Airbnb Released 100 Features in One Quarter. The Gap Is Getting Wider.

0:23Good morning. Hey, hey, hey.

0:31Michael Goldin: it, this is Jamie's favorite episode of the quarter. So we'll get into it in a minute, but Brandy, you're still up at the cabin.

0:39Brandreth Canaley: I am. And I have yet again, a different background because my neighbors are removing a whole bunch of trees that are going into their septic system. So it is extremely loud and I'm trying to be, I'm in the furthest place possible. Um, so if you hear any chainsaws, I am going to try to panic mute whenever I'm not talking, but, um, that's, you know, you gotta be adaptable. So I'm just touring around the house.

1:04Michael Goldin: Beautiful. Jamie, good weekend. Oh yeah. I had the kids wife comes back today after being gone for five days. Thank Lord. Um, But it was good. The news from the weekend was made it to the finals in our dart league. And then we lost. We got crushed in the last game, which was so sad. All right, Ted Lasso. Yeah. I know.

1:31Brandreth Canaley: I was like, got to store this information for later.

1:35Michael Goldin: Don't play Jamie in darts. Got it. Same old Samuel around here. went to play in the creek and oliver's catching little fish with his little hand net which was impressive um but it's super hot and i'm ready for summer to be ever it's funny i'm it's like

1:54Brandreth Canaley: really cooled off up here i'm like in a sweatshirt and jeans right now so and apparently it's like sweltering in boston so i'm not totally looking forward to going back to that it does not feel good does not feel good definitely feels like a swamp down here in atlanta yeah uh well before we dive in, I want to give a shout out to the team at Moving Mountains. I had another work trip to Steamboat Springs last week, just ping ponging all over the country this summer. And it was just great to see that team. I'm always so impressed. The homes are just insane and they take such good care of them. So it's definitely a really fantastic example of luxury in our space.

2:36Brandreth Canaley: And I looked up the house that we were staying in. I looked up what it would cost me to go the week we like to go out West. And it was like 22 grand. And I'm like, maybe not.

2:48Michael Goldin: But how lucky are you that you're in an industry that you can go and stay in that place and not have to pay for it?

2:55Brandreth Canaley: Yeah. I mean, pretty awesome.

2:57Michael Goldin: Even if it's not peak, that's all right.

2:59Brandreth Canaley: Yes, exactly. Well, before we jump into all of our juicy earnings call recap today. I want to give a shout out to our sponsors at StayFi. StayFi helps short-term rental operators build direct guest relationships through branded Wi-Fi portals, email marketing, and guest data tools that turn one-time bookers into repeat guests. So start growing your direct booking revenue today at stayfi.com slash goodmorninghospitality. So first up on the earnings call, drum roll, is Airbnb. be. So since this is Jamie's, I don't know, Christmas, do you want to tell us what your thoughts are on their earnings call?

3:41Michael Goldin: Give us stock advice. Are you buying, selling? Just kidding.

3:44Brandreth Canaley: As a disclaimer, this is not a show that gives financial advice. And maybe, Will, if you could bring up the chart that I shared, because it's really instructive for both what happened on Airbnb, but also, and we're going to get into booking and Expedia as well. But Airbnb accelerating night's growth to 10 % in the second quarter was big. They had guided that it was going to be down from last quarter. There was a lot of worry in terms of summer bookings, were they going to show up? And could they really accelerate the business when really everyone was guiding the second quarter to deceleration.

4:29So where booking and Expedia came in at like decelerating was sort of everyone's expectation. So the big surprise here was that Airbnb was able to re-accelerate growth in a period of deacceleration. And And I know you guys didn't listen to the earnings calls. I read it.

4:50Michael Goldin: I still get partial credit. I re-listened to it again this morning. It was so good in terms of the topics. But it felt like listening to it, and also in contrast to the Expedia and Booking ones, that a lot of different things are hitting at the same time. So on the hotel side, and it was funny, I think, to hear Brian talk about how like, and hotels is easy. And we built a whole platform, like essentially creating a category, matching supply and demand. And now it just like, it says we think they have the best hotel booking product online and people just sign up and bring on their inventory. It's amazing.

