My experience on Airbnb Experience: Part 2
My first Airbnb Experience can be found here.
One of the benefits of living in Sacramento is it’s just two hours driving distance from both San Francisco and Lake Tahoe. You can basically organize a day trip to see mountains, beach, or forest and you only have to pay probably a third of the rent compared to the Bay Area! Having lived in Ithaca (NY), Madison (WI), and Ottawa (ON) between 2017 and 2023, I sometimes miss seeing several feet deep snow creating winter wonderland all around me. Lake Tahoe can usually come to the rescue when I want to witness some snow during the winter.
I have been to Lake Tahoe several times since moving to Sacramento, but I always felt like there are more to explore here than I did so far. So, I opened my Airbnb app and looked for some experiences in Tahoe. There are a couple that stood out to me: this “Wild Nevada off-Road Adventure Tour”, and “Hike with a Tahoe Local”. The former wasn’t available during winter season, but I could book for the hike.
Right after the booking, Jen (the host) created a messaging group within the app. There was also a couple from Oklahoma (let’s call them “L&E” who would be attending the hike. So, a local Tahoe resident, L&E from Oklahoma, and yours truly from Bangladesh…I was already intrigued about the hike! In fact, while listening to Hiroki Asai (Chief Experience Officer in Airbnb) in a recent podcast, I came to know that a third of the people who book an Experience in Airbnb are doing so to meet other people.
Let me go off on a tangent here and mention that it only occurred to me somewhat recently that there are certain aspects about moving to a different city that are likely lot easier to navigate as an immigrant than even American citizens. A few months ago, I threw a dinner party and invited ~40 people to come to my place. When I mentioned this to a couple of American friends, one of them was surprised that I even know so many people given I moved to California only a couple of years ago. It was only then I started appreciating why my experience may be a little anomalous compared to many Americans. Both my wife and I attended colleges in Bangladesh from which vast majority of the graduates (~70% for my wife’s college, and ~25% for mine) move to somewhere in the Western hemisphere. To contextualize, fresh graduates from even the top engineering and business schools in Bangladesh get paid $300 to $600 per month. So, you can understand why most of these graduates consider it economically ruinous to stay there post-graduation. This, however, has created a strange situation that I can move to any random major city in the entire Western hemisphere and can probably easily find ~30-40 people within a year whom I will know on a first name basis and I myself will be invited to probably dozens of dinner parties.
In fact, when I was interviewing for jobs post-MBA, I was often confused why many interviewers were so curious about why I would want to move to a particular city. I didn’t say this, but in reality whenever I heard that question, I used to think “my brother in Christ, do you really think I left my entire friends and family back home only to nitpick between moving to Alaska and Dallas? I simply do not care; give me the job, I will go wherever you want me to”. Perhaps what I didn’t quite appreciate back then was my attitude towards moving implicitly took a ready community for granted given the reality I described above…I knew I would find a Bangladeshi community full of our alma maters no matter where we move.
It took me a while to appreciate that ironically, it can be much harder for many Americans to find such community if they need to move to a random city for a job. My personal experience probably only holds true for most first-generation immigrants who can more easily connect to other fellow immigrants on the basis of their shared journey and life experiences. But even second generation immigrants, including my son will probably have lot harder time finding such ready community given he probably wouldn’t have much “connection” with Bangladesh by the time he is in my age.
So, meeting other people, even just for the sake of meeting people, can be potentially a very unmet want (need?) for anyone moving to a different city. And if you’re traveling, most people probably want to meet other people—both the locals or/and the people who also came from different parts of the country/world to visit the same place. So, perhaps it makes a lot of sense why third of the people booking Airbnb experience are just trying to meet other people!
Back to my own Airbnb experience.
Right after publishing my “daily dose” yesterday, I started driving for Lake Tahoe as the experience starts from 9 am PT. I was exactly on time and found the group in the meeting spot.
Our host Jen has lived in Tahoe for 26 years. However, she mentioned she discovered the trail we were about to embark on only six years ago. L&E are in town to celebrate L’s birthday. After reaching Tahoe yesterday, L&E were trying to figure out what activities they can do; they looked into Airbnb app and found this morning hike.
