5 Challenges for Airbnb Experiences

Skift

19-05-2025

The latest version of Airbnb Experiences won't be a slam dunk even with a $250 million investment, and Airbnb hiring staff with experiences on their resumes.
Airbnb has a strong brand and millions of loyal users – but its mission to build a $1 billion experiences business in the next few years will face multiple challenges.
"Whether the unit economics are good enough, whether there's enough supply, whether it's big enough to be more than a rounding error on [Airbnb's] total GBV [Gross Booking Value]: these are all outstanding questions," wrote Thomas Reiner, a partner at Altimeter Capital, in a recent research note.
Among the challenges:
1. Low Growth Rates
Reiner noted that the tours and activities sector "just isn't growing that quickly." Using a variety of industry sources, Reiner estimated that the total addressable market for the global tours and experiences sector would grow at a compound annual growth rate of just a 7% rate from 2024 to 2030, to $400 billion.
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Reiner wrote that to reach its goals, Airbnb would need to onboard a large number of smaller, often offline experience providers, or take market share away from Viator, GetYourGuide, and Klook.
But Viator – owned by Tripadvisor – still isn't a $1 billion business and it is considered by many to be the industry leader. Its 2024 revenue was $840 million.
Skift Research and McKinsey have previously noted that the total experiences market could be as high as $1 trillion. However, Skift Research estimated the serviceable addressable market that businesses can target and serve at $250-$310 billion.
An Airbnb spokesperson said: "We've been preparing for the launch of Services and a reimagined Experiences business for years — rebuilding our tech stack and perfecting our core service so that it's easier to use, more reliable, and more affordable. The launch was just the beginning - along with adding more services and experiences offerings, over the next several months and years, our goal is to expand our business and bring people together all over the world."
2. Small Basket Sizes Compared With Hotels
Reiner wrote that "the economics aren't great" for experiences, which sometimes can include a $50 cooking class versus a $500 hotel room for a night or two. For the operator, paying a $12-$13 commission on the $50 cooking class is a big chunk, which discourages partnering with online travel agencies.
For Airbnb and other activities aggregators, "the servicing costs and the marketing costs for that experience aren't going to be terribly different than they are on $500 hotel rooms so the economics aren't nearly as attractive," Reiner said.
Reiner didn't mention Expedia and Booking Holdings, but many large online travel companies have shied away.
For example, Expedia offers experiences but has never made them a top business priority. And Booking Holdings tried to build an experiences business from scratch before the pandemic, and scrapped it because of the challenges in building it up.
Booking had acquired activities software provider FareHarbor in 2018, but ultimately decided to partner with experiences companies such as TUI, Klook, and Viator.
Airbnb has 'learned a lot about experiences over the last few years," said Chief Business Officer Dave Stephenson, who was speaking at the Skift Asia Forum just two days after the company relaunched its experiences product. 'We've learned that people really desire them. But we need to make sure they are unique, different, and of the city,' Stephenson said.
3. Airbnb Would Have to Capture Travelers Twice
Reiner argues that people don't usually book experiences at the same time as they book a stay so "booking behavior doesn't align."
He said Airbnb would therefore have to re-engage travelers when they are ready to book a tour, "which is difficult or expensive or both."
In addition, many travelers book tours and activities in the moment rather than through prior reservations online.
Another big issue is that major tourist attractions take bookings directly, often not needing to use the services of middlemen like Airbnb and other online travel agencies.
Airbnb has noted that in a global survey, more than 75% of people said they've traveled — or plan to travel — somewhere specifically for an experience or activity.
4. Quality Is a Good Goal, But Tough to Achieve
Airbnb is trying to ensure that the experiences it offers are top quality, a laudable, if hard to realize goal.
[Airbnb CEO Brian] "Chesky is attempting to tie the unique and differentiated supply and the brand voice that Airbnb has to the experience supply," Reiner wrote. "If it works it'll be killer and well loved and definitely deserving of the 20% take-rate. But one has to acknowledge that this is attempting to conquer the most disaggregated and complicated part of the market TAM."
On the plus side, Airbnb brings its brand strength. It's much better known than Viator and GetYour Guide, although people think of Airbnb for places to stay and not for tours of the Louvre. Airbnb also has its huge customer base, and guests at a destination who will be looking for things to do.
However, Reiner writes, Airbnb has not proven that it can cross-sell from stays to experiences, and faces aggressive competition in the U.S. and western Europe.
Stephenson emphasized the importance of the quality. 'We don't just let any experience onto Airbnb,' he said. 'We're only bringing on experience hosts that know the city best.'
5. Selling to Locals and Travelers
Airbnb may also find it tough to meet its stated goal of selling experiences and services to both travelers and locals. Many travel businesses have tried such a dual target audience in the past without much success.
For example, when Booking Holdings acquired restaurant reservations platform OpenTable for $2.6 billion in 2014, officials talked about the synergies between travelers and locals all wanting to book restaurant reservations. There was talk that its brands, including Booking.com, Kayak, and Priceline, would all tout OpenTable restaurant reservations on their pages to snag travelers flying into their destinations.
That synergy didn't occur and Booking took a $941 million writedown on the OpenTable acquisition two years later.