We aim to go beyond the traditional landmarks list: Airbnb Global CFO Mertz

India is an exciting market not just from a demographic point of view, but also because the government wants to make tourism a much bigger portion of the economy, says Mertz

Experiences will be the new frontier of growth for vacation rental company Airbnb, said its global Chief Financial Officer, Ellie Mertz. In an interview in New Delhi with Akshara Srivastava and Gulveen Aulakh, she said the company is betting big on the Indian growing middle class and is partnering with the government to accelerate business growth in one of its fastest-growing markets globally. Edited excerpts: 

 

What are Airbnb’s key growth opportunities in the global market?

 

We delivered incredible scale with nearly $82 billion in gross booking value (GBV) in 2024 and there are three major growth opportunities for us. The first one is continuing to optimise our core business of accommodations and ensuring high standards of services are offered at the right prices to drive value. The second is expanding into global markets, and the third is to expand what we offer. Starting May this year, we are looking forward to expanding beyond accommodations, which is something we have on the platform but is not a big portion of the business yet.

 

Can you elaborate on this new phase of expansion in India?

 

We want to dive further into experiences, an offering that we have globally, and then provide incremental products and services to guests and hosts over time. The idea is to go beyond the traditional landmarks list that a destination may have to offer and offer something local and authentic. 

 

Anyone who is using the platform is certainly doing things in the market when they travel. We want to bring that activity onto our platform and merchandise them. There is a huge opportunity here to follow that and allow guests to discover experiences that make them appreciate the local food or culture, among others.

 

How does India stand out as a critical market for you?

 

While we are present in 220 countries, our business is highly concentrated in five core markets, which represent nearly 70 per cent of GBV and about 50 per cent of the nights booked on the platform. So, there’s a huge opportunity beyond them and we have been identifying key markets that we want to invest in.

 

With a growing middle class, growing disposable incomes, and a large cohort of young consumers, India, not surprisingly, falls into that bucket of target expansion markets and is one of our fastest-growing markets globally. There’s a considerable opportunity for us to accelerate the rate of growth here and reach a $29 billion origin-adjusted total addressable market by 2029.

 

We have also seen strong origin growth in India, with our domestic business growing by 35 per cent year-over-year in the December quarter, but there’s also a capacity constraint in hotel infrastructure. This gives us the opportunity to support the tourism growth of the country by building some of that capacity via homestays, not just in the big cities, but also in smaller cities, and creating employment while doing so.

 

The Indian alternative accommodation market has seen a lot of new players emerge since your entry in 2016. How do you view this competition? 

 

The fact that other platforms have gotten into homestays or alternative accommodation is a big win and shows that an increasing number of people are interested in staying in places outside of hotels. It is a massive growth opportunity. In this market, there is no ‘winner takes it all’ phenomenon possible. As tourism grows in India and the government’s goal of making tourism a $3 trillion economy by 2047, it is a massive amount of growth, and hotel infrastructure is not being added at par with this. 

 

There is, hence, a huge role for homestays to play and Airbnb is the current market leader in that space here, and we want to extend that lead by being present on the ground and working towards earning every incremental night and also partnering with the government to drive growth. There is also a big focus on affordability. We want to make sure we are offering great value objectively, but also relative to any competitor in the market.

 

What do you mean by partnering with the government?

 

India is an exciting market not just from a demographic point of view, but also because the government wants to make tourism a much bigger portion of the economy. It is being very creative and open-minded to work with us and others to ensure that those targets become a reality. It is what makes this market more exciting than just the raw numbers of growth opportunities.

 

We partner with them and local communities to equip potential hosts with the skills to do so, like the Airbnb entrepreneurship academy in Goa to help people get the skills to host or maybe co-host someone else's listing. 

 

How are you integrating AI to make the user and guest experience better at Airbnb?

 

We have deployed many AI applications, like helping hosts with their photo tours, where AI recommends the order of photos posted on the app and the listing description or in reservation screening. We are now using AI to automate the customer service experience to make it quicker, and simpler and ensure better outcomes for guests and hosts. This will eventually lead us to leverage AI for more proactive guest experiences for both trip planning and trip concierge services.