It was a beautiful, sunny Friday morning and I thought about leaving my jacket in my car. Jen suggested otherwise as she warned that I might feel a little chilly in the shades during the hike. I am glad that I paid heed to her. There were some remnants of snow, but the trail was largely unaffected. The “core” hike was completed by 45 minutes; then Jen asked the group if we were willing to keep going to go near the water. We all nodded, so we kept going.
Jen showed us some eagle nests near the top of dead trees. Apparently, bears climb the trees to get to the nests; however, if it’s a dead tree, it’s lot harder for the bear to climb. She mentioned there’s a YouTube video you can watch a bear climbing to a tree while eagles are trying to defend their nests. I recommend watching it to appreciate how mother nature can be quite ferocious!
When we reached near the water, Jen offered us hot chocolates which was a nice touch! I had a brief conversation with L&E and Jen; Jen offered tons of recommendations for L&E since they will be staying in Tahoe for the next four days. Jen later texted all her recommendations (activities, food, sightseeing etc.) to the group. Here’s a one-minute video of our hike (to respect the group’s privacy, I didn’t include any group photo).
I also had a restaurant recommendation for L&E. Last year, I found this Argentine restaurant called “Empanash” which I highly recommend to anyone visiting Lake Tahoe. I always order the Hammers with golf sauce. After the hike, I drove for another 20 minutes, had a couple of Hammers by the beach, and then bought some more for the family as I started driving back to Sacramento at noon.
You came for the business analysis, but you ended up getting food recommendations!
Okay, fine. Let me wear the analyst hat now.
For the hike, there were total 20 spots available, each of which costs $64/guest. The unit economics of a “filled capacity” Airbnb experience from the host’s (and Airbnb’s) perspective is more compelling than hosting your home. Of course, the problem is it seems really, really difficult to fill capacity in most days. Jen was telling me that she typically gets groups visiting Tahoe, but it’s usually “a few times” in a week, and not everyday. And it’s rare to get 20 spots filled.
How did Jen get started? While she’s a PE instructor, she looked for some side hustle during the pandemic. She found a woman in Colorado who was doing hiking experiences on Airbnb and had a Zoom call with her to learn how to do something similar in Tahoe. Jen came to know that woman was making >$100k/year from doing these experiences; Jen was encouraged by it and decided to launch this hiking tour in Airbnb. Unfortunately, demand has been lot more spotty for her, and after a while, she decided to list her experience on Viator as well. She mentioned once she was available on Viator, she started getting more customers from Viator, but Airbnb has been picking up for the last couple of months. This isn’t surprising since Viator has ~$4 Billion booking whereas Airbnb’s undisclosed experiences booking may be a couple hundred millions (just guessing)!
What was perhaps a bit more surprising to me was why nobody except Jen was offering similar services on Airbnb given Tahoe is one of the top tourist spots in California. It turns out it may not be exactly legal to offer such services. You must apply for a permit, but the permit process is really antiquated. You can only get a “concessionary” permit i.e. if you want to sell snacks or any food items within national parks, you need to get a permit. I guess that’s why Jen was offering us hot chocolates? The reason we probably don’t see many people offering similar services is it is nearly impossible to get these permits!
Of course, Airbnb would be more worried about such a supply bottleneck if Jen had her capacity filled everyday. But as mentioned earlier, that’s not the case at all. Demand is quite spotty for Jen despite her “monopoly” within Airbnb in providing hiking tours at Lake Tahoe.
I have noticed some Airbnb hosts for stays offer “experiences” on the platform as well. If the consumer awareness is there over time and demand picks up, I wonder if we will see a noticeable supply increase from some of the existing individual hosts themselves. Such an integrated offerings would certainly make guests even more loyal to Airbnb.
Speaking of loyalty, I consider Airbnb launching a loyalty program to be likely imminent (perhaps later next year?). One way to instigate demand in experiences is if anyone staying on Airbnb for 5-10 nights a year gets a free experience. Since most Airbnb stays are group stays anyway, you can sweeten the “experience” by offering one free experience if you’re booking the same experience for 3+ group i.e. you basically pay for n-1 group. Airbnb is in a very envious position to design the loyalty program in a way that only creates further differentiation of the overall travel experience from any other OTA out there!
Once the demand for experiences is there, perhaps nothing begets more supply than having more demand.
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