How Airbnb Cashes In on Our Quest for Unique Experiences

Danielle Oteri has been leading food tours of the Bronx’s Arthur Avenue for over ten years, but her family's ties to this iconic Italian-American neighborhood in New York City trace back even further—to 1918.

When Airbnb launched its Experiences tours and activities in New York City in 2017, nearly a century later, Oteri was among the first to join. Now, after two years, she’s observing a rise in similar tours on the platform. Some seem to be run by individuals seeking quick cash, while others appear to be major corporations disguising themselves as local experts. She’s noticed some of these larger players modifying their profiles to appear as if they are sole operators, like a local food blogger, rather than a large business.

Oteri’s friend and fellow food tour guide, Joe DiStefano, a food writer based in Queens, recounts instances of people taking a tour, inquiring about the exact cost of each item, and then offering a similar tour on Airbnb at a lower rate. “On platforms like Airbnb, even if you’re successful, it’s highly competitive because you never know who might replicate your experience,” Oteri explains. “Anyone offering an experience on there risks having their offering duplicated.”

Welcome to the fiercely competitive, often ruthless, and constantly expanding realm of experiences.

Over twenty years have passed since the concept of the “experience economy” entered our everyday vocabulary, shaping how we live today. While traditional consumerism remains prevalent, millennials and Gen Z are shifting their focus from accumulating ‘things’ to seeking meaningful experiences, especially when traveling. Nowadays, interacting with locals and sharing a meal is often valued more than purchasing souvenirs.

This shift might explain why more companies are now offering experiences than ever before. According to Phocuswright, a travel research firm, the tours and activities market is projected to reach $183 billion by next year. The United Nations World Tourism Organization reported a record 1.4 billion international tourist arrivals in 2018, with travelers spending more on activities than on car rentals, train tickets, or cruises combined. Only airline tickets and lodging attract more spending.

Among these activities, dining and drinking hold the highest appeal. A recent Arival survey found that 68 percent of travelers consider food and drink essential to their trips. Another Arival study revealed that 27 percent of American and European travelers engaged in some form of culinary tour, class, or experience beyond mere dining. Younger travelers aged 18 to 34 are even more inclined, with 32 percent having participated in such food-related experiences on their recent travels.

Given this trend, it’s no surprise that Airbnb recently introduced a new category featuring over 3,000 cooking experiences across more than 75 countries. This marks the first time Airbnb has created a specialized category for a single activity within its Experiences offerings.

Moreover, we as consumers aren’t just enjoying these experiences—we’re sometimes helping to create them for companies to offer, such as Airbnb, a $35 billion travel platform set to go public next year. Yet, the tours and activities sector remains fragmented, with many players in the field. It’s still common for people to book excursions based on hotel brochures or approaches from sightseeing bus representatives, which is why Airbnb capitalized on this market opportunity three years ago.

In 2008, Brian Chesky and Joe Gebbia, struggling to cover their steep San Francisco rent, started renting out air mattresses to design convention visitors. By 2016, Airbnb had evolved into a major short-term rental platform valued at over $30 billion. That same year, the founders ventured into the experience economy with the launch of Airbnb Trips, offering a new way for people to share their unique skills and knowledge through “experiences,” with Airbnb taking a 20 percent commission.

Initially, Airbnb's experiences were introduced as a fresh alternative to traditional bus tours. At the debut, Airbnb CEO Brian Chesky described Airbnb Trips as “customized experiences that let you dive deep into local life.” You could hunt for truffles with top Italian truffle hunters, learn the art of Korean embroidery known as chasu in Seoul, join a Drag Queens Cooking Class & Dinner Party in Lisbon, craft wooden sculptures with a chainsaw in Salem, Oregon, or paddleboard with Mr. Beaches, a San Diego corgi who doubles as an instructor.

Liz Martinez, Airbnb’s global director of food and drink experiences, explains that the company seeks hosts who offer access, expertise, and a personal touch. Striking the right balance is challenging, as Airbnb aims to emphasize the personal over the professional, valuing local knowledge and experience over traditional tour guides, even if those locals are officially certified guides.

While Airbnb didn’t create the idea of offering specialized activities, platforms like Vayable, Eatwith, Withlocals, TakeMeTour, and CityUnscripted, which also feature peer-to-peer local tours, have been around for years, some even before Airbnb Experiences launched. However, Airbnb’s extensive reach allows it to compete with major online travel agencies like TripAdvisor, Expedia, and Booking Holdings, which alone boasts a valuation of nearly $88 billion.

What sets Airbnb apart from other online platforms is its reputation as a global network of authentic, real people. Airbnb hosts come across as executive chefs, passionate home cooks, food enthusiasts, and even food identity experts. These “amateur” guides have helped position Airbnb as a distinct alternative to the experiences offered by Expedia, Booking, and TripAdvisor, despite Airbnb’s own corporate scale and financial power.

