In Asia, a newly-prosperous middle class is traveling like never before. Can Airbnb catch on?
If you haven’t used Airbnb yet, you probably know someone who has—or at least you will soon, if the San Francisco-based start-up and "sharing economy" paragon, which matches up hosts and travelers online, has its way. Now Airbnb is focusing its attention on Asia, where a newly-prosperous middle class is traveling like never before.
Quartz talked with co-founder and chief technology officer Nathan Blecharczyk on the sidelines of the World Economic Forum in the Chinese city of Dalian about how Airbnb plans to create a virtuous cycle of supply and demand in Asia, propelled by socially networked word of mouth and a belief that in China, "foreigners are cool."
Blecharczyk: Relative to Europe and America, our penetration in Asia is relatively young. We have about 50,000 properties in Asia, but that’s not a lot in comparison to about 100,000 in the U.S. and 250,000 in Europe. We're a marketplace, and you need critical mass of supply and demand to make the thing work.
Seoul, Tokyo, Bali, Singapore, Hong Kong, Taipei—all these cities have really come into their own and will probably be prime destinations for Chinese travelers. The cities in (mainland) China are still quite nascent—we do have 1,000 in Shanghai and 500 in Beijing but there’s just less folks coming into China than there are going out. [There are only about 20 Airbnb properties in Dalian; Blecharzykh stayed in a hotel.]
There are early adopters out there that will be the brave ones and try something new. Those people exist anywhere but there are relatively few of them. From there on it’s all word of mouth, and honestly that works in every culture. Even in China or the Asian markets, the power of an endorsement from someone you trust can overcome anything else.
You do see some patterns. You’ll see that the rate of growth is a little faster in countries that are undergoing financial stress, like southern Europe—Italy, Spain, Portugal, Greece, these places—there’s a little bit of added incentive, right? They kind of need it. Northern Europe, where the economy’s strong, there’s a little more friction. But honestly, we’re talking about the difference between 200 percent and 300 percent growth.
Let me give you an example of how it started off in the beginning and still plays out today.
We started by focusing on New York, making sure we had high-quality product in New York—I’m talking just 40 properties, making sure they were professionally photographed, reasonable prices, etc. Before you know it, people from around the world start wanting to stay there. The owners start making money, and they tell their friends. The friends see the quality of the product and they emulate it: good photos, good prices. Now you have more supply, now you can support more demand, and people who were going to New York go to back where they came from—Paris, Berlin, Moscow, wherever—and either they themselves become hosts or they tell their friends who would become hosts.
It sounds like you can track those dynamics pretty closely.
What can you do specifically to get critical mass in Asia, especially China?
Using Airbnb, you can not only go abroad, but you can meet someone who afterwards you can call a friend and stay in contact with, is incredibly appealing. That gets you over all the other hurdles you might face. Historically the way of traveling has been through tour groups … that’s not currently what we’re about. The added benefit is you’re going to meet somebody, get the real authentic experience, and have a friendship that could last a lifetime.
There haven’t been any interactions in China.
Top image: Just outside Beijing's Imperial Palace and $135 a night. Courtesy of Airbnb.
This post originally appeared on Quartz, an Atlantic partner site.