We got a sobering reminder this week of where South Africa stands in the pecking order of booming online hotel disruptor Airbnb. The San Francisco headquartered business that started through renting blow-up air mattresses in client’s lounges is now worth 24bn, more than Marriott, the world’s most valuable bricks and mortar hotel group. Its CEO Brian Chesky made the briefest of whistle stop visits to Johannesburg yesterday. He was in and out in a flash, the PR people said, so definitely no time for interviews. Come to the Press Conference where there will be a Q&A after The Oracle has spoken. But we can certainly line up time with the newly appointed regional manager…… Which is a strange way to open up a new market so far from the HQ – until you consider President Barack Obama took a bunch of US businessmen along on his East African visit. And as South Africa’s economy is seven times that of Kenya’s, Chesky concluded it was better use of his extremely valuable time to make a quick trip down south? I’m a big fan of the company’s product. And sure, Chesky has better things to do like attending the Allen & Co annual gathering in Idaho (see below). But after this reality check, it’s hard to warm to the opportunistic CEO and his inauthentic aw-shucks image. Maybe there’s an African start-up ready to take on Airbnb? The Steers to the US’s McDonalds; the Vida Cafe to their Starbucks? They’ll get my business. – Alec Hogg
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By Brad Stone
(Bloomberg Business) – Airbnb is hoping to spread its unique brand of hospitality throughout Africa. The San Francisco company, which allows people to rent rooms in their private homes to travelers over the Internet, held an event in Johannesburg yesterday, where Airbnb Chief Executive Officer Brian Chesky walked local reporters through the company’s ambitions in the world’s second-most populous continent.
Airbnb recently hired a general manager for Middle East and Africa, Nicola D’Elia, who was the former head of international growth and partnerships at Facebook. D’Elia, based in London, will hire staff to manage the business in Africa and says he may eventually open local offices in the region. In the coming weeks, Airbnb says it will also roll out its “host guarantee” in Africa, which reimburses hosts for up to $1 million U.S. dollars if a guest damages their homes.
Many Africans had already taken to Airbnb despite the company’s lack of a physical presence there. With news spreading mainly through word of mouth, some 9,400 homes are for rent in South Africa, making it the company’s largest market on the continent. The biggest cities for Airbnb are Cape Town and Johannesburg, and the company says listings in South Africa are increasing 138 percent a year. The number of people staying in Airbnb homes in the country is growing 257 percent. “Africa is an incredibly exotic place to travel to, and this is an incredible way to experience it like a local,” says Chesky, on his first trip to the continent.
The preemptive outreach to South Africans could help Airbnb head off resistance from local regulators and businesses down the road. Another company in Silicon Valley’s so-called sharing economy has received a turbulent reception in South Africa. Drivers for Uber, which was launched in Johannesburg in 2012, were recently threatened in the Sandton business district by metered taxi drivers anxious to protect their business. Uber said it served 1 million rides in South Africa in 2014.
Airbnb has experienced similar pushback from regulators in such places as New York, Paris, and San Francisco. D’Elia says the company has not started talking to housing or tourist authorities in Africa. “We’re keen to start working with local governments and to help them understand how home sharing can be beneficial to cities,” he says.
Airbnb recently hired Laurence Tosi, the former chief financial officer for Blackstone Group, as its CFO, and has been in talks to raise a round of financing that would give the six- year old company a valuation of at least $24 billion, a person familiar with the matter told Bloomberg last month. Part of the promise for investors is Airbnb’s potential to create a global travel platform, letting tourists enjoy a similar level of personalized service wherever they go in the world.
Before his trip to Johannesburg, Chesky attended the Global Entrepreneurship Summit in Nairobi, Kenya, as a guest of President Barack Obama and met with Nairobi entrepreneurs. Ahead of Airbnb’s press conference on Monday, Chesky spent time with a dozen South African hosts in the backyard of a four-bedroom Johannesburg home listed on Airbnb as “Entertainers African Dream – Bliss!” The home had a thatched roof, a pool in the spacious backyard, and the high walls and gates common in homes in the affluent neighborhoods of Johannesburg.
Nearly all the hosts at the event had first heard about the Airbnb platform only in the past few months. James McNeany, 66, says Airbnb has helped to allay his financial anxiety after he recently got pushed into retirement at an insurance firm. “I was hanging onto my previous job as long as possible. I couldn’t imagine what I’d be doing next,” he says. Now he rents out three suites on his property near Hyde Park for $463 a week, mostly on Airbnb but also on rival website Booking.com. He has a live-in housekeeper from Zimbabwe who helps him maintain the properties, and he says that in some months, bookings via Airbnb have equaled his former salary.