In 2018, Airbnb Trips was rebranded as Airbnb Experiences, and now boasts over 40,000 unique experiences across 1,000 cities worldwide. Among these, food and drink-related activities are among the most popular, though Airbnb hasn't specified the exact number. What is clear is that bookings for these experiences have surged by 160 percent since 2018.

According to The Information, Airbnb is projected to bring in up to $5 billion in revenue by the end of the year, though the exact contribution from its Experiences segment remains uncertain.

In 2018, Airbnb earned $15 million from its Experiences segment during the first three quarters, a notable amount but still a small fraction of its total revenue. Although Airbnb has reported past profitability, The Information noted a $100 million loss before interest and taxes in the second quarter of this year, largely due to increased marketing and advertising expenses ahead of its direct listing.

The company is also expanding into related experience-driven ventures. In September, Airbnb led a $20 million Series B funding round for Atlas Obscura, a travel media company offering distinctive local experiences since 2009. Nearly 50 Atlas Obscura experiences are available on Airbnb, with plans for further expansion. Atlas Obscura also runs a food-focused vertical, Gastro Obscura, which may soon offer its own branded experiences, although some food-related options are already available.

New entrants are also joining the experience market. Media brands like Afar, Dinogo, and Fathom are launching their own curated experiences. In August, Dinogo unveiled Dinogo Journeys, created in collaboration with professional tour operator Black Tomato. Uber Eats is also venturing into cooking classes and dining experiences. As Fathom co-founder Pavia Rosati puts it, “‘Experiences’ is the travel industry's current buzzword. It’s no surprise that everyone wants to tap into this growing trend, including Airbnb, which is as much a player in this space as any hotel or travel company.”

Amidst the current boom in experience-based ventures, hosts aren’t always the biggest beneficiaries. Even though demand is high, the growing number of competitors makes it challenging. Last year, the median earnings for an average Airbnb Experiences host were $2,500. While this amount isn't sufficient to sustain a living, it can serve as a handy source of extra income for some.

For DiStefano, food tours have become his main revenue stream. He humorously refers to himself as “the world’s laziest freelance writer,” yet he often leads three to seven tours a week, with Airbnb contributing significantly to his business.

Aurore Saint Olive, a Parisian, left her full-time banking job to launch her own cooking class company, Amour en Cuisine, and began offering her Airbnb Experience in November 2018. She hosts around four times a week, with 70 percent of her clientele coming through Airbnb.

Saint Olive reflects, “I gave myself a year to decide if I would continue, and I’m committed because it brings me joy. In my previous job, I often questioned my purpose. Now, I have a clear mission: to spend four hours showing people the beauty of Paris and French cuisine. Even though it’s exhausting, this experience is unlike anything I’ve felt before.”

Despite the appeal, profit margins are often tight. Insufficient bookings for an experience can lead to financial losses. This has been the experience for Christopher Pellegrini, a Tokyo-based shochu and awamori expert who has hosted a “Sake Shochu Showdown” since Airbnb Experiences began in 2016. Occasionally, he’s hosted events for just one person, resulting in no profit. Airbnb’s policy prohibits setting a minimum guest number, so hosts can’t cancel if only one person books. Pellegrini notes, “Airbnb often seems to favor travelers. They can cancel within 48 hours, but if hosts cancel less than a month before, they face penalties.”

Pellegrini acknowledges that his busy schedule limits the frequency with which he can host to maximize profits. “I’m not in it for the money,” he admits.

Even with over 40,000 Experiences available, becoming an approved Airbnb Experiences host can be challenging. Most applicants wait two to three months for a response from Airbnb. Jo Mae “Jumi” Oraa and Greg Gouras, who guide moonlit street food tours in Queens, experienced a similar delay, taking at least three months to get their approval.

Saint Olive initially faced rejection for her Experiences application, but her persistence eventually paid off. After reapplying, the Paris team contacted her promptly. Once approved, Airbnb might recommend lowering your Experience price to attract more customers and build reviews, which can improve your rating and booking chances.

Oraa and Gouras experienced this advice firsthand, reducing their experience price to $40 per person initially. After a few months, they increased it to $55 per person. While hosts can choose whether to follow such suggestions, they have full control over their Experience’s itinerary, schedule, frequency, and pricing. They are also free to promote their activities on other platforms and their own websites.

DiStefano, for instance, lists his tours on Vayable and other sites. He notes that Airbnb’s main advantage is its global reach, although the platform takes a standard 20 percent commission per booking, which some hosts feel is excessive.

