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Feb, 2013

Short term room rental market view and road ahead for airbnb in Asia

By: Sharad Gupta

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Contents

Current situation and competitor analysis

Key issues and complication

Solutions

Back up

Interest in airbnb has risen approximately 3X, while interest in roomorama declined globally in last one year

*The numbers on the graph reflect how many searches have been done for a particular term, relative to the total number of searches done on Google over timeSource: google trends

Net income after provision*Interest over time *(roomorama)

• Interest in airbnb.com was stable for last six months and now it started rising again globally• Interest in airbnb roughly rose 3X in 2012 i.e. from 35 to100

Net income after provision*Interest over time *(airbnb)

3X rise in interest resulted in 4X rise in night booked and 2X room listings in last one year for airbnb

• airbnb’s night booked has risen 4X in a year .From 5 million to 10 million in first 6 months of 2012

• airbnb’s room listings increased by 2X over last year from 120k to 300k in 2012

Net income after provision*Nights booked and # of listings globally with airbnb

~2X

~2X

Nights booked over 6 months( in millions)

Source: techcrunch

# of room listings over an year

Asian growth in interest is slower than global growth for airbnb

*SG,TH,MY,ID for airbnb and only SG data available for roomoramaSource: google trends

Net income after provision*Interest over last 24 months across globe*(airbnb)

• Interest in airbnb.com rose from 40% to roughly 65% in past 12 moths in Asia • Interest in airbnb.com rose from 40% to roughly 100% in past 12 months at overall level

Net income after provision*Interest over last 12 months in Asia *(airbnb)

airbnb.com has almost doubled(94%) the room listings in Asia in past year while roomorama.com has grown by roughly 39%

• airbnb room listings increased by 94% over last year

• roomorama’s listings increased by 39% year

Net income after provision*room listings in Asia*

94%

39%

airbnb

roomorama

*SG,TH,MY,ID,Cambodia and VNSource: airbnb.com and roomorama.com

*% of total traffic contributed by a channel across the globeSource: similar web

Both companies are pursuing different marketing strategy and huge upside possible by crafting and executing regional marketing strategy because…

• Direct channel contribute roughly 53% of total traffic indicating strong brand and recall in US• Search traffic contributes lower in comparison to roomorama• Social has much higher contribution in site traffic than roomorama but overall still low contribution(6%

+)• Roomorama seems to be generating much higher traffic through email• Airbnb uses much wider social networks for generating WOM and awareness • Roomorama seems to have higher SEO focus

Net income after provision*Channel contribution* (in %) Paid vs. non paid search contribution Social channels contribution (in %)

Wide variations in traffic, volume and quality across countries and heavy dependence on US traffic

• Airbnb traffic flow is heavily US centric contributing to roughly 50% overall traffic

• Airbnb.com bounce rates varies by country and region so country specific channel optimization required

Net income after provision*Traffic inflow and bounce rates distribution on the website( in %)

Source: similarweb.com

airbnb

roomorama

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Only few cities in asia are showing any significant interest so further gains possible by city penetration and expansion

• Only few cities are generating significant interest/search volume for the Asian countries.

Net income after provision*Interest by cities( in %)

Source: Google trends

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Contents

Current situation and competitor analysis

Key issues and complication

Solutions

Back up

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External data reveals three key issues for airbnb in asia

2Sub optimal marketing strategies and channel effectiveness at country level

3Heavy dependence on US trafficand city level penetration Appears to be low in Asia

Summary What?

Slower* growth in SEA on both local demand and supply compared to rest of the world

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• 50%+ traffic is originated in US for airbnb• Asian traffic( site visitors ) from major Asian tourist destinations is

not even in top 5 traffic sources

• Global interest in airbnb risen by 3X in last one year• Nights booked risen by 4X and listing increased by 2x in last

one year for airbnb• Asia listings grew by 2X in last one year and interest** risen by

1.7X

• Bounce rates on UK airbnb site is 60%+ while for US its 28%• Contribution of organic search, referrals and emails in traffic

volume is much higher in roomorama compared to airbnb

* Based on publicly available data but internal data will give more reliable picture** Interest represents how many searches have been done for a particular term, relative to the total number of searches done on Google over timeSource: google trends

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Contents

Current situation and competitor analysis

Key issues and complication

Solutions

Back up

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Actions

• Launch awareness campaigns via direct display, PRs, blogs and possibly offline channels

• Mobile advertisement focusing on awareness rather than conversions• Facebook CPC campaigns for building awareness• Separate(SEM and direct display) campaigns for travelers and property

owners

Broaden the focus to include asian property owners and travelers

Effective country specific marketing strategy

• Optimized budget allocation across channels considering multiple objectives i.e. awareness vs. conversion

• Affiliate and partnership marketing for reaching out to larger base• Local language paid SEM campaigns targeted for asian tourists• Selection of right retargeting digital medium( google retargeting vs. face book

retargeting) to optimize the conversions

Three broad strategic goals needed to be achieved to tackle the three growth and penetration issues

Source: i3C Analysis

Facilitation of WOM in SEA through social media

• Facilitate WOM for airbnb through facebook organic and promote features• Leverage other social networks (twitter, youtube) and travel focused social

media platform for the region• Focus on promotion through referral program

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END