But even the $31-billion valued company’s 40,000 listings number doesn’t hold up well when compared to competitors. While Airbnb does not disclose the number of rooms listed on its platform, taking an average of two rooms each gives the platform a rather liberal estimate of 80,000 rooms. Compare this with hospitality startup Oyo’s 143,000 rooms and it seems far less impressive. And if one looks at OTAs such as MakeMyTrip and Yatra, the number looks still smaller.
Is it really encouraging stat?
Besides, 40,000 listings are hardly a cheer-worthy number in a huge country like India which has cheap real estate and ample availability of second homes as well as first homes with hosts. South Korea, a country that’s a fraction of India’s size, has 37,100 listings (as of 31 December 2017). Thailand, meanwhile, has 61,400 active listings and New South Wales (NSW), a southeastern Australian state, has 54,900 active listings, according to data from the company’s official advocacy platform Airbnb Citizen.
A former Airbnb executive justified this saying that listings grow in proportion to the number of tourist arrivals. However, a cursory analysis of the 2017 tourism footfalls of different countries shows little correlation between the two. A glaring example would be NSW, which received just over a quarter of India’s 15.5 million tourists in 2017 yet has more listings. To truly make its mark in the country, Airbnb will have to up its number of listings. However, even if it is to push for more listings, India’s unique travel ecosystem may still put the brakes on Airbnb’s ambitions.
On a budget
Primary among the hurdles in the way of Airbnb’s path to market domination is the fact that India is a budget travel market. As such, Airbnb’s listings struggle to compete with the bevy of Indian budget hotels. According to a study by the Boston Consulting Group and Google titled ‘Demystifying the Indian online traveler’, mid-scale and budget hotels account for more than 50% of branded hotel rooms. Of this, budget hotels are expected to grow at 14% annually, the highest among all hotel categories.
Yatra’s Chief Operating Officer, Sharat Dhall puts it succinctly: “When someone is getting a room per night for Rs 700 ($10) with a guaranteed standard of service and complimentary breakfast, why would she bother to pay even Rs 300 ($4.25) more for a homestay,” he says.
The popularity and growth of budget hotels have only been helped by deep-pocketed OTAs and Oyo offering discounts and cashbacks. With MakeMyTrip raising $330 million in May 2017 from China’s Ctrip and South Africa-headquartered Naspers, and Ritesh Agarwal-led Oyo Rooms raising $1 billion in September 2018 from SoftBank and a clutch of other investors, the discounts and cashbacks are here for a while longer.
Dhall goes on to say that homestays are currently being driven mostly by experience seekers and leisure travelers. There is no experience angle in budget homestays, and that’s where it all falls apart. The market for experiential and leisure travel is currently very small, and that’s why homestays have not seen much growth.
In fact, one of the reasons the concept of alternate accommodation has worked well in the US, the UK, and many European countries is because hotels are expensive and homestays are cheaper. Unless the anomaly created by India’s budget hotels and fuelled by OTAs corrects, it is unlikely that Airbnb’s hopes for rapid growth will manifest.
Airbnb’s Bajaj says that the company is focusing its efforts on expanding its listings to include more price points, properties, and experiences to accommodate all sorts of travelers.
The complex world of homestays
Budget hotels are not the only speed bumps. There are other challenges inherent to the homestay market in India.
First up, there is the issue of service expectations. Indian travelers are not very Do-It-Yourself savvy and typically like to be served when on holiday. Many Indian hosts, unlike in the West, are not very clued in about standards of civic sense and sanitation, leading to an expectation mismatch and spoiling the homestay experience.