Since Airbnb was launched in 2008 as a way for two broke roommates to make extra cash by renting out air mattresses in their apartment, the home-rental service has swelled to become a gig economy titan, one that boasts four million rentals in nearly 200 countries, with an estimated valuation of at least $31 billion.
It also has become a regulatory nightmare.
As Airbnb has grown, linking millions of travelers to short-term housing around the world, the sharing-economy service has accumulated scores of critics. By allowing virtually anyone the ability to offer a home — or a castle, yurt, or tree house — for rent, Airbnb, critics have claimed, has violated zoning laws, driven up neighborhood rents, exacerbated security concerns, and contributed to the urban housing shortage.
Airbnb’s response thus far has been to brazenly dig in — while also to pivot to rely less on that home-sharing component. Despite some major victories — winning legal status in a handful of cities, including Philadelphia, for example — Airbnb also has rapidly expanded into alternative services it believes could become a core piece of its future.
In November 2016, Airbnb launched Airbnb Experiences, a service that allows travelers to book adventures with hosts in designated cities. After starting small — with just 12 cities and 500 experiences — Airbnb announced this week that the Philadelphia region now offers the Experiences service, too.
With the Philadelphia launch, Airbnb has more than 5,000 experiences in more than 58 markets.
The idea is to link travelers and “hosts” to provide a hands-on, behind-the-scenes experience that an ordinary tourist would not typically receive, according to Airbnb. In Seville, Spain, for example, for $52 a person, travelers can cook paella with a professional chef. In Tokyo, for $73, a traveler can make a kimono and drink Japanese tea with a local. And in New York for $38 a person, travelers can shop in vintage Brooklyn stores with a personal stylist.
Airbnb has launched 40 experiences in the Philadelphia area. Among those offered: A $9-a-person “Rocky Run” that guides runners around Philadelphia’s sites, ending at the Philadelphia Museum of Art. The site also offers a $50-a-person home-cooked Italian meal, featuring first a stroll through Bella Vista’s Italian Market to shop for ingredients. And, for $30, one host offers a tour through Philadelphia’s best cheesesteak joints to “enjoy a little history with our whiz.” (Only one cheesesteak is included in the price.) The Philadelphia market also offers six “social-impact experiences,” said a spokeswoman, in which funds go straight to the nonprofit host. One example: $25 to run with Back on My Feet Philadelphia, a nonprofit that aims to give the homeless population independence and confidence through a regular running program.
Potential Experience ideas must be submitted and approved by Airbnb — a model different from its home-sharing, which allows nearly anyone to list a space for rent.
The progression from an exclusively short-term rental website to a multiservice platform has the potential to transform Airbnb into a lasting travel company, industry observers say. With the company’s home-sharing facing just as much criticism as ever — and with cities worldwide continuing to pass strict regulations against it — diversifying the company’s revenue, observers say, could help Airbnb outlast any restrictions or regulators aiming to rein in home-sharing.
Plus, Airbnb’s home-sharing service also could be hitting a saturation point, some say. A survey of 4,000 adults, Morgan Stanley argued in a November note, indicated that adoption of Airbnb’s rental service has decelerated, while awareness of the site is at an all-time high.
So far, Airbnb has had few, if any, clashes with regulators over Experiences. In an October interview with Fortune Magazine, Airbnb CEO Brian Chesky said the company consulted with regulators and community organizers when creating the service to decrease the likelihood of concerns.
Chesky has said in previous interviews that he expects Airbnb’s home-sharing platform to account for less than half of total revenue in the future. Beyond its Experiences expansion, the Silicon Valley company also last year acquired Luxury Retreats, a rental service for high-end properties. In addition, Airbnb now allows users to book restaurant reservations through the website after partnering with reservation service Resy. And Airbnb now offers a “Places” service, which provides travelers with recommendations from local residents.
In a November 2016 announcement, Airbnb — without offering many details — said it expects to offer “Flights” and “Services” in the future.
According to a Tuesday report from Reuters, Airbnb said it soon expects one million Experiences bookings a year. (Airbnb has had more than 260 million home-sharing bookings in the last decade.) By charging Experiences hosts a 20 percent fee for each booking — compared with 3 percent for home-sharing — the Experiences sector of the company is on track to be profitable by the end of 2019, Reuters reported.