5:40We already have all this traffic. um uh so that was an interesting one i and i'll just run through some of the interesting things and maybe we can pick ones that you guys want to chat about um the single service fee coming in september i think is going to be a big deal for hosts uh we're probably not talking about enough in terms of just industry and all the property managers uh api connected hosts already moved but it's going to be millions of hosts sort of having their service fee changed and And so they talked a little bit about that. One that was, I think, really interesting for us to talk about was the three phases of travel and where they think they are.

6:23So Brian called out that they still think right now they're in the first phase, sort of attaching incremental types of travel to their home booking. So they launched services experiences. businesses uh they're gonna be rolling out um car rentals things like that so that's like the connected trip booking's been working on it for 10 years brian's like ah we're gonna roll it out in a year it's gonna be great uh it's gonna work uh so i'm really interested to see that that in phase two that they're gonna probably roll out next year uh is full service booking site so one stop shop for travel. And that's what a lot of the AI companies, Layla, we talked about last week, Odessia, I enrolled out a few months ago.

7:15So can they compete in that space? They own a lot of the travel inventory. They're putting together all the booking providers. So they could be a powerhouse there and then moving from traveling to living, maybe pie in the sky, what could be, but interested that they're still talking about that. And then the final one I'll mention is AI pricing. So Brian called it out. One of the biggest single levers that they could pull, many time larger than ReserveNow pay layer in terms of incremental growth, that they are going to rebuild, relaunch their pricing models for hosts to help them price their listings better.

8:02And bringing in real-time hotel prices have been calendars lead times. That is expressly prescient for us because we are just launching our AI pricing tool at RDNA. So let's get a test side by side who prices better. Yeah, nothing like having one of the biggest companies in the world try to launch a product competing against you. but Airbnb is a great partner with them. And what I would say is Airbnb, just let us price it for you guys. Like push host to us. We'd be happy to help increase the revenue of all your hosts with our tools.

8:40Michael Goldin: White label it, get a few bips of each transaction. Easy. Yeah.

8:45Brandreth Canaley: Well, I think that let's, so all those are some great topics for us to chew on, but I think the pricing is one that will impact hosts of all sizes. And you always have to think about who is this pricing making, who is it getting better for? And obviously they don't want hosts to be so discouraged with their revenue that they stop hosting on Airbnb, obviously. But I think this is still a very good reason why you should have your revenue management team. Or if you're a smaller host that has a couple of homes, don't just trust whatever Airbnb is going to tell you because they're like the incentives are not aligned and I think with this even more though what makes me nervous to see in the future is how is the algorithm going to favor like are properties that are using their AI pricing going to be put forward on page one even if the pricing is might not necessarily be the best but are they're like, hey, you're because you're like the reward function is going to be there for using their whole suite of products.

9:52Brandreth Canaley: And maybe that won't happen, but I could easily see that happening, you know? And so, yeah.

9:58Michael Goldin: The thing for me is that Brian talks about AI a lot and how it's accelerated their product growth and release. And for what feels like two years since they bought the AI company for$200 million. Very little discussion of what AI is actually doing for them. And it seems like it's now starting to kick in and help catch up. And we saw this happen with Verbo and Expedia. Verbo hit a little bit of a slump for a little while and then became fully integrated with Expedia and their numbers have been climbing since. So it's impressive to see at how much has been released this quarter. Brian called it out specifically that it helped them reduce time from concept to delivery by as much as 60 % on key initiatives.

