more credibility than anything your brand says about itself.
The brand is both aspirational and attainable
Travel is perhaps the most aspirational of all activities. Who doesn’t want to take a trip, see something new, experience the world a different way? Even before Covid, travel would rank as one of the most desirable consumer activities for a broad range of different demographics. And yet outside of luxury brands, there are no hotel chains with global brand recognition.
Airbnb is different. It offers the most luxurious houses that cater only to the truly wealthy, or a humble air mattress on the floor of a guest bedroom in someone else’s home. And it offers both under the same brand name, using the same search function, with the same service guarantees.
Lesson 3: if your brand is built around inclusivity (and this is increasingly important in the world) then whatever your price point, you must treat all people with the same respect.
The brand partners to make impossible fantasies come true
Do you love airplanes? Have you ever wanted to sleep in the cockpit of a plane? Airbnb and KLM did just that with the Airplane Apartment.
Are you a Van Gogh fan? Would you like to sleep in one of his paintings? Airbnb and the Art Institute of Chicago invited people to sleep in his bedroom with Van Gogh BNB.
Or do you have some other crazy passion and desire that you want to explore and learn about? Airbnb partners with people everywhere to help you learn new crafts and cultural arts.
While these experiences may sound a fantastic, some may also feel out of reach. You could ask yourself how many people really got to sleep on a KLM plane or in the Van Gogh painting. But they stretch and excite the imagination of travelers and guests in ways that help to build the mental availability that Byron Sharp describes as being essential for brands to grow.
But for Airbnb, this approach isn’t limited to a campaign. It isn’t just the few examples that I shared above. With a simple search you can find dozens and perhaps hundreds of slightly crazy homes and experiences that are always available to anyone. Airbnb even launched a fund so it can partner directly with hosts to build out the silliest, craziest places imaginable. Here’s a few if you want to look for yourself.
Lesson 4: Modern brands must recognize that they don’t exist in isolation, but that consumers get more from them when used in combination with other products. Partnerships therefore should be embraced as a way to highlight the full potential of your products.
The values of the brand can be seen in the actions of its leadership
In 2016, a discrimination scandal started brewing around Airbnb as certain hosts were said to be refusing guests based on ethnicity and religion. Airbnb didn’t shy away. It didn’t state that these people were independent contractors. It addressed the problem honestly and tried to solve it. It worked directly with those hosts where complaints had been filed, and it publicly launched the We Accept campaign.
It was a sign that the brand was committed to not only to business growth and profit, but to community and culture. Because how can you say you stand for 'belonging anywhere' but look the other way at discrimination?
That was just one step to show that Airbnb lives and breathes its brand values. This year, as room bookings dropped to near zero, Airbnb was forced to halt many of the programs it was working on and to make 25% of its staff (1,900 people) redundant. But unlike other brands, it wasn’t done quietly. Brian Chesky wrote what I believe to be the most empathetic letters ever to explain the decision. He laid people off earlier than he had to not to cut more costs, but so he could give better severance. But probably most importantly, he published the names of everyone that was made redundant in a searchable Airbnb Talent Directory designed to help other brands find great employees that he never really wanted to lose.
Airbnb showed that its values aren’t for sale. They aren’t something that can be compromised. 'Belong anywhere' is made real by the commitment Airbnb has to community, people and culture.
Lesson 5: Brand values are not something that exist in a Powerpoint deck to guide tone of voice and communication. They are the actions the business takes every day, they are increasingly how your audience judges you, and brand actions will have an increasing impact on loyalty and pricing power.
None of the lessons described in this article are new. I am not the first person to express their importance, and in fact I know many brands that talk about these types of issues regularly. But few brands act on them with the consistency and authenticity of Airbnb.
My hope is that the Airbnb IPO, and its 114% (US$45 billion) surge in market value shows just how profound the impact of a truly customer-centric brand can be on business performance and value, and that it provides a roadmap more brands will follow.
Justin Peyton is APAC chief transformation and strategy officer at Wunderman Thompson.