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Brian Chesky was on CNBC this week speaking about the temperature of the business, and what he has to say is quite interesting. He speaks to building the Airbnb business over 12 years only to watch it collapse in a matter of 4 to 6 weeks, but things aren’t all bad. In fact, the desire to travel, get out and away, is still very much alive and resonating within Airbnb. He has observed fundamental shifts in the business, even going to so far as to say that “travel as we knew it is never coming back.” Big words. Never is a long time, but I recently wrote an article about how travel could be impacted if deurbanization sticks, and what he’s saying runs parallel.
Personally, I think the verdict on deurbanization is still out, since much of the current flight from city centers has been from affluent households that can easily pick up and leave, or buy second homes that provide them space. But, what Chesky says speaks to a desire that may be indicative of a sentimental shift towards suburban and rural abodes in the middle, upper middle, and lower upper classes of the US. He speaks to a shift in travel demand, that people ” want to get out of the house, but they want to be safe, they don’t want to get on airplanes, they don’t want to travel for business, they don’t want to go to cities, they don’t want to cross borders, but what they are willing to do is get in a car, travel a couple hundred miles to a small community where they are willing to stay in a house.” Chesky even goes on to say that demand in May 2020 was similar to May of 2019 without any marketing ( they usually spend upwards of $1B on marketing). Many of their bookings are more than 30 days ( 20% in fact ), and they now have more hosts than prior to Covid. He thinks that travel will be redistributed across thousands of destinations, and is also hints at downsizing their corporate footprint, more remote work, etc.
This is a massive shift from the flock to urban centers and desire to travel to densely populated cities like NYC, Paris, and Hong Kong. If his observations prove to be true we could be in the nascent stages of a fundamental redistribution of the population similar to what occurred in the 1970s and 80s.
Personally, I think the desire to travel and also to live outside city centers will gain substantial traction. I also think that this isn’t a fad, and believe that it’s the start of a trend: that families will continue to choose to hop in the car, hit the road, and rent a house. Not to say there isn’t opposition to this viewpoint – I read an article earlier today published by the Journal of American Planning Association that says that people are far safer being in densely packed city centers due to better quality health centers and wider adoption of social distancing. Perhaps this is true, but I’m not sure that’s where people’s heads are at, or pointed. I think if remote working continues to gain traction, second spikes/waves occur, homeschooling persists, the desire to have more space will only increase. If an exodus creates enough inertia, the trend could result in lower tax revenue for areas that have seen a resurgence which leads to decreased funding, and that concerns me that not only would people not choose to live in a place like NYC, but perhaps also question the safety around visiting. As I said, we’re still in the very nascent stages, but Covid has been a black swan event ( as much as experts warned about pandemics it’s clear no one was really prepared ), and black swans have a way of creating new normals, trends, and travel won’t be immune.
Have a listen, it’s an interesting take.
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