5 ms·

"That sounds richly valued to me, but not insane." The threats to airbnb are much greater (and of course different) than the threats to IHG. IHG has a lock on

by larrys 13y ago

"That sounds richly valued to me, but not insane." The threats to airbnb are much greater (and of course different) than the threats to IHG. IHG has a lock on locations because of contracts in addition of course to locations which they own. IHG has brands. And they have standards. You book with them because you expect a certain level of service when you visit one of their hotels (regardless of who owns the property). They have a functioning marketing machine which fills up hotel rooms with conventions and corporate travel. Otoh, airbnb is much more susceptible to a threat from someone else doing something similar, slightly different, or essentially the same. There is a barrier to entry in being IHG as they have infrastructure and an established brand. To me that makes them valuable.

Patrick_Devine 13y ago
I agree with most of your points, but one thing airbnb does have going for it is a network effect. They have both the supply, and the demand and that makes it difficult for other people to break into the space. If I'm looking for a place to stay, my default option will be the place with the most inventory. If I've got a place to rent out, I want to list it where most people are looking and where I can get the highest occupancy. Since airbnb is effectively an exchange, how would another exchange move in to replace it? Marketing and branding is one way, particularly since airbnb hasn't fully saturated the market. One strategy might be to include hotel rooms in listings since airbnb is unlikely to do that given their niche. Another way might be a series of negative events (eg. a serial stalker or rampant bed bugs) which could really tarnish their brand.
- frandroid 13y ago
  https://www.roomorama.com/ https://www.roomorama.com/
  - ojbyrne 13y ago
    http://homeaway.com http://homeaway.com http://vrbo.com http://vrbo.com http://vacationrentals.com http://vacationrentals.com
- toomuchtodo 13y ago
  AirBNB is a commodity to me. I can replace the value they provide just by pointing my browser to another provider. That is the double-edge sword of being a tech company. Non-capital-intensive, but fast growth. Make it work, and make your money fast, because what you're doing has almost no barrier to entry other than code and server time.
  - wepple 13y ago
    I agree - while AirBnB may have market dominance, it can be replaced: see myspace Trying to knock a major bricks n mortar hotel chain off it's perch is 1000x more difficult
    - ianstormtaylor 13y ago
      You're both insane... No one would have argued that Myspace was as easy to replace as simply "code and servers". Just like no one is going to argue that Facebook can be replaced with just code and servers. What delusion do you tell yourself to discount everyone else that talks about the importance of network effects? They're the crazy ones? Sorry, just blows my mind how people think in such black and white terms. Just because one thing is easier to displace doesn't mean it's immediately a "commodity" that can be replaced by the equivalent code and servers farms. Might be great dev-think but definitely gets you nowhere fast when trying to actually build a successful business.
      - kamaal 13y ago
        Both AirBnb and Holiday Inn are difficult to replace. But Holiday Inn is definitely far more difficult to replace than AirBnb. If you try today, you may be able to replace AirBnb, but it may take you 1000x the effort to replace Holiday Inn. For one simple fact, Holiday Inn is a physical entity providing service to people with massive brand in a industry which is capital intensive and requires endless customer focus. The easiest example is Elon musk trying to make a car company Vs building Pay Pal. Difference is so enormous, though both are difficult, they are yet no way comparable.
      - wepple 13y ago
jcampbell1 13y ago
Who is IHG? They are the place I end up at because I search at Hotels.com and they posted the cheapest rate. Sounds like a shit business that is as profitable as an airline. I don't use AirBnB, but my understanding is they take 12% no matter what. In some ways, AirBnB is more like Hotels.com than the local Holiday Inn.
- timr 13y ago
  "Who is IHG? They are the place I end up at because I search at Hotels.com and they posted the cheapest rate. Sounds like a shit business that is as profitable as an airline." IHG is InterContinental Hotels Group, one of the largest hotel operators around. And given that their net profit margins are around 25% annually (that's $500 million in profit, and it's growing YOY) [1], I wouldn't be too quick to dismiss them as "a shit business" in favor of AirBnB's 12% surcharge. They seem to be doing pretty well for themselves. Seriously, folks: take the two seconds to look things up before you snark. You'll look smarter. [1] https://www.google.com/finance?q=NYSE%3AIHG&fstype=ii&ei=SHp8UqioCqiriAKzVQ https://www.google.com/finance?q=NYSE%3AIHG&fstype=ii&ei=SHp...

