While these ecosystem challenges have always existed, innovation could help Airbnb overcome at least some of them. A source from a boutique hospitality consultancy points to Booking.com, another American brand, as an example of what Airbnb could do.
Booking.com customized itself to the needs of Indian travelers by implementing a “Pay on Arrival” service in India. Pay on arrival offers customers flexibility when there are last-minute plan changes or cancellations. This feature worked so well that even rival companies such as MakeMyTrip and Cleartrip have incorporated it. Airbnb, though, has not followed suit or, indeed, shows the same keenness to adapt to the Indian travel ecosystem.
Different factors covered
Airbnb Plus, one of the company’s global products, hasn’t been launched in India yet even though it suits the Indian travel ecosystem. Airbnb Plus, which was launched in February 2018, consists of homes that have been inspected and verified in person against a thorough checklist covering cleanliness, comfort, and design. Airbnb Plus hosts benefit from top placement, in-home services such as design consultation and expert photography, as well as premium support.
This is not to say that the company is unable to adapt to new markets. When Airbnb set its mind to crack the Chinese market, it went all out. Last year, in an effort to win over Chinese tourists traveling within the country, the company launched a domestically-focused operation called Aibiying, which translates to “Welcome each other with love.”
It launched an offline training program—Airbnb Host Academy— that educates landlords about using the platform. Oh, and it also launched Airbnb Plus in China just over a month after it announced the initiative. The results are clear for all to see—China represents 4-5% of the company’s overall revenues.
Penetrating the Indian Market
In contrast, there hasn’t been a focused strategy to really penetrate the Indian market. This can be seen in the company’s filings. Airbnb has two registered entities in India—Airbnb India Private Limited and Airbnb Payments India Private Limited.
There isn’t much clarity about the sources of revenue for both these firms, but former Airbnb executives and industry experts The Ken spoke to said that Airbnb Payments India receives money made from domestic bookings by Indians, while Airbnb India receives revenues in the form of foreign exchange from Airbnb Ireland. This, experts say, would be revenues accruing from outbound and inbound transactions.
According to data from company research platform Tofler, Airbnb India’s revenue for FY18 was Rs 35 crore ($4.97 million). However, this would not be an exact figure since it has come in the form of “professional and consultation fees”. It would only be a part of the actual revenue from outbound and inbound transactions. Airbnb Payments India, which collects the company’s domestic revenue, saw its revenue increase to Rs 19.3 crore ($2.74 million) in FY18 from Rs 7.4 crore ($1.05 million) in the previous year. Its profit, meanwhile, went up to Rs 14.6 lakh ($20,750) from Rs 7.8 lakh ($11,080) for the same period.
Credit where it’s due though—experts say that it is quite impressive that Airbnb is profitable in India at a time when some of India’s top internet travel firms are bleeding. Oyo Rooms posted a loss of Rs 331 crore ($47 million). Yatra, meanwhile, posted a loss of Rs 16 crore ($2.3 million) for the second quarter of FY19.
However, given the company’s own lofty standards—such as its $130 million revenue figure in China—surely the company can do more. Experts say that Airbnb must increase its visibility in the Indian market. At a time when rival brands are spending millions of dollars on marketing, Airbnb has hardly carried out a significant marketing exercise in India. Its last advertisement, a YouTube offering in June 2018, featured Bollywood couple Saif Ali Khan and Kareena Kapoor. Tellingly, even that was targeted at outbound travelers from India.