Is AirBnB's 25 Billion Dollar Valuation Justified? - Strategy With RS

Does it seem possible?

It seems so given the way Airbnb has chalked up strategies to tap into new opportunities, which are both large, & profitable - leisure & business segment.

Take the business segment. In USA it is estimated to be $ 302 billion growing at 5,2% p.a. To lure Corporates it has crafted a program titled – Business Travel with a tag line – Help your Team always feel at home. But corporate road warriors are reluctant to move to ‘Airbnb’ because it would mean giving up the lucrative Loyalty Point & the pampering showered upon them by Hospitality chain. Not to be deterred Airbnb is following ‘foot-in-the-door’ technique. It is encouraging corporates to opt for it when it does Off site programs which requires employees to stay under one roof; or to accommodate extended stay employees; or when young people, hired by them, require temporary residence till they are able to locate a permanent residence themselves.

All these initiatives by Airbnb have not gone unnoticed by American Hotel & Lodging Associations, which represent 52000 properties. They are up in arms against Airbnb!

Business Lesson for us: If Airbnb can disrupt century old hospitality industry, then hidden from our sight, our industry’s ‘Airbnb’, could be taking root & in due course could emerge, gradually & then suddenly, to disrupt or destroy our business. Therefore we should proactively prepare our business to ensure that we are not caught napping when the eventuality strikes us.

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In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here