Online homestay aggregator Airbnb is pouring money into its Indian operations.
For the financial year that ended in March 2018, Airbnb India, a subsidiary of the San Francisco-based company, reported a revenue of about Rs35 crore ($4.95 million). Nearly all of it came in the form of foreign exchange as “professional and consultation fees,” according to Tofler, a business intelligence platform which accessed Airbnb India’s filings with the registrar of companies.
The filings list Airbnb’s holding company in Ireland as the sole client. “This is some commercial arrangement where Airbnb India is claiming services delivered to the parent entity as revenue,” said Yugal Joshi, vice-president at Texas-based consulting firm Everest Group.
Airbnb India declined to comment for this story.
Airbnb India’s year-on-year profit also grew by 85%. This reflects the net balance of the Indian subsidiary’s transactions with its parent company, and not earnings from Indian bookings made on Airbnb’s platform.
“The bookings are done with the Airbnb holding company,” said Anchal Agarwal, CEO at Tofler. “Airbnb India is providing business development and marketing services to the holding company.”
Incredible India
Parent company Airbnb turned profitable in the second half of 2016, and continued in the green throughout 2017 on the back of a 150% rise in bookings globally. In sharp contrast, Indian travel stay aggregators have been suffering heavy losses as they race to multiply revenues and capture a greater share of both domestic and international markets.
For instance, OYO, India’s only travel accommodations booking unicorn, lost an estimated Rs325 crore in the financial year 2016-17.
While OYO ties up mainly with hotels, Airbnb focuses on homestay accommodations, generally charging a 3% commission fee on bookings. After it moved to a franchise model, OYO began charging commission rates of around 22%, and says it lists the services of more than 8,500 hotels.
Meanwhile, Airbnb expects the Indian travel market to grow to $40 billion by 2021. And the company is moving fast to grab its share. The states of Goa, Rajasthan, and Kerala are currently the most popular destinations for tourists on its platform, while metropolitan cities such as New Delhi and Mumbai are the top choices among business travellers.
“With over 30,000 listings in the country, Airbnb listings in India have grown by 115% over the past year. There has been almost 2x growth in the number of nights booked on Airbnb in India since 2016,” co-founder Nathan Blecharczyk had told The Economic Times newspaper in February.