April 9, 2025
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Airbnb is considering a move into the car rental industry. CEO Brian Chesky has flirted with the idea for multiple years, and company investors have grown excited with his vision for the future. With aspirations to add multiple subsidiary companies under the Airbnb umbrella, Chesky has introduced plans to allow hosts to list vehicles through the Airbnb platform.
Likely to be popular among hosts with investment properties, this feature could be beneficial to millions of listings. Seen similar to a jacuzzi or a home gym as a premium feature, offering car rental could lead to increased revenues for hosts, ease of the travel process, and customer experience for the consumer, and additional billions of dollars in revenues for the Airbnb brand.
As worldwide tourism has returned to historic highs following the hardships of the COVID-19 pandemic, the online travel sector, in particular, has benefited. In 2024, 70% of the revenue in the worldwide travel and tourism market came from online sources, with year-over-year growth expected through 2029 (Statista). As the third largest online travel agency (OTA) by revenue, the second largest in terms of market capitalization, and the most downloaded OTA with over 75 million downloads, the company has a great opportunity for expansion into vertical markets. Airbnb should leverage its extensive community of users to move into the car rental industry due to its mutualistic industry relevance and low capital expenditure needs, ultimately leading to increased revenues and an enhanced customer experience.
As home and car rentals are complementary goods, Airbnb has an opportunity to increase its revenues by allowing hosts to rent vehicles alongside their properties. Despite the company’s steady growth and strong market presence, Airbnb has struggled to monetize its success, reporting nearly a 45% decrease in net income from 2023 to 2024. This financial setback has prompted company leaders and shareholders to explore new revenue streams and diversification strategies.
Meanwhile, the car rental industry remains robust, ranking as the third most popular travel product booked online in the United States. As Millennials and Gen Z travelers increasingly seek to book their entire trips online, Airbnb should leverage its massive user base to enter the car rental market and meet this growing demand.
What the company will certainly be looking to avoid is having a negative automotive experience tarnish the reputation of the core Airbnb home brand. As the company will always be aligned first and foremost in real estate, some would argue that this would stray from brand identity, and the company should leave the car rental business to established brands such as Hertz, Enterprise, and the newly popular car-sharing service Turo.
However, Airbnb has an incredible opportunity to solidify its brand identity as a one-stop shop for vacation needs. By delivering the same product as competitors in a simple and consolidated manner, Airbnb would only bolster CEO Brian Chesky’s vision for the company. Airbnb has a unique advantage in the car rental industry that would be extremely difficult for its competitors to replicate. The company already has tens of millions of target customers visiting its platform.
In the current customer process, a prospective customer would book their accommodation first on Airbnb and then need to navigate away from the site to begin a separate transaction with a competitor. Allowing hosts to include vehicles in their listings enables a one-click buying experience for all vacation needs. This will lead to more in-demand property listings for early adopting hosts, a streamlined buying process for the customer, and a positive brand image for Airbnb, in turn increasing return customer rates, customer satisfaction, and revenues.
With such a move, the vacation staple would be able to successfully disrupt the car rental industry, as large capital expenditures would not be required for their success. The largest companies in the sector, such as Hertz and Enterprise Rent-a-Car, have multi-billion-dollar fleets of company-owned vehicles. Airbnb differentiates itself by avoiding the possibility of dangerous losses. Potential competitor Enterprise recently reported a $440 million loss on their electric vehicle gamble (Yahoo!). By limiting its capital outlay to software development and advertising, Airbnb has a much more manageable and predictable profit and loss analysis while taking on less risk than its competition.
Potential legal obstacles may be seen as a great enough reason to deter the company from entering the car rental business entirely. With physical damage and injury inevitable, the company needs to implement strong legal contracts protecting them and their hosts against customer malpractice.
Airbnb could further protect itself against this threat by requiring insurance for its users. This could be done by upgrading their “AirCover” coverage for both hosts and guests. Currently, AirCover covers damage or liability issues during a guest’s stay. Although costly, it would be smart for Airbnb to include auto coverage in this policy. In doing so, revenue gains will far outweigh the potential costs. With their extensive user base, Airbnb will be able to incentivize millions of hosts to rent their vehicles to users, streamlining the vacation process, increasing customer satisfaction, and boosting revenues.
Overall, this model solves a major problem of accessibility. Not long ago, it was well documented that Airbnb pricing was especially outrageous in the path Taylor Swift’s Eras Tour would follow. As negative press circulated about hosts tripling prices, customers began to ask how the company could allow for such surge pricing. Encouraging customers to rent cars as a part of their vacation experience will lead to a more expansive and diverse ‘hot spot’ in high-traffic areas.
With Airbnb group sizes increasing and nuclear families renting vehicles at a significantly high rate, customers of both of these industries may desire more space in their vacation homes. This will likely not be found in the city centers, where most Demetriades 3 concerts and attractions are held. In totality, this implementation will benefit both more hosts and more guests, as a greater number of listings will become incrementally more valuable while offering guests a reasonable vacation option further away from popular attractions.
Airbnb would be foolish not to take the next step into the car rental industry. With a low cost of entry, their expansive community would be intrigued by such a complementary good. As both the vacation and car rental industries share similar customers, Airbnb could introduce a new revenue stream that would realign them with the success of the online travel industry. Making vacation rentals more accessible and affordable would be beneficial, in both the Airbnb home and car brands, and is a major reason why the company is primed for success in this new market.
Overall concerns regarding liability and brand alignment will be far outweighed by new revenues. Simple measures can be taken to protect Airbnb against legal feuds and brand alignment concerns, benefiting the company in the long run. Ultimately, by utilizing its loyal user base and entering a naturally aligned market with minimal upfront costs, Airbnb can generate new revenues while streamlining the travel experience for customers. This expansion not only reinforces Airbnb’s position in the online travel space but adds further value for the company, the brand, and the community.
A senior at USC’s Marshall School of Business, currently pursuing a degree in Business Administration with an emphasis in Entrepreneurship. My experience includes roles in recruiting, private equity, and finance, with exposure to both startups and established firms. Overall, my personal passion lies in connecting business strategy with real-world impact, with a particular interest in how innovative thinking, collaboration, and strong leadership contribute to sustainable growth across industries.
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