When Airbnb sells more than just beds

On 17 November, Airbnb CEO Brian Chesky announced the launch of a fairly radical new offering called Airbnb Trips, comprising three features. 

The first – Homes – is essentially what Airbnb has been doing since it launched in 2008: the provision of a marketplace that enables travellers to rent rooms or entire homes from property owners looking to earn some extra cash. 

The second feature – Places – seeks to create user-generated information guides for Airbnb-serviced cities, towns or regions. 

Easily the most interesting new feature from an economic point of view is Experiences, which envisages certain Airbnb “hosts” selling guided tours and other curated experiences on the Airbnb platform, in addition to renting their rooms and homes. In the words of a recent Airbnb press release, “[Airbnb] Experiences offer(s) unprecedented access and deep insights into communities and places that you wouldn’t otherwise come across, such as truffle hunting in Tuscany or the grime music scene in London.”

It did not take long for the ripples of excitement to reach South African shores. Cape Town, Chesky announced, was one of 12 cities chosen for the launch of Airbnb Trips. Cue a big splash of local articles, quoting from pre-released Airbnb press material. Cape Town's mayor Patricia de Lille even did her bit to publicise the initiative, by agreeing to sample, on video, a locally listed Airbnb community art tour, hosted by Airbnb “Experience Host” Delecia Forbes (who happens to be the wife of De Lille’s DA colleague Wilmot James).  

In a slickly produced video De Lille was perfectly on script, commending Airbnb Experiences for “delivering people out of the city center into the other side of Cape Town where history was really fought and made… to me, that’s the beauty of this initiative”. 

Going on the available press one would be forgiven for assuming that Airbnb is both very original and very significant, but it isn’t necessarily either of these things.

For starters, the concept is not new. Backpacker lodges all over the world have long functioned as markets in which local community members advertise and sell unique local experiences. A good South African example is Bulungula Lodge on the Wild Coast, where you can choose from a range of guided experiences, including spending time with a local herbalist, harvesting plants in a nearby forest. But of course the platform in these cases tends to be the lodge foyer and a notice board made of old wine corks, not a sophisticated technological application. 

Also, Airbnb is not the first tech company to attempt to create an online exchange for local travel experiences. In Silicon Valley patois, what Airbnb is attempting to do is called peer-to-peer (P2P) tourism. The P2P economy is defined as an alternative economic model that enables two individuals to buy or sell goods and services directly with each other, without intermediation by a third party, or without the use of a company or business. Airbnb has, for example, amassed a $30bn valuation since 2008 by enabling renters of privately owned accommodation to connect and transact with individual travellers online. 

In recent years a number of tech start-ups have tried to emulate Airbnb’s success by drawing other slices of the tourism cake into the P2P economy, particularly the tours and experiences industry. Most have fallen flat, for the simple reason that while accommodation is essential, guided experiences are not. 

There have been some success stories, however. ToursByLocals was founded in Vancouver in 2008 with the intention of providing “a reliable way to bring local people with their knowledge and expertise together with travellers who are looking for an authentic cultural experience”. Today, the eight-year-old site has 1 767 guides working in 148 countries around the world. 

But even these successful P2P tourism initiatives have not come close to “disrupting” the formal tours and experiences industry in the way that Airbnb has disrupted the hotel and lodging industry. Officially launched in South Africa in mid-2015, for example, Airbnb had listed 9 000 local hosts in its first year (the number is over 15 000 now in Cape Town alone), and logged 134 000 local users and 99 000 international customers. As the company’s share of the travel accommodation market continues to grow exponentially, some commentators have suggested that Airbnb’s sheer size will enable it to do what others haven’t managed, and successfully disrupt the rest of the travel industry. 

This has caused some jitters amongst tour operators and other tourism service providers, but local tech expert and economic futurist Arthur Goldstuck feels there is no need to panic. 

“The Airbnb Trips offering will not be transformative for SA tourism, but will add a new dimension as it allows ordinary people to become hyper-local guides to their cities or towns. There are many formal tour guides with intensive local knowledge, but most tend to have a more general expertise,” he said. 

Former Cape Town Tourism manager Sheryl Ozinsky concurs. 

“It’s a gap in the market and well done to Airbnb and their local entrepreneurs for trying to fill it. It’s not rocket science that the best way to get to know a place is through its people. Visitors love the fact that they’re making a friend in a destination that they’re visiting – they’re making a local connection, and that really resonates,” she said. 

In her “recruiters brief” to prospective Capetonian “Experience Hosts”, Airbnb marketing consultant Velma Corcoran repeatedly emphasised that, “your Experience can’t just be a regular tour – it needs to be something guests can participate in or that gives them insight they can’t get from a regular experience… experiences they wouldn’t just be able to get through Google or traditional channels”. 

Ideas submitted by would-be “Experience Hosts” were rigorously vetted, and some of those that passed muster are certainly original. These include the Ocean Advocate experience, a three-day experience that plunges travellers into the world of local ocean conservation, and also an intriguing one-day entertainment immersion experience called Madam Mystery, hosted by former Cape Town Tourism employee Nicole Biondi. 

“The vetting process was extremely rigorous,” says Biondi, who has worked in tourism for 17 years. 

“Not only does one have to meet some serious documentary requirements, but I had to give a number of test experiences before being accepted as an Experience Host,” she said, adding that the effort had been worth it. 

“I think it’s an important initiative because it takes the tourist rand where it hasn’t been before. I also believe it holds the potential to become the primary income source of those Airbnb hosts who understand the concept and can meet the requirements. Airbnb doesn’t restrict individual hosts to one trip,” she said. 

What Airbnb does do is manage the pricing of local Experiences, which currently sell for between R700 and R4 000. 

“Affordability is a big thing for Airbnb,” said Biondi. 

There is some concern, particularly from organisations representing tourism guides such as the Cape Tourist Guides Association (CTGA), that not all the currently listed Experience Hosts appear to be certified as tourism guides and registered with the department of tourism, as required by the Tourism Act. This has raised questions around quality control, and the potential erosion of standards in the Cape travel sector. Questioned about this, spokesperson Lena Sönnichsen replied, somewhat enigmatically, that “Experiences are different from your standard tours and tourist activities, because most Experience Hosts are individuals sharing their lives, passions and interests with small groups of visitors or locals. Different rules apply to different Experiences on offer and we make Hosts aware of appropriate rules and ask them to confirm they will comply with them.”

Goldstuck laid it out in clearer terms, warning that “P2P travel faces the same dilemmas as Uber, which taxis its way through regulatory loopholes and bypasses formal certification”, but added that the bad would be countered by a lot of good, as the Experience Hosts, whatever their training, would be meeting an unmet need. 

On behalf of CTGA, Alushca Ritchie said that Airbnb had proven receptive to her industry’s concerns, and had committed to ensuring regulatory compliance. 

“What’s certain at this point is that Airbnb is not going away, and so it’s in everybody’s best interests to work together to solve our concerns. It could well be that this initiative provides new opportunities for the region’s certified guides, because at present there’s an oversupply of these skills,” she said 

This article originally appeared in the 8 December edition of finweek. Buy and download the magazine here.


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