by Shannon Manuel

Airbnb is expanding into new markets

Airbnb Global Strategy Director, Chris Lehane discusses Africa’s growth of Airbnb and township uptick in home-sharing in Khayelitsha

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Online marketplace and hospitality service, Airbnb enables people to rent or lease short-term lodging, including vacation rentals, homestays, hostel beds or hotel rooms. It has over 3 million lodging listings in 65 000 cities spanning close to 200 countries, including South Africa, where it enjoys a prosperous market arena.

“We have a very strong and robust business in South Africa and, in particular, Cape Town, where we have about 17 000 hosts, and it is one of our strongest markets in Africa,” says Lehane. “Over the last year, we really wanted to focus on what we call ‘inclusive travel’—making sure both local and international travel and tourism benefits as many people as possible—and from some of our data, we discovered that we have a large number of travellers who are really interested in visiting townships like Khayelitsha for its art and food scene, culture and history.

“Therefore, earlier this year, we began to test a programme to create and train hosts in Khayelitsha and it has been extremely successful. Currently, we have a small number of hosts within the township and going forward, we’ve announced that we’re actually going to expand this programme into fifteen other townships in 2018 in South Africa,” he says.

In terms of what this would mean for the economic footprint in these townships, Lehane says that travel and tourism make up 10% of the global GDP, and is about the same here in Cape Town. His guess is that Cape Town will begin to over-index as it’s one of the great places in the world to travel to.

It’s growing faster than the rest of the economy and any time you have those types of dynamics, it’s a question of who benefits, and there are some people not benefiting. We call it inclusive travel—sometimes ‘healthy travel or democratising travel’—and so if you’re able to make sure that a fair share of the travel wallet is actually getting spent, not just in the beach areas or the CBD in downtown Cape Town, but in places like this, you know you are spreading the benefits. What is important is that this is not the place you’re going to jump on a bus and ride around and take photos so if that’s the experience that you’re looking for, we’re probably not your option.

“However, it is for you if you’re looking to come up here and spend some time with some real people and get a sense of their history. It’s pretty incredible and you can come and truly have a transformative experience, and transformative in the right way whereby you end up with a meaningful connection. Nelson Mandela used to talk about that, that as a traveller, you should visit someplace and you should take something away from it because you’ve been there but you should also leave something behind and I think that’s a pretty good definition if you can get this right,” he says.

Lehane says that locals have been embracing the new technology and that platforms like this are particularly beneficial to new entrepreneurs with great untapped potential, giving them the ability to gain recognition.

“There are limitations in terms of how much data costs and access to good Wi-Fi connectivity—some of that’s going to take care of itself as technology gets cheaper and gets built out, but I think some of it as platforms like ours can come in to help. We have the CiTi, which is the Cape Town Innovation and Technology Initiative, that has developed this Techbarn, which is fantastic and a great asset to the community. As our hosts build up here, we need to start thinking of what we can do to help make sure that the technology is as easy to use and accessible as possible for each community and the conditions that they live in. But that’s what is great about spending time within the communities—you’re able to see what it’s really like and how people are using the technology,” he explains.

In their recent Africa Report, the growth of Airbnb in Africa has more than doubled from 500 000 in the previous 12 months to over a million in the last twelve months. Lehane says that this reflects and reinforces the fact that this is a tremendous attraction for tourists.

The appeal lies in the usual tourist attractions of the natural environment and resources and the food and wine that exist here, however, what was behind the data was something that is a part of South Africa’s identity’the spirit of Ubuntu—the whole concept of sharing. It’s unique, people are attracted to it and are really embracing it. The data shows that our South African hosts are getting some of the highest ratings of any hosts in the world, and I think this sense of Ubuntu is one of the reasons we’re seeing this type of success.

“And what that leads to is this network effect of more and more people meeting and sharing their experiences and encouraging others to experience it themselves and do the same. And you can sort of see it play out in the data and the economics are pretty invariable. There’s been approximately US$249 million in economic activity in South Africa in the last 12 months alone. So it is really exciting,” he enthuses.

Lehane explains that the tourism market is so vast and is able to accommodate and include not only the big industry players but the smaller local entrepreneurs. Airbnb hosts make 97% of the money and most of the money spent by the guests stays in the neighbourhoods that they’re going to and, thus, Lehane believes that the company is changing the face of tourism not only in terms of providing that authentic experience but also by making sure that the economics are really getting driven to benefit real people in their communities.

“It’s taking the middleman out. I call it democratising capitalism. In a typical capitalist structure, the entity that controls the supply chain makes the vast majority of the economics, regardless of whether they’re responsible for the creation or not, they intermediate between the seller and the buyer. Airbnb connects them directly—they both do well only if they’re both servicing each other and meeting at that peak point. In economics, they call it the frontier, where both fronts are benefitting equally and what that does is really help to align how capitalism is working with society’s interests. We only do well if our hosts do well and our hosts only do well if the guests do well, and it ends up really aligning everyone in an interesting way,” Lehane says.

The biggest lesson learnt thus far is that one has to always be true to your values and the values of Airbnb have revolved around being committed to the mission of allowing people to belong anywhere and putting community first.

“Whenever I do these trips, I get to meet with presidents and prime ministers and a range of remarkable people, which is always fun. But the best part is meeting the hosts. We have these home-sharing clubs that we usually conduct meetings at and they are incredibly interesting people—they’re extroverts, they love their community, they love where they are and they love being hosts,” he says.

He explains that the type of tourists, as well as what is traditionally regarded as tourist destinations, are definitely evolving, specifically, Millennials who are more open to meeting new people, having new experiences and almost have an inclusive way of travelling.

“If you put them in a focus group or sitting having drinks with them, they would say, ‘We want to be real, we want authenticity. We don’t necessarily want to be in a room with four walls, hanging out with people who are similar in every way, or experiencing the same things that we can do at home.’ They want to spend time in places like this, spend some time with the people, look them in the eye, understand them and engage with them through some of their passions, whether it be food, sports, history or art. Increasingly, that is what the Millennial traveller is looking for, which I think is a healthy form of travelling and a pretty cool thing,” he says.

In terms of the evolution of Airbnb and future plans, as well as paying more attention to diversifying the business, earlier this year, CEO, Brian Chesky stated that Airbnb is currently developing a feature that will allow travellers to book flights with them. Lehane explains that Airbnb is working to become an end-to-end travel platform.

“Eventually, we’ll be able to facilitate how you are going to travel; where you are going to stay in our homes, connecting with people who may have similar interests so you can do meet-ups—it’s all creating and providing experiences and we’ve spent 2017 focused on experiences. We initially picked 12 cities in the world to test their sense and Cape Town was one of them. It has been amongst the most successful locations in terms of other international cities in demand.

“It is up there and growing. There are some cities in the world that people can travel to for two or three days and that’s the extent of the business, but this is a place where people are going to want to remain in and experience for longer periods. If you look at the overall continental data,

Africa is going to become an exponentially larger tourist destination, as both within and outside of Africa, I can channel African travel. South Africa is likely to be one of maybe two or three portal entries for that, and there’s an amazing amount of stuff that you can do here. I think as a whole, South Africa and Cape Town are really positioned to be this entry point and it’s really amazing and exciting to be here,” Lehane concludes.

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