Airbnb Seeks Funding At $10 Billion Valuation; Most Valuable Startup?

Airbnb Seeks Funding At $10 Billion Valuation; Most Valuable Startup?
By DesignStudio (Airbnb's Design Department) [Public domain], via Wikimedia Commons

A $10 billion valuation would see the online home and apartment marketplace supplant both Wyndham Worldwide Corporation (NYSE:WYN) and Hyatt Hotels Corporation (NYSE:H). The former manages over 7,500 hotels under numerous brands including Ramada and is valued at $9.4 billion. Hyatt has a valuation of $8.4 billion.

$10 billion?

The company, in its sixth year of operation, allows people to rent out their homes, apartments, rooms or even couches with Airbnb responsible for collecting the “rent” determined by the host and taking its fees. Presently, the company has over 600,000 listings worldwide. While the company has always remained mum on revenue and profitability, in December it announced that it had facilitated 10 million guest stays with over half of that number occurring in 2013 alone.

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The service has received millions of glowing reports from both renters and guests alike, but when you are responsible of 10 million guest stays there will always be exceptions. Regulators have also focused on Airbnb with concerns and investigations of safety, oversight, and tax collection.

Airbnb: Trouble in rental paradise

Airbnb has recently received quite a bit of bad press with renters finding their homes trashed with used condoms and feces and, on one occasion, having their things thrown out on the street to accommodate a planned sex party.

After complaints from hotel owners, New York Attorney General Eric Schneiderman subpoenaed the company to discern whether or not a number of renters were violating a state statute that prohibits sublets of less than a month when not in the property themselves. Airbnb, rather than turning over the information, is fighting the order in court.

Despite this highly-publicized exception, both Airbnb and Uber are championing the “sharing” economy where users are able to offer a ride, a room, etc. for a fee that they set with the companies taking their cut.

The last round of funding for Airbnb was done in 2012 with a valuation of $2.5 billion. In the two years since, the company has added 160 countries to its rental service, many of which have far less regulations than the United States, and as a result has seen its valuation soar. Peter Thiel’s Founders Fund, Andreessen Horowitz and Sequoia Capital have all invested in Airbnb in past rounds.

In addition to its rental fees, Airbnb is actively pursuing additional revenue streams including its own cleaning service for renters in San Francisco and New York.

“We are actively looking to build specific services,” Mr. Chesky said in an interview with the Wall Street Journal in January. “We need to offer more.”

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