Airbnb is one of the world's best-known and most popular online accommodation booking platforms, with rooms in over 65,000 cities and over 6 million accommodations.

The business model that the company has used up to now has been based on intermediation between private users in which hosts could advertise their homes and other private individuals could rent them directly.

However, with its sights set on a jump to becoming a publicly listed company, it has begun to diversify revenue sources and inorganically acquire companies to complement the services it offers and reduce the firm's risk and volatility.

Next, in this post we will focus on analysing the reason for the purchases made by Airbnb and the strategic fit of these moves.

Airbnb acquisitions

Hotel Tonight

Undoubtedly Airbnb's largest acquisition to date was a deal that closed in March 2019. The terms of the acquisition are not known, however, it is believed that the deal could be worth around $$463M.

Hotel Tonight is a start up that offers last minute hotel bookingsThis will reduce the number of unused rooms in urban areas.

This acquisition reinforces Airbnb's commitment to try to consolidate itself as a comprehensive platform, which wants to expand into all sectors of the travel industry, including hotels, experiences and flights.

Gaest.com

Gaest is an online platform for reservation of space for business activitiesoperates in 8 countries and has more than 3,000 spaces available for lease.

The business model comes from renting venues for meetings, project work or even interviews in London and Stockholm among other cities.

The objective in this case is twofold: to try to offer a comprehensive service that not only covers business trips, but also to offer spaces where they can carry out their work, in order to promote cross-selling and take advantage of synergies.

Luckey Homes

Luckey Homes es una empresa centrada en la housing services and management in France for residential tenants and operates in more than 100 French cities.

The service offered by this company is comprehensive, that is to say, it takes care of both the management of the rented properties, trying to chain short-term leases that allow it to maximise income.

In addition, it is responsible for the management of the guests, paperwork, positioning of the property in order to obtain more bookings and the cleaning of the properties.

In this case, the acquisition of this company seeks to differentiate itself from other platforms such as Booking that want to compete in the private home rental market, so that thanks to Luckey Homes, users who want to rent their homes can have all the services included and forget about the rest.

It is another operation that seeks to bundle its services so as to maximise profits and maintain the competitive advantage that Airbnb currently enjoys.

Luxury Retreats

Luxury Retreats es una empresa orientada al alquiler de hospedaje de lujo a nivel global, concretamente especializado en villas de lujo.

This company was acquired in 2017 by $200M with the intention of consolidating horizons and growing in the high-end market, where superior margins reside.

With this acquisition, Airbnb is trying not to focus on the low-cost market and between private individuals, but to touch all branches of the travel industry.

Conclusion

In short, we can see how the strategy prior to the jump to the stock market appears to be growth in all branches of the travel sector. It is trying to differentiate itself from the rest of its competitors in the area of rentals between private individuals and seeking convergent growth in the rest of the complementary areas, which would help it to diversifying income over the long term and to gain critical mass, enabling it to become more efficient and to be able to improve the bottom line in the short term.