Posted on April 1, 2017 by Wilson Pindercot
In an announcement that has sent shockwaves through the travel industry, Austin-based boutique hospitality operator The Guild has entered into a definitive agreement to acquire AirBNB, the iconic accommodations marketplace that has raised over $4 billion of venture capital. This transaction comes as a surprise to many investors who had anticipated an AirBNB IPO in 2017.
While the terms of the deal have yet to be disclosed, awaiting an FTC antitrust review, sources close to the matter speculate that the purchase price could be as much as $50 billion, a meaningful premium to the $30 billion valuation of AirBNB’s most recent financing round. This hefty price tag would make sense, given AirBNB’s rapid growth trajectory and immense popularity.
AirBNB has been a game-changer for intrepid, budget-conscious travelers but has drawn the ire of conventional hoteliers and civic regulators. The Guild, a relative newcomer to the hospitality scene, has quickly established itself as the accommodation of choice among discerning travelers who like to stay in unique spaces but also expect the comforts of an upscale hotel.
According to entertainment news outlets, several A-listers crashed at Guild properties during the South By Southwest annual boondoggle in Austin last month. Celeb guests included billionaire Shark Tank investor Mark Cuban, funnyman Seth Rogen, hip-hopper Snoop Dogg and even country music legend Garth Brooks. TMZ reported that Rogen hosted a "modest but exclusive evening gathering" at his Threadbare Hip Suite at Guild East 6th. SXSW socialites marveled about how Guild City Center eclipsed Spotify House and Hotel San Jose as "the place to see and be seen" at this year's conference.
Despite The Guild's obvious popularity among celebs and upscale travelers, many industry veterans are questioning whether this is the right strategic move for AirBNB. Jim Oppenheimer, a travel news columnist from Skift offered up one hot take. "For several years AirBNB has been betting the farm on Super Hosts and their ability deliver AirBNB guests a more consistent and reliable experience. How ironic that AirBNB is now being subsumed by one of its most prolific super hosts."
Unlike AirBNB, which serves as a marketplace to connect travelers with third party hosts, The Guild is a vertically-integrated hospitality operator. Because it controls its rental inventory, The Guild also controls every element of its product and guest experience. This degree of control also enables the Guild to work closely with government regulators to play by the rules and pay taxes.
Meanwhile, AirBNB and The Guild share a passion for enabling authentic travel experiences. Unlike traditional hotels, neither AirBNB rentals nor Guild properties have lobbies or other common areas. The Guild’s team of local hosts encourage guests to support nearby local businesses, endorsing hidden gems like that lobster taco food truck on Austin’s East Side.
Success for The Guild has not come without it’s challenges. The TravelCrunch team recently sat down with Guild Operations Manager Dave Schwartz (an enthusiastic millennial with an unkempt beard) who spoke candidly about the arduous journey. “When I joined the Guild seven months ago, did I think it would take this long to get to achieve this degree of success? Of course not. But, we kept telling ourselves that it’s all about the journey rather than the destination. It’s gratifying to know that those countless weeks and months of hard work have finally paid off.” In a generous gesture, The Guild has waived the customary twelve-month cliff on Dave's stock options. Let's just hope Dave can now afford a beard trim before meeting AirBNB's operations team here in San Francisco.
According to sources close to the matter, AirBNB Co-Founder Brian Chesky will share the CEO crown of the new combined entity with Guild Co-Founder Brian Carrico. Not only do Chesky and Carrico share first names and initials, they also share a bold vision for the company’s future, which combines eclectic accommodations, unique local experiences and high standards for product and service quality. The latter is where industry insiders believe the Guild could really complement AirBNB by operating and curating properties with exacting quality standards.
“The whole situation is surreal.” said Carrico. “Just a few years ago, my wife and I were managing a small handful of cabins along the Frio River in West Texas. Today, I’m co-running a multi-billion dollar company that’s reinventing how people travel. It just goes to show that anything is possible with hard work.”
The Guild is expected to phase the AirBNB brand out over the course of two years. Sally Beckinsworth, a San Francisco-based brand consultant thinks this is the right strategy. “The Guild is the logical evolution of the AirBNB story. Community has always been central to AirBNB’s success and nothing personifies community better than The Guild.”
Guild Head Innkeeper Chris Herndon is ecstatic about the transaction and is hopeful for the future . “While the headlines may claim that The Guild acquired AirBNB, we very much view it as a merger of equals. The AirBNB team is extraordinary, and we can’t wait to collaborate with them on this bold experiment. I have no doubt the best is yet to come.” As an early adopter and brand evangelist of both products, I'm hopeful that this power couple can live up to its promise.
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