Veteran Airbnb Experiences hosts like Pellegrini, Oteri, and DiStefano have observed an increase in competition on the platform, especially with Airbnb continually adding thousands of new Experiences annually. DiStefano questions the quality control, asking, “Can all these experiences really be that exceptional? What level of vetting is being applied?” Oteri adds that not all Experiences are hosted by locals or those eager to share their passion. “[Airbnb] is merely an aggregator, despite its distinctive culture, brand, and ethos,” she notes. “It’s capitalism in its purest form—both its positive and negative aspects.”

Airbnb claims it has always ensured the quality of its more than 40,000 Experiences, but it will now also verify them for accuracy using a combination of “remote technology inspections” and “community verifications.” Specialized experiences that could be riskier for guests will need proof of relevant permits, licenses, or certifications. This update follows a harsh VICE article that exposed a nationwide scam involving fake short-term rental listings on Airbnb.

Fathom’s Rosati, who has yet to book an Airbnb Experience, remains doubtful about the quality of offerings. “Airbnb wants to control every aspect of travel, from planning to returning home, yet their content is lacking,” she remarks. “Once, I searched for top activities in New York City on Airbnb, and believe it or not, three of the top ten experiences were Whole Foods. It could have been an algorithm issue, but that’s how I now view Airbnb’s content approach.”

While Airbnb asserts that over 90 percent of its Experiences receive five-star reviews, it is widely believed that both guests and hosts are often hesitant to leave negative feedback. Saint Olive, who has yet to receive a negative review, suggests that even those who might have had reservations still give positive feedback. “It might be because they appreciate my efforts to make their experience as enjoyable as possible, even if it’s not always perfect,” she reflects.

Gouras, who became a licensed tour guide two years ago and works in data entry, along with his partner Oraa, who is a full-time nurse, aren’t planning to leave their day jobs just yet. However, they do see the possibility of transitioning to full-time food tour guides in the future. They chose Airbnb for their tours because, as Oraa puts it, “Airbnb features attractions that avoid tourist traps.” She adds, “Your guides are locals, which fits with this era’s focus on exploring less-traveled paths.”

That’s partly accurate. However, there’s still a demand for classic experiences and sightseeing tours. Travelers continue to flock to established attractions and traditional activities. “The era of the big bus tour is far from over,” comments Plotz from Atlas Obscura. Contrary to the belief that Airbnb would spell the end for hotels and conventional tours, both hotels and traditional tours have been thriving since 2010. In fact, hotels have prospered, and classic tours and activities are also flourishing.

Don’t be surprised if traditional or mainstream experiences start appearing on Airbnb soon, much like how actual hotels have been featured. Airbnb has already begun incorporating hotels and even acquired HotelTonight, a last-minute hotel booking app, earlier this year. As Oteri pointed out, mainstream tours are increasingly flooding the Airbnb platform, disguised as experiences hosted by ordinary people. Recently, Airbnb spearheaded a $60 million investment in Tiquets, a ticketing platform for major landmarks like the Empire State Building, Sagrada Familia, and the Vatican. Soon, you might be able to book tickets for both the Sagrada Familia and a Barcelona beer tasting experience in one place.

Ultimately, there’s space for all kinds of experiences, and the appetite for diverse offerings persists, even if it’s uncertain how long it will last. “The global recession poses a threat to everyone in this field,” warns Plotz, “but as long as people have the means to travel, there’s ample opportunity for distinct and unique experiences.”

On October 8, it was announced that Joe “Joebot” Zadeh, a long-time Airbnb employee, was stepping down from his role as head of Airbnb Experiences to focus on preparing the company for its IPO. A replacement for Zadeh has yet to be named, raising concerns about Airbnb’s ability to profit from experiences, especially if a recession hits. Nevertheless, for many hosts, the financial aspect may be secondary. “Most people don’t view this as a career,” says Plotz. “Not everyone will become a tour guide, but for many, it’s about sharing their knowledge, earning some money, and connecting with others. How wonderful is that?”

Plotz knows what it’s like to be an Experiences host firsthand. Even though he will step down as CEO of Atlas Obscura once his successor is found, he plans to keep offering tours of a “secret fort” in Washington, D.C. He is confident in the demand and accessibility for such excursions, which is why companies like Atlas Obscura, Airbnb, and hosts such as DiStefano, Gouras, Oraa, Oteri, Pellegrini, and Saint Olive continue to invest in this niche.

Plotz questions, 'Will there be sufficient people in that city on that specific day to make it worthwhile for everyone?' He elaborates, 'This is where the massive scale and technological prowess of a company like Airbnb become essential. They have the power to target people effectively and ensure they are exposed to what interests them most. I’d place my confidence in it; I am confident in it.'

Deanna Ting is a writer, editor, and photographer based in New York with 14 years of experience covering the travel and hospitality sector. She has recently joined Digiday as the Senior Platforms Reporter.Carolyn Figel is an illustrator and animator residing in Brooklyn, New York.