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brian chesky airbnb: India to be one of our biggest growth markets this decade: Airbnb CEO Brian Chesky

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Overall booked nights in India on Airbnb grew by 70% when comparing full-year 2022 with pre-pandemic 2019, while domestic nights in India grew by almost 110% in the country. Globally as well, 2022 was a record year for Airbnb. The company’s net income stood at $1.9 billion, making it the company’s most profitable year ever.

In an exclusive interview with ET, CEO and cofounder Brian Chesky spoke about India being one of the biggest growth markets of this decade, the launch of Airbnb Rooms and sweeping new upgrades based on community feedback, global inflationary pressures and their impact on travel and bouncing back from the Covid-19 pandemic. Edited excerpts:

How has the Airbnb India business fared in the last year?

In India, our business is doing exceptionally well. Overall nights booked in India have grown by 70% when comparing full-year 2022 with pre-pandemic 2019, while domestic nights in India grew by almost 110%. This growth is largely due to the domestic market.

Although our penetration in India is much lower than in more mature markets like the United States, I believe we are just scratching the surface of what is possible in India. There is no reason to think that Airbnb couldn’t be as popular in India as it is in the United States. People in India want authentic experiences, to connect with others around the world, to travel, to stay in homes, and to save money. These desires are universal and transcend cultural boundaries.

Is India one of the fastest growing countries in the Airbnb ecosystem?

From a business perspective, India is an exciting new market for us. We now have 1,000 employees there, and I believe it will be one of the biggest growth markets, if not the biggest, in this decade.India is now the most populous country in the world and will soon have one of the biggest middle classes in the world. As smartphone penetration and the GDP continue to rise, I believe we have all the foundations to build a really important business there.

The real opportunity, I think, will be when the Indian middle class emerges, particularly younger travellers who want to experience the world. Airbnb is a great way for them to do that for the first time.What I find especially exciting about India is its robust culture of hospitality. It is a unique aspect of Indian culture that I believe will only help to further our business growth in the country.

2022 was a record year for Airbnb. The company recorded revenue of $8.4 billion, with a 40% year-over-year growth. Net income stood at $1.9 billion, making it the company’s most profitable year ever. What consumer trends drove such growth?

Our business model is versatile and can cater to nearly every type of space, geography, and price point. This flexibility has enabled us to adapt to changing travel trends and remain relevant in the market. Secondly, despite economic headwinds, people still have a strong desire to travel and connect with the world. We have seen an increasing number of people travelling across borders and domestically, to urban and rural areas, as well as national and state parks.

Another important trend we have noticed is that people are seeking authenticity and human connection in a world that is becoming more artificial. At Airbnb, we want to use technology to bring people together and offer opportunities for genuine human connection.

We have also noticed a significant portion of our business is for longer stays, with a fifth of our bookings being for more than a month. This shows that people are not just looking for short-term vacations but are also seeking longer stays and a more immersive experience.

Is high inflation and geopolitical uncertainty changing consumer behaviour in travel?

A little bit. Despite the challenges posed by the Covid-19 pandemic and rising inflation, the travel industry has proven to be more resilient than many expected. People still have a strong desire to travel, and this has been reflected in Airbnb’s strong business performance.

We have noticed that affordability has become an even more critical consideration for travellers. With inflation affecting the cost of travel, people are looking for more affordable options. This was one of the driving factors behind our focus on Airbnb Rooms, which offers a more affordable option for travellers.

Airbnb has $ 9.6 billion cash on the balance sheet, so which are the growth areas for investments?

One opportunity that is obvious is international expansion. Especially in Asia, especially in India. China, India, South Korea and Japan within Asia are big opportunities. I think some parts of Africa will be interesting. We have been investing quite a lot in Latin America. Even other parts of Europe – Northern and Eastern Europe. There are really big opportunities there.

Secondly, there are going to be some new verticals and new opportunities that could be really interesting as well. The great thing about our business is it’s a highly capital efficient business. Networks aren’t very expensive to scale. So, I don’t foresee us having to dig too deep into the cash reservoir anytime soon.

But we’re always going to be open minded. Maybe there will be a capital intensive opportunity where we might want to use the cash flow, or a big acquisition. We haven’t seen it yet. But we might.

Lately, people have been complaining about the high costs of a stay at an Airbnb, including the cleaning fee etc. The rates are higher than good hotels in some cases. Is Airbnb’s original unique selling proposition (USP) of affordability still effective, especially in high volume places?

I believe that affordability is a key issue that we have been hearing a lot about this year as rates on Airbnb around the world have gone up, while inflation has also gone up, causing people’s money not to go as far as it used to. To address this concern, we launched Airbnb Rooms and upfront pricing to integrate cleaning fees, lowered fees, and allowed payment by banks to make monthly stays cheaper.

We also show hosts competitive listings in their area and encourage them to offer competitive prices, and we have made monthly and weekly discount tools more accessible. All of these efforts are examples of how we prioritise affordability, which is currently a top consideration for travelers.

You stayed in an Airbnb for a few months. Now you are hosting people. How do these stints help you manage the company better?

As a CEO, I believe that it’s crucial to remember that people are not just numbers. When you start a company, you have no data, so your first-hand experience and understanding of your product is critical. You are the customer. And one day you become so big that all you look at is data.

When people become numbers, decision-making becomes abstract. You don’t know what the numbers represent. You get emotionally detached. You don’t know why but you just know what. That’s why I always strive to stay deeply grounded and connected to the product and its users.

When I look at a metric I know what it means because in my bones I have first hand experience of the product. I like to always balance quantitative and qualitative. In other words, it’s like being in a laboratory.

An interesting factoid in the 2022 results statement was that the company’s headcount was down 5% from 2019, while revenue was up 75%. How did you manage that?

When Covid hit, we had to do a pretty big reduction. As our business grew faster than we could hire people, we started noticing that with smaller teams focused on fewer problems, we became a lot more productive and moved a lot faster. So, we decided to hire back the people that we lost, but we’re pacing ourselves and not hiring them all at once.

We went in the opposite direction compared to a lot of tech companies, who went on a hiring spree. I think that the hiring spree did not generate incremental revenue. You need enough people to get something done, but more than that is too many.

Our idea was to be an incredibly small, lean, and elite team with as much talent as possible, focusing on just a few areas. When you’re focused and don’t do a lot of things, you don’t need a lot of people, and big ideas can go very far.

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