by larrys 13y ago

Patrick_Devine 13y ago

I agree with most of your points, but one thing airbnb does have going for it is a network effect. They have both the supply, and the demand and that makes it difficult for other people to break into the space. If I'm looking for a place to stay, my default option will be the place with the most inventory. If I've got a place to rent out, I want to list it where most people are looking and where I can get the highest occupancy. Since airbnb is effectively an exchange, how would another exchange move in to replace it? Marketing and branding is one way, particularly since airbnb hasn't fully saturated the market. One strategy might be to include hotel rooms in listings since airbnb is unlikely to do that given their niche. Another way might be a series of negative events (eg. a serial stalker or rampant bed bugs) which could really tarnish their brand.

frandroid 13y ago
https://www.roomorama.com/ https://www.roomorama.com/
- ojbyrne 13y ago
  http://homeaway.com http://homeaway.com http://vrbo.com http://vrbo.com http://vacationrentals.com http://vacationrentals.com
toomuchtodo 13y ago
AirBNB is a commodity to me. I can replace the value they provide just by pointing my browser to another provider. That is the double-edge sword of being a tech company. Non-capital-intensive, but fast growth. Make it work, and make your money fast, because what you're doing has almost no barrier to entry other than code and server time.
- wepple 13y ago
  I agree - while AirBnB may have market dominance, it can be replaced: see myspace Trying to knock a major bricks n mortar hotel chain off it's perch is 1000x more difficult
  - ianstormtaylor 13y ago
    You're both insane... No one would have argued that Myspace was as easy to replace as simply "code and servers". Just like no one is going to argue that Facebook can be replaced with just code and servers. What delusion do you tell yourself to discount everyone else that talks about the importance of network effects? They're the crazy ones? Sorry, just blows my mind how people think in such black and white terms. Just because one thing is easier to displace doesn't mean it's immediately a "commodity" that can be replaced by the equivalent code and servers farms. Might be great dev-think but definitely gets you nowhere fast when trying to actually build a successful business.
    - kamaal 13y ago
      Both AirBnb and Holiday Inn are difficult to replace. But Holiday Inn is definitely far more difficult to replace than AirBnb. If you try today, you may be able to replace AirBnb, but it may take you 1000x the effort to replace Holiday Inn. For one simple fact, Holiday Inn is a physical entity providing service to people with massive brand in a industry which is capital intensive and requires endless customer focus. The easiest example is Elon musk trying to make a car company Vs building Pay Pal. Difference is so enormous, though both are difficult, they are yet no way comparable.
    - wepple 13y ago

jcampbell1 13y ago

Who is IHG? They are the place I end up at because I search at Hotels.com and they posted the cheapest rate. Sounds like a shit business that is as profitable as an airline. I don't use AirBnB, but my understanding is they take 12% no matter what. In some ways, AirBnB is more like Hotels.com than the local Holiday Inn.

timr 13y ago
"Who is IHG? They are the place I end up at because I search at Hotels.com and they posted the cheapest rate. Sounds like a shit business that is as profitable as an airline." IHG is InterContinental Hotels Group, one of the largest hotel operators around. And given that their net profit margins are around 25% annually (that's $500 million in profit, and it's growing YOY) [1], I wouldn't be too quick to dismiss them as "a shit business" in favor of AirBnB's 12% surcharge. They seem to be doing pretty well for themselves. Seriously, folks: take the two seconds to look things up before you snark. You'll look smarter. [1] https://www.google.com/finance?q=NYSE%3AIHG&fstype=ii&ei=SHp8UqioCqiriAKzVQ https://www.google.com/finance?q=NYSE%3AIHG&fstype=ii&ei=SHp...