Airbnb knows how to make waves in the accommodations booking industry. Over the last few years, the San Francisco-based company has taken major market space away from more conventional hotel booking sites like Hotels.com and Expedia.com, and it looks like the company has once again invented a new technique that will add to its already considerable momentum.
The new “Instant Book” feature allows users to secure their vacation home, apartment or condo with just one click. So what does the combination of Airbnb and instant booking mean for the travel industry? Most significantly, even more travelers are making the shift to Airbnb.
Airbnb’s ‘Instant Book Trend’ could lead to travel market domination. The company has seen significant growth over the past few years, scaling from 800,000 total units in 2014 to over 4.1 million active listings today. Though Airbnb’s top line growth remains healthy at 24.3% (3.3 million listings in 2016 to 4.1 million listings today) we’re seeing a reduction in growth as they reach market saturation.
The company has shifted to a focus on instantly bookable inventory and this shift could position Airbnb at the top of the market. There are several reasons for this, and we are going to take a look at what this trend means for the overall travel industry. So, will Airbnb dominate the market in the near future?
Though the pace at which units are being added to Airbnb has slowed, the growth in instantly bookable units has increased this year by more than 76.1%, from 923,990 units in January of 2017 to over 1.6 million units active instantly bookable listings today.
Instant Book is a user-friendly process because travelers can skip the chit-chat with the property host and have a room, or a property, instantly ready for their trip. This will encourage more people to use Airbnb to quickly secure a place to stay.
From our data, we’ve been able to produce two charts that outline the impact of the instant book trend. Chart 1 shows the number of active listing Airbnb units since January 2017 and the number of instantly bookable units.
– Data collected from AllTheRooms database
Here you can see that the percentage of instantly bookable inventory has increased from 27.9% in January of 2017 to over 39.5% in August of 2017 – and it is likely to keep increasing as more homeowners and hosts see the benefits of having their properties listed as instantly bookable.
Meanwhile, Chart 2 shows the month by month growth in instant bookable inventory over the total Airbnb inventory growth.
– Data collected from AllTheRooms database
You can see that the volume of instantly bookable inventory is growing at three times the pace of the total inventory – showing that vacation rental owners are switching on to the benefits of the instant book trend.
So what does this mean?
How will the instant book trend affect the hotel, OTA, Google Adwords and overall travel market?
Firstly, the instant book trend will lead to an improved online conversion rate – instead of going back and forth with homeowners, users can instantly book a room, making the process incredibly simple.
Airbnb will begin operating more like an OTA (like Booking.com or Expedia where you can immediately book online). It also allows a pathway for hotels to list their properties on Airbnb — there are currently over 75,000 hotels listed on Airbnb (this is compared to Expedia’s 367,000 and Booking.com’s 471,000). It’s likely the number will continue to grow.
Airbnb will up-rank instant book inventory over the non-instant book inventory, meaning that homeowners will be keen to advertise their vacation rental as an instant book, in order to see better results. In turn, this will crowd out the rest of the market. If you’re listed as instantly bookable on Airbnb, you really can’t be instantly bookable on other vacation rental sites like HomeAway, Booking.com and TripAdvisor.
If Airbnb is driving the majority of traffic and revenue to the properties, loyal users of traditional vacation rental sites may turn their backs on the sites, so they can be only available for bookings through Airbnb.
Airbnb and Instant Booking
There will also be improved ROI for Google Adwords PPC spend (which will allow Airbnb to spend more efficiently on Google Adwords) opening up an entirely new revenue and ROI channel.
It’s clear that the instant book trend is a powerful one. It positions Airbnb to not only continue to dominate as a player in the alternative accommodations space but also positions the company to be a real player against the more traditional incumbents like Expedia and Booking.com. So will Airbnb become the next largest OTA? Only time will tell.