It’s been a little more than year since Airbnb hinted it might challenge titan OTAs Priceline and Expedia with its own flight booking tool. The company has offered few details since it threw down the gauntlet; but given Airbnb’s preference among the ever-important millennial age set, airlines should work with the company to develop a mutually beneficial distribution relationship.
When Airbnb debuted its “Trips” product in Dec-2016, it outlined plans to eventually include flight booking its its portfolio of accommodation and experiences. The project is known internally as Flights.
It’s a logical move for Airbnb, which aims to build revenue by capturing a greater share of complete travel journeys of its customers. But airline distribution is thorny business, and not for the faint of heart, reflected in the continuous tussles airlines and global distribution systems (GDS) have engaged in during the last decade.
Airbnb has existing relationships with a handful of airlines whose customers can earn miles when they book accommodation through the home sharing site. Those partners include Delta, Qantas, Jetstar, Jet Airways, Peach and ANA. Airbnb’s relationship with Virgin America ended in Jun-2017 after it was acquired by Alaska Air Group.
Airlines and GDS companies would be wise to embrace Airbnb’s plans to develop a flight booking tool. Companies across all industries are using data mining and research to understand buying patterns of millennials in order to ensure their relevance for the long term.
Just before Airbnb alluded to its aspirations to build a flight booking tool, the company conducted a study with GfK examining millennial behaviour. Among the study’s findings was the conclusion that approximately 60% of all guests that have booked on Airbnb are millennials. The number of millennials booking accommodation through the site jumped 120% during the 12M ending Oct-2016.
Most airlines understand the importance of remaining relevant to millennials. The age group is a prime target of Swoop, the new ULCC under development by WestJet. Air France’s Joon is specifically designed for millennials.
Delta goes a step further, opting to categorise millennials as Emerging High Value Customers (EHVCs). The airline is particularly focused on younger business travellers to “catch upstream” while they’re in college or working at larger firms such as PwC, Deloitte or McKinsey.
The travel behaviour of those future high yielding corporate travellers will vastly different than older generations, driven by a desire to expanding their preference from home sharing to business travel. Presently, business travellers represent roughly 15% of Airbnb’s business; but the company has ambitious plans to double its business customer base by 2020.
Airbnb has no doubt proven it is a force to be reckoned with in the travel space. Airlines worldwide would be wise to forge creative business partnerships with Airbnb to grow and remain relevant among the age set that will represent 75% of all consumers and travellers by 2025.