Of all the high-valued technology startups, Airbnb might actually end up the most valuable. Not only is the fast-growing juggernaut reportedly raising money at $20BN valuation, but Airbnb makes serious money. The company is a true marketplace with a critical mass of buyers and sellers, and -- as we’ve learned from Craigslist and eBay -- these kinds of marketplaces are highly durable.
The company gets a commission on every single transaction in the marketplace: 6-12% from the buyer (the guest), and 3% from seller (the host, though most of this goes to cover credit costs). The more people that book vacation rentals, with Airbnb, the more money the company makes. This may seem obvious, but it’s actually somewhat different from how its biggest competitor, Homeaway (which runs Homeaway.com, VRBO.com, VacationRentals.com and others) operates. On the Homeaway marketplaces, homeowners typically pay an annual listing fee to advertise their properties and don’t (typically) pay a per-booking commission.
This is all to say that Airbnb is a very good business. It’s only likely scratched the surface of how big and profitable it will one day become.
Back of the envelope math: 3 people per booking, $100 per night, 8% commision= $1.5MM in one night for Airbnb
And despite how well Airbnb is performing, there is at least one arena where the company is performing pretty dismally -- the Google Search Results. We couldn’t help but notice that when you do a Google search to find a vacation rental in some random city, Airbnb practically never shows up as a top result. For a company with nearly infinite resources that so effectively turns customer demand into revenue, this seems like a wasted opportunity.
So, we thought we’d crawl through vacation rental Google search results and see just how badly Airbnb was lagging behind its competitors. And the answer is: very badly.
The Vacation Rental SEO Index
The Priceonomics data crawling team put together a data set of 186 popular vacation destinations in the United States. We then looked at what happens if you perform a Google search to find a vacation rental (“Napa vacation rental” for example) in these locations. We noted which companies ranked first, second, third, etc in the Google results.
For the 71% of the cities in our index, a HomeAway company (HomeAway.com, VRBO.com VacationRental.com) company took the first spot. Flipkey, a lesser known competitor, and its parent company TripAdvisor, claim the top spot 9% of the time.
Airbnb takes the top spot just 2% of the time in our index. Someone looking for a vacation rental through Google is 36 times more likely to see a result from Homeaway than Airbnb as the top result.
Source: Priceonomics data crawling
Looking the second and third spots in the Google Search results, Airbnb performs just as poorly. The company is the second result just 3% of the time, and substantially behind is competition even for the third result.
While we analyzed the Google Search Results for 186 cities, below is a snapshot of some of the more interesting cities to get give you a sense of how Airbnb is ranking. A third of the time, Airbnb’s results don’t even rank in the top 10.
Sample of results. Full data available for purchase through Priceonomics Data Services.
Of 186 cities we looked at, Airbnb captured the top spot just 3 times. What’s more, these cities aren't exactly top travel destinations (no offense to Hartford, Newark, and New Haven).
Nowhere to Go But Up?
So, does this matter? On one hand yes, it’s matters a lot for Airbnb. More traffic from consumers using Google means more bookings on their platform, and that means more revenue. Instead, Airbnb is having to buy ads on Google in order to show up at the top of the search results.
You'd have to scroll way down the page to reach Airbnb's organic result for this search.
It’s likely Airbnb’s competitors are outperforming it at SEO simply because they are devoting more resources to it. One can safely assume that at Flipkey/Tripadvisor and Homeaway/VRBO/VacationRentals.com, SEO is an intense area of focus. But Airbnb has resources, access to to talent, and great content; it’s puzzling the company is still so far behind.
On the other hand, Airbnb really has no where to go but up when it comes to ranking well in the Google search results, and generating more demand that way. Instead of living and dying based on the Google Algorithm, Airbnb has built a direct consumer relationship and brand in a way that Homeaway and Flipkey have not, and that is nearly impossible to replicate. It's much more valuable to have users that download your app or search directly from your front page instead of attracting casual Google visitors.
Nevertheless, it seems only a matter of time before Airbnb makes SEO a priority and focuses on getting it “fair share” of the Google Search Results.
Note: The data from this post tracking SEO performance of a variety of companies is available for purchase through Priceonomics Data Services.