Airbnb this week took the latest step towards becoming a more holistic and comprehensive local services app. It’s now curating and offering local services and experiences that are relevant to bookings. This brings it closer to the holy grail of the on-demand economy: becoming a super app.
Before getting into that broader super-app trajectory, what did Airbnb launch? As part of a broader update, the app now lets users book local services that are meant to elevate their stays. This includes things like massages, chef-prepared meals, or endemic local fare (think: surf lessons in Hawaii).
Initially, this will be organized into 10 “service” categories to keep it simple, including chefs, catering, prepared meals, photography, massages, spa treatment, personal training, hair, nails, and makeup. Though some of these involve a visit by the pro, they’re mostly things that you leave your Airbnb to do.
These will be joined by what Airbnb is calling “experiences.” These live within 19 categories, including cultural and museum tours; outdoor, watersport, and wildlife experiences; food tours and cooking classes; art workshops and shopping experiences; and workout, wellness, and beauty experiences.
Along with local services and experiences, the latest app update includes a group messaging function, and it teased some upcoming social features (more supper-app fodder as we’ll explore in a bit). Meanwhile, the new “services” are available in 260 cities, and “experiences” are available in 650 cities.
Intended Outcome
Stepping back, one thing Airbnb did here was simply observe the activities that its guests were booking on their own, and giving them a means to do it all in one place. That carries a sort of one-stop-shop convenience factor – and trust factor – for users, while allowing Airbnb to bring in some affiliate revenue.
For that last part, Airbnb will take a 15% cut from services and a 20% cut from experiences. To keep things convenient for users – pursuant to the one-stop-shop appeal noted above – they’ll only see one price, and will book through the Airbnb transaction system. That’s where its brand trust comes into play.
Longer term, all the above is hoped to grow out of the core bookings business. In other words, if Airbnb can establish itself as a place for curated local experiences, it could gain engagement beyond guests that book its home listings, such as hotel guests in a given destination. It’s all about expanding TAM.
That thought was inspired from Airbnb’s usage data. According to CEO Brian Chesky during its Q1 earnings call, Airbnb online channels were accessed by 1.5 billion devices in the past year, but a low percentage booked a home. If it can convert some of those with lower-stakes local services, it’s a win.
Meanwhile, these local services and experiences could have second-order effects. For example, by giving potential guests more things to do in a given destination, it may entice their interest in the trip overall. If done right, the intended outcome is to boost conversion rates in the core business.
Flow State
Back to all the super-app stuff, this is a coveted flow state of the on-demand economy, as noted. It carries several advantages, such as stickiness for users and diversified revenue. The latter can be seen as you triple-dip into marketplaces revenues, payment processing revenues, and affiliate revenues.
But this isn’t easy to pull off. In fact, the super-app state has somehow been elusive for U.S. apps to achieve.– where you’re a go-to place for everything from food delivery to movie tickets to peer-to-peer payments. For cultural and other reasons, this has been seen mostly in Asian markets (e.g., WeChat).
The model hasn’t gained equivalent traction in Western markets for several reasons. One theory we have is that the freedom to cherry-pick best-of-breed functionality from several apps – Uber, WhatsApp, Spotify, Snapchat, etc. – is aligned with American cultural ideology. The home screen is the super app.
Regardless, it’s become a north star for several companies, such as Uber and its everlasting journey towards super-app nirvana (a separate article). And Elon Musk is obsessed with the idea, which propels many of the moves and machinations of X, with payments being a lynchpin (Musk’s jam).
Back to Airbnb, it has many of the foundational layers for a super app, including payments, user trust, and an established user base. From there, it’s about gradually bolting on adjacent and synergistic pieces. And that’s what this week’s play was all about. Expect more such moves in the coming quarters.
