Airbnb has ambitious plans for Africa, as its CEO, Brian Chesky, announced in Johannesburg on July 27. Already in 17 countries on the continent, the accommodation listings company has seen its listings in Africa more than double over the past 12 months, and the number of visitors increase by 145%. Airbnb has named a general manager for the region, is considering opening regional offices, and plans to extend its “host guarantee” (which compensates homeowners for damage caused by guests) to Africa.
This enthusiasm makes sense, because Africa—like Cuba, where Airbnb is also growing fast—presents the company with a singular opportunity: There are too few budget and mid-priced hotels. Data from two providers, Statista (subscription required) and STR Global (pdf), both show that the Middle East and Africa region have the highest average daily rate for a hotel room, though their numbers vary:
A study (pdf) of the Texas hotel market, published in May by Boston University researchers, found that Airbnb listings there competed with lower-priced hotels, rather than hotels catering to business travel. The study found that after Airbnb entered the Texas market, the hotel revenue of budget and mid-price hotels decreased by 8%-10%. Those hotels have responded by reducing their prices.
In Africa, however, such mid-range hotels—at least, the brands that international travelers recognize—are thin on the ground. “The huge emerging middle class is travelling more than ever, most often on business. But if you were travelling to Kinshasa, Kampala, Conakry or Cotonou, how would you know where to stay?” asked Gillian Saunders, a partner at the Johannesburg office of the international advisory firm Grant Thornton, in a post two years ago on the company’s blog.
Saunders told Quartz that Airbnb’s continued growth in Africa will depend on its location choices, and the company’s ability to source a variety of budget- to mid-priced listings that are reliable and safe, guaranteed by the company’s peer-reviewed online booking platform. Clearly, the company is betting on being able to do just that.