10:52Michael Goldin: The other piece that jumped out to me and we've kind of ragged on it a little bit is how they're leveraging their brand and becoming an actual true OTA. So it's good to see them say, outright, Brian said, Airbnb's focused over the next year and a half on becoming a one-stop shop for travel. And that's as clear as day that now they're officially an OTA. Jamie, do you agree that it's good to hear them say the words out loud? Yeah. I told you, I was at the product release in in may right like it was clear i'm there that they were they're an ota like they launched car rentals that they and are pushing into all the other things that the other ota's launched like i mean and they didn't say it but you could feel that i'm hotel i'm and they did talk a lot about hotels that i need uh airlines are coming like that that this is a move that they're pushing, like they can't just be homes and there's just not enough growth there for them that they've got to continue to push into the entire sort of travel ecosystem.

12:08So I mean, yes, it's good to hear them say it, but, and they've been showing it with their actions for much longer that, and this is, um, a area that they're going to be pushing into. Uh, the one last number I'll, or I'll give you one more number because I spent a lot of time digging into it last week. It's just like what the AI pricing or what dynamic pricing just means for an average host. Because like most hosts don't use dynamic pricing. Like 25 % of listings still have a flat rate out there. Like the lack of pricing sophistication out there in the industry is still mind boggling to me. and like looking and controlling for all the different things, like using dynamic pricing versus not, it's like 20 % more revenue throughout the year.

13:01Like it is meaningful. And most of it isn't from higher prices. It's from more bookings, from lowering your rates during off season and pushing them, changing them based on how lead times and pacing is playing out. So I do think there's a lot of juice there for them if they can convince hosts to do it. I think there is a lot of question of like, if people haven't done it now, what can Airbnb do to push them to actually make that change to be more dynamic in how they're going to price?

13:39Brandreth Canaley: Yeah, I just wanted to kind of circle back to the connected trip portion quickly because this has been hanging over the OTAs for a while. and I actually think personally that if any of them like who would I want to book my trip through probably be Airbnb just because of like their user interface and the experience in the app but then I think this also connects back to our other big favorite topic of like points and loyalty like how are you going to you know a lot of people are booking their flights and hotels based off of their credit card points or their airline miles or a combination of two so like how I think that's a huge hurdle to anyone doing connected trip.

14:20Brandreth Canaley: Like I think you have to integrate those somehow for it to be successful. Yeah.

14:26Michael Goldin: And that's where booking through a chat GPT could actually have all your logins connected and be able to transact. But then you give up the control of the supply that the OTAs has. So that one's a tough one to navigate. Jamie, I got a question for you that I don't have, but Paul Manzi has. I'm going to read this aloud to you. Airbnb has developed trust with the traveler. There's a gap there between PMs and hosts. Does dynamic pricing cause more distrust or close the gap? Yeah. One, I think dynamic pricing is getting more accepted in modern day society. And you know that if you're going to a concert, you're going to pay more for an Uber when you leave than if you're going to an airport at 8 a.m., right?

15:21that there's this concept of supply and demand and price is sort of a moderator there. You're going to pay more in the summer. You're going to pay less in the off season. And it pushes, I think, to actually help drive the trust of like, hey, like hosts, like you are overpriced in the shoulder season. Like, and guests are willing to book at this lower price if you're willing to meet them at what they're willing to pay during that period. And I think if it's done in the right way, and I do think their move to all in pricing has actually helped a lot with the consumer of like not nippling, nippling, dying you on like, are you got the service fee, the cleaning fee, like all these things in your folio of like, here's the price.

16:08Are you willing to pay it or not? I think ultimately does help build trust with consumers.

16:16Brandreth Canaley: You know, it's not just the like small individual hosts that are kind of lagging behind in the dynamic pricing specifically on Airbnb. I know there are some other operators that view Airbnb as like, oh, I'm just going to try to use this in my shoulder seizer and my offseize, like turn it on then. And it's like, that doesn't work. Like that's not how the algorithm is going to favor you or setting prices really, really high on Airbnb because they don't want the guests or they don't trust the guests or whatever, speaking of that trust component, but then they're also like, and we don't even get a lot of revenue from them.

16:51Brandreth Canaley: Like, that's because you're not like, you're not playing within the system. And so I, it's not just, you know, there's, there might be some pooh-poohing from the professionals towards individual hosts, but there are some P larger PMs that still don't, it comes back to this trust component that don't trust Airbnb, but then it's, it's like a flywheel effect and they aren't doing what they need to do to be successful on there. And then they're not successful and then they don't like it and it just kind of continues.

