In New York City today, Marc Andreessen was busy telling those gathered at Dealbook’s Opportunities For Tomorrow conference that we’re in the opposite of a bubble — in fact, we’re currently in a tech depression. Meanwhile, in Cambridge, Mass., the MIT Center For Digital Business’ “Big Data” conference is underway, with tech veterans like Tim O’Reilly speaking on the impact of the “Sharing Economy,” among other things.
Of the many tidbits of gold to emerge from the conference, one in particular stuck out. Many are aware that the 4-year-old collaborative consumption pioneer, Airbnb, is growing like gangbusters. In a panel on the “New Tech Landscape,” Cloudera CEO Mike Olson, Head of SAP’s Mobile Division Sanjay Poonen, and IBM’s Chief Economist Martin Fleming touched on the giant effect that the peer-to-peer rental marketplace has had on the hotel industry (among other things).
Quoting Airbnb CEO Brian Chesky, Mike Olson told the crowd that, by the end of this year (December 31st), the company will be filling more room nights than Hilton Hotels. Hilton operates an international chain of luxury hotels and resorts, which according to its corporate overview, currently operates more than 3,200 hotels and 525,000 rooms in 77 countries, including more than 135,000 team members across the globe. (Although Hilton’s Wikipedia page indicates the number of hotels worldwide is closer to 540, for what it’s worth.)
It’s an eye-opening stat. While some might not have imagined it even as recently as a few years ago, Airbnb has moved beyond its early security snafus to become not only a platform that is changing the game for luxury hotel giants like Hilton, but Airbnb is also quickly becoming a tourism marketplace. Its economic (and perhaps cultural) influence extends beyond the hotel room and mini bar.
Back in November, Ryan shared a study conducted by real estate and economic development consulting firm HR&A Advisors, which showed that Airbnb guests “helped contribute $56 million in total activity to the San Francisco economy from June 2011 to May 2012, the vast majority of which was unrelated to the money they spent on lodging.”
According to the study, guests renting apartments or lodgings through Airbnb spent $12.7 million on their accommodations, but spent an additional $43.1 million on local activities and events. Just as is true for hotel travelers, Airbnb guests spend the majority of their disposable income in nearby businesses, pumping a significant amount of cash into these local economies.
This data on Airbnb’s economic impact followed on the heels of the company’s announcement earlier this year that it had hit 10 million guest nights booked in total and that 200K property listings were (at the time) active on the site. Writ large, one starts to understand why the company’s recent massive funding round came with a $2.5 billion valuation. It seems that quite a few of the hottest tech companies in the last five years have been the beneficiaries of lofty valuations, some of them not-so-justifiable, which were then later corrected after IPO. Perhaps Airbnb is one of a very few companies that actually deserves that multi-billion-dollar valuation.