Airbnb CEO speaks on disrupting hotel industry

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In an extensive interview with Fortune, Airbnb founder and CEO Brian Chesky recently discussed the company’s competition with traditional hotels, and its future expansion and IPO plans.

• Chesky said Airbnb’s competition with traditional hotels is overstated, as it serves a different segment of travelers. The average Airbnb stay is 2.5x longer than the average hotel stay, and roughly 20% of all Airbnb stays are longer than 30 days. Chesky added that when Airbnb surveys its customers, it asks which alternatives they considered for their trip, and staying at a hotel is not one of the most common responses. Instead, customers say they would have stayed with family, or not taken their trip at all.
• However, Airbnb will come into much more direct competition with hotels if it lures away business travelers: 70% of all hotel stays in the US are booked by business travelers, and Airbnb is actively working to grow its business travel segment through its Airbnb for Business program.
• Chesky didn’t provide any specific information on when the company might IPO, but hinted that it is in little rush to do so. He said Airbnb’s investors aren’t pushing it to IPO, and stressed that the company needs to grow its business more before it is ready to go public.
• Without a larger, more robust revenue base, the company could struggle to weather the ups and downs of the public markets, Chesky suggested. Airbnb has grown its portfolio of services beyond its core homestay business in recent months to allow customers to book flights, travel activities, and restaurant reservations. Those efforts should help the company grow and diversify its revenue, fortifying it to deal with the perils of going public.

Meanwhile, Airbnb still faces hurdles to its core business related to local housing regulations in many cities around the world. In addition to diversifying its revenue sources, Chesky said the company is making a greater effort to work with landlords and regulators to collect local hotel taxes, limit the number of properties hosts can rent through Airbnb, and inform landlords about their renters who are hosting on Airbnb. Until Airbnb can mitigate these issues and grow its alternative revenue streams, it will likely continue to hold off on an IPO.

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