17:22Well, we'll see what pricing

17:24Michael Goldin: does. I, Jamie, I want to see an AB test with your product versus theirs. Can you, can you commit to doing that on the show? A hundred percent. Yeah. Beautiful. Um, well, moving on to the next OTA Expedia is talking more and more about their B2B products, which we've talked about a lot on the show and they want it to be a one-stop shop. Historically, it's been very heavily hotel focused, but they're pushing into more verticals. Good strategy, bad strategy, Jamie, thoughts? It's clearly been the growth driver for them. Think about Expedia in 20th consecutive double digit growth quarter for their B2B business, 70 ,000 plus partners, like they're aggregating all this inventory.

18:18And then these partners are going to come connect to it and then go out and

18:22Michael Goldin: sell it for them where they're just sort of this middle layer. And it did come up multiple times on the Expedia call of like how the B2B business is getting more competitive and bookings, obviously pushing in there and wanting to compete with them for that space. They have, and the connected trip they have all the other pieces of the the travel pie too so i do think it's going to be competitive it's not going to be for expedience just to run with it but they are clearly like winning on the b2b side like and their list of partners that they talk about are incredible and then that they're willing and able to go out and acquire whether it's and car car trawler to make sure they have the best car rental inventory or like a layla where it's like hey this is a new B2B partner that we can own, test with, and see, okay, how is AI going to change?

19:19I'm third party. I'm booking platforms and get all those learnings internally, I think is huge for them. I think the question though is, if you look at their consumer brands versus the B2B brands, like can they continue to grow their consumer brands and Expedia, Hotels.com, Vrbo. I did get excited. They talked a lot about Vrbo on the call and they're doing their tests on and sort of paid search for Vrbo. I think that's going to be really interesting. Can they get their partners willing to be able to pay for higher growth? And that's advertising revenue for them. And that's been a big, also piece of growth on their consumer brands.

20:05Like you got all these eyeballs. Can we get our partners to pay and to show up better to merchandise their inventory better? I think that could also be a huge growth leader for them.

20:17Michael Goldin: Yeah.

20:17Brandreth Canaley: Yeah. I think about like the acquisition of customers going like just plugging into Chase and now you have all of Chase's network, that seemed like they were playing 4D chess. Obviously, there's a lot of work that goes into being an integration partner like that. But whoever started that, those partnerships, really saw the future. And hopefully there's some resources going into Layla. Because as we discussed, I think, last episode or the episode before, not so great.

20:51Michael Goldin: No, don't put resources into Layla. Just use some warnings from it and build your own would be my take. I mean, Airbnb largely signaled they're doing an organic language search as well through their platform. So I suspect all of them will go that route. It is a better customer experience instead of going and checking boxes. Because even sometimes those boxes that I want don't exist. but Jamie brings up a question that I suspect will become a topic more and more for Expedia's earning calls. Are they an infrastructure layer or are they a consumer product? Do they have a storefront or are they a more modern bed bank?

21:36Michael Goldin: I like the push to being more infrastructure layer, but I don't know if that's going to come to a cost of their storefront and their public facing brands is that a question no no just a statement i don't know i don't know the answer if you guys have uh an opinion i'd love you to weigh in i don't really i i don't really think it's going

22:07Brandreth Canaley: to come at a cost to the store the like front-facing brands but i i think that that would be i don't know cannibalizing some of that product doesn't make a lot of sense to me but i don't know jamie uh i think that consumer is fickle uh and having different growth leaders if you can figure out what's going to hit with consumer awesome you're going to get higher take rate if you are powering engine behind someone else that figures it out great you're going to get a share of what they book. So they've got multiple different options for driving growth. And it's like having a diversified portfolio.

