Airbnb CEO Brian Chesky Says Competitors Have The Travel Marketing Funnel All Wrong

The travel industry has believed for years that “the marketing funnel that starts with inspiration, research, discovery, booking and then booking should focus on flights because that's where travelers start planning their trip.

Enter Brian Chesky, Airbnb Chairman and CEO, who believes that online travel's competitors - his exact words "too many people" - are the primary focus of travel and that marketing should instead focus on the destination and perhaps the accommodation . Unfortunately, Airbnb does not offer flights.

"A lot of people think that selling flights is the way to the top of the travel funnel because flights are the [first] purchase you make," Chesky said in an interview at a Goldman Sachs tech conference earlier this week. "I actually think that at the top of the funnel, it's not about flying, it's about inspiring people about where to travel. That's the first decision you make. Where am I going?"

Travel journalists often advise people to book flights first due to flight price fluctuations, and in some cases, when demand is low and price is important to you, last-minute accommodation bookings can save you some money. On the other hand, when demand is high, necessary accommodation may not be available if the traveler waits too long.

But Chesky said there's a new way for travelers to work remotely, and Airbnb can inspire them on where to relax or work, which is why the company launched an expanded list of accommodation categories a few months ago, starting with islands in the arctic, oh my god god! and small houses. It says these search features have been used more than 180 million times since their launch in May.

"You see people coming to [Airbnb] and being flexible about where they go, we can inspire them to go where they want to go," Chesky said. "It allows us to be at the forefront of the channel and in the realm of inspiration."

Airbnb CEO Chesky, Booking Holdings CEO Glenn Fogel, and Expedia CEO Peter Kern will speak at the Skift Global Forum September 19-21.

Chesky said the company uses performance marketing, public relations (authors wrote half a million articles about Airbnb in 2021) and brand marketing to get its message across, while underestimating competitors who must arbitrate their marketing. Paid search engine.

"If the ride is so exciting, why is it billed as a casino?" asked Chesky. "And I feel like a travel website going back to that golden age would primarily have more to do with things like performance marketing than direct marketing, but it might start out filled with why people travel. “ So we decided to approach marketing in a completely different way.”

Expedia's marketing funnel was like a sieve

Marketing funnels, while awkward, have been the subject of much discussion this week.

Expedia Group CEO Peter Kern said in a separate interview at the Goldman Sachs conference that traditional performance marketing methods don't work.

"And a lot of our business, the industry is built around it, we have a lot of sales, a lot of customers. We jokingly said we don't have a funnel. We had a screen ." on the other hand. Now we're more focused on customer retention and trying to get the right types of visits, quality visits, and keep them for as long as possible."

Kern said Expedia is now focused on loyalty and retention.

"We want you to become a member, you get the program, you get the best tools, you get all the good stuff to use," Kern said. "And then you're more likely to become a valuable, long-term contributor, ie, a long-term customer."

However, the changes will take some time. It is necessary.

In Q2 2022, Airbnb dedicated 18% of its revenue to sales and marketing, while Expedia Group and Booking Holdings spent more than half of their revenue on sales and marketing.

Airbnb is investing in experiences after a two-year hiatus

In other news, Chesky said Airbnb will reinvest in its pilot businesses in 2023 after a two-year hiatus due to the pandemic.

“He's ready to invest heavily in this business again.

Chesky cited another e-commerce buzzword behind the funnel discussion, "flywheels," arguing that Airbnb's personal and business experiences reinforce each other.

"We have some really interesting things planned," he said, "including 2023. Something unique that you won't find anywhere else."

Booking.com: Attractions will not be big money.

Booking Holdings CFO David Golden noted in a speech at Evercore's Sept. 8 technology conference that the company is moving from an "internal acquisition strategy" to a tours and events partnership model -- when it bought Fareharbor in 2018. Agreements with TUI Musement and Viator.

He added that the size of the market and transaction costs for attractions are not as important as accommodation or flights.

So I don't think it's going to bring us huge cash flow, but it's definitely something that creates a lot of value for our customers, so we want to keep our focus on that," Golden said. . .

Brian Chesky: Airbnb and the future of timeshare