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I bought at $146 and feel ok at that price for a long play. I see regulation as the major risk. But getting millions of people to trust you with their homes i

I bought at $146 and feel ok at that price for a long play. I see regulation as the major risk. But getting millions of people to trust you with their homes is one hell of a moat. Everything about the post-pandemic world favors AirBNB. - Remote/Mobile workers. That alone is gonna make them an incredible amount of money. This isn't ever going to change. - Pandemic housing boom. People are buying at unprecedented rates. This is money leaving cities. This is a generation of global-minded, young internet-savvy buyers. AirBNB wins here. - Economic recession / unemployment. Everyone who _does_ own a home and finds themselves in financial trouble is going to consider renting a room. It's an obvious move and I think the job market will have at-risk homeowners considering this move en masse.

HexagonalKitten 6y ago
Assuming their costs are about 50%, and that they need to make ~$8B profit / year, they'd need to collect $16B to make $8B, so that's about $100B in rentals at 15% take. Plausible, because the USA alone is ~$90B, but why does it seem stable? If AirBNB starts to charge enough to make $8B profit per year why wouldn't you rent your suite with VRBO? The margins can get paper thin because nobody seems to want the profitable extras - just CC processing and a listings site. I know people who rent vacation property and they do not lack for potential customers. They're on all the services, but also Craigslist, etc. They value the services for easier money handling, slightly less customer service required, and a few smaller things. But certainly not enough to warrant more than a 5% cut, but ~15% seems more common. This seems to usually be obfuscated by charging the guest, not the host, but it's still money that's not on the table for them. They often break the rules to deal with this by suggesting customers contact them directly and pay by money transfer, so the industry is already price conscious and willing to undercut partners. Not a friendly place to expand into. And customers tend to price conscious and shop around, so it seems likely to stay this way. Uber, to contrast, benefits from their network effect because most customers are time, not price, conscious and thus only check one service. For AirBNB you have months to shop around and contact the host out of band.

HexagonalKitten 6y ago

Assuming their costs are about 50%, and that they need to make ~$8B profit / year, they'd need to collect $16B to make $8B, so that's about $100B in rentals at 15% take. Plausible, because the USA alone is ~$90B, but why does it seem stable? If AirBNB starts to charge enough to make $8B profit per year why wouldn't you rent your suite with VRBO? The margins can get paper thin because nobody seems to want the profitable extras - just CC processing and a listings site. I know people who rent vacation property and they do not lack for potential customers. They're on all the services, but also Craigslist, etc. They value the services for easier money handling, slightly less customer service required, and a few smaller things. But certainly not enough to warrant more than a 5% cut, but ~15% seems more common. This seems to usually be obfuscated by charging the guest, not the host, but it's still money that's not on the table for them. They often break the rules to deal with this by suggesting customers contact them directly and pay by money transfer, so the industry is already price conscious and willing to undercut partners. Not a friendly place to expand into. And customers tend to price conscious and shop around, so it seems likely to stay this way. Uber, to contrast, benefits from their network effect because most customers are time, not price, conscious and thus only check one service. For AirBNB you have months to shop around and contact the host out of band.