22:49Like right now, Airbnb is entirely on consumer. It is up to them to figure out, can we drive the supply? And can we have a site that consumer wants to book on? And they don't have that option. And clearly they could probably build that B2B option for their home inventory that might be tough, but something they could do. But Expedia and Booking both have those other options of if some of their partners start taking off and they're the engine behind it, like that's a, and that's what they've seen. Like Expedia has all these great partners that have been driving this growth for them. And that's led to that growth.

23:30Michael Goldin: So we saw, I don't know, two decades ago, booking by Priceline or Priceline by booking, right? And now everything's kind of sunsetted. They still are around, but booking is the driver of that business. In five years or 10 years, do you think the infrastructure layer is going to be driving Expedia or do you think it's going to be consumers or some healthy mix of the two?

23:59Brandreth Canaley: i i think it will be can continue to be less and less consumer facing i think the infrastructure layer i mean especially where the llms are going i don't think the consumer layer is going to just disappear entirely but i think it makes sense where you see a lot of the money going towards that that will continue to be a driver it's one of the biggest levers they have to pull right so

24:21Michael Goldin: I totally agree, but I suspect Jamie might disagree a little bit. I think it's going to be a healthy mix. I think as a management team, you've got to drive the options there. And I think ultimately you want your consumer brand to be that top of mind spot where people go to book. And that's what's going to drive more partners wanting to be part of your platform, all those things. that, like, I think consumer brand can be a huge piece of the flywheel.

24:57Brandreth Canaley: Yeah. Awesome. Well, before we get to our third and final OTA news of the day, I want to give a shout out to our sponsors at Built. They're helping restaurants and hotel F &B teams better understand their guests and create more personalized experiences that drive repeat visits. So if you care about loyalty and guest experience, it's worth checking out, head to joinbuilt.com slash gmh. So in bookings reporting, they flagged Google AI for the first time as potentially becoming an issue, which we had also talked about previously on the show. I think the fact that AI overviews are squeezing SEO is like, that's not a bombshell revelation.

25:36Brandreth Canaley: That is something that we've kind of been talking about here on the show. Yeah.

25:40Michael Goldin: If you weren't preparing for SEO to be less and less valuable, this is your wake-up call. There's a noticeable difference at Booking.com with their SEO. And Booking survives or has thrived on two core areas, SEO and paid ads. And now SEO is hurting a little bit. They've done all the things that you need to do to be seen. They've got integrations with the LLMs and they're working with Google's Gentic checkout, which is another topic that we aren't going to get into today. But if you're not paying attention to this shift in search, it's time to wake up. Yeah. I was interested, Michael, when you're listening to the call, were you surprised when they called out that only - Just to be clear, I did not listen to the call.

26:38that only 1 % of nights were coming from the agentic sort of booking platforms. Like that to me like - From the checkout, right?

26:50Michael Goldin: From the checkout, yeah. Search is much higher and checkout is downstream of search. Did he acknowledge that search was up a lot? I mean, I think the whole point though is that we talk excessively on this program and I think everyone talks about it on how AI is changing search, changing the way people think and book travel. And then you've got the largest booking site in the world driving more incremental bookings across hotels, short-term rentals, everything than any other site in the world. And it's like, eh, it's 1%. It's not really moving. Like a little bit higher conversion, but it's not meaningfully changing their business yet.

27:38Does that surprise you?

27:42Brandreth Canaley: I, excuse me, I think that until they can figure out the payment part of it, that does, I mean, I'm not like, wow, so surprised. I don't, I maybe wouldn't think it'd be higher, but I think because the ease of completing the whole transaction is still not there yet. And then once that happens, I think you'll see a huge shift.

28:03Michael Goldin: They're still pushing them to the website. They're giving them click out links, right? So of course, it's not transacting in the LLMs yet. It is only a matter of time. And yes, I'm fully, fully convinced of that. And again, it's downstream of search, right? Google has owned search for so long. We are, none of us knows exactly how it's going to play out. but it's going to be a little bit different than what we've seen in the past two decades. Yep. The other question I had for you, Brandy, is from the booking call, like, and it was clear in that chart where bookings growth for alternative accommodations has been slowing.

28:49They're at 4%. And they highlighted, and they're not seeing the supply growth that they really wanted yet in the US that and it feels like they're losing some of their momentum that they had. Like, how are you? How are you seeing it? Like, are you hearing more and more people pushing into booking? Or are you guys seeing the volume? Like, and are you seeing any traffic, things like that?

29:23Brandreth Canaley: I think that it's still very segmented urban versus traditional vacation rental because I mean at Romy in our last year booking.com was the biggest channel like without a question but we were solidly urban and then booking isn't even necessarily part of the conversation in some of these markets like there it's not there are other even more niche OTAs that people are willing let's get on those first because we're going to be getting a small percentage but like it will be coming through there where I don't know if the booking.com travelers are searching for those kinds of homes in those areas. So, and I don't know, like if it is like a chicken or the egg component, like the inventory isn't there.

30:06Brandreth Canaley: So people aren't looking at it. Um, and people aren't looking at it. So people are like, well, it's not worth our time. Um, and it's an expensive OTA as well. So I think for like condo product, it's that's, there's definitely a good push there, but they have not figured out the homes, at least like from what we've seen. Michael, if you were running booking, how would you get their home's business? Is it awareness? Is it advertising? And they're an advertising machine. Like they just need to go all out on like driving awareness. Like what is missing there?

30:41Michael Goldin: I, well, they own the rest of the world. Although Airbnb is chipping away in certain markets, right? I think you continue to double down in what you do well, and you keep trying to grow organically new markets. They've been trying to crack into and dominate the U.S. market for a long time. But to Brandy's point, I would focus all of my spend in the U.S. on markets where my European or global travelers like to go to. And maybe you can grow organically out from there. but it's a challenging conundrum. And for years, their payment structure was just such a hindrance that I think that really hurt their brand with professional managers.

31:33Michael Goldin: And I know a lot of that's been solved, but they have a lot of brand updates. And I think that's part of why we're seeing Glenn Fogle come to Verma this year. First time he's ever come. Glenn has been very outspoken about wanting to grow alternative accommodations in the United States. But this will be the first time he goes to Burma. So now maybe the money is where the mouth is. And let's see. I'm excited for him to go. I don't know about you.

32:06Brandreth Canaley: Yeah, I'm excited for that. I mean, keynote speakers at conferences in general, not just at Burma, sometimes they're not as exciting as you would want them to be. Um, and so, but this is one I'm really looking forward to. Um, well, great discussion. Um, it's always interesting to see what these big players are doing and kind of the downstream effects this is going to have on our listeners as operators in the business. Um, what is on your agendas this week? Anything exciting or same old, same old?

32:39Michael Goldin: Well, I'll start with you. School is back in and it's been a long time. I might have said same old, same old all summer, but I'm excited for it to actually get back to a little bit of that. So school's in full swing. It's still hot as hell here, but I'm ready for the fall. Very much ready.

33:00Brandreth Canaley: How about you, Jamie? I'm going to try to force some fall by going up to the mountains this weekend. Use our short-term rental. Take some friends up there. So, yeah, we're going to head up, cut out early, early on a Friday afternoon, pick up the kids from school and head north. Summer Fridays. Yeah. It's a and we're head down product mode right now at work. So it's lots of releases coming out. It's exciting. Yeah. Well, this is my last full week. My only full week that I've had up here when initially the plan was to have a month of it. but getting my last little bits of mountain time in and then having some front, my biggest group I've ever had up here coming up next weekend.

33:48Brandreth Canaley: So feeding a lot of people.

33:51Michael Goldin: There's a theme here. This house is correlated with feeding lots of people.

33:56Brandreth Canaley: It is. Yeah. It's kind of the vibe, but thank you to everyone who joined us in the live viewing special to, especially to Paul. You're always such a fun commenter. So thank you for keeping the show lively. and thank you to all of our listeners who are listening on the download later on. We appreciate you too and we will see you all next Monday.

34:40Thank you.