made its first acquisition as a public company. This company is Gameplanner.AI
, an AI startup that was founded in 2020 by Adam Cheyer, one of the founders of Siri. Interestingly, $AAPL acquired
Siri for more than $200 million. According to Airbnb, this acquisition will accelerate some of Airbnb’s AI projects. Those AI projects could be related to Brian Chesky's travel concierge
vision that learns about users over time and enhances their travel experiences. With the company being profitable and having $11 billion in cash and liquid assets as of the end of September, Airbnb has dry powder to acquire struggling startups.
While there are many things Airbnb can do with Gameplanner.AI, let's think of how this AI program can be used to boost booking conversion rates. Using a conservative ROI analysis, let's assume:
- there are 150 million users on the Airbnb platform (source)
- average booking value is $161 per night (source)
- Airbnb gets 5% of the booking value
- Gameplanner.AI increases the conversion rate by 2%
This means Airbnb gets:
- 3 million extra bookings
- $483M in incremental gross booking value
- $24.15M in incremental platform revenue with the 5% fee
- 12.08% annual ROI on Gameplanner.AI
The annual ROI that $ABNB
will receive from Gameplanner.AI will grow overtime. While the projected breakeven in Airbnb's acquisition is after 8 years, the breakeven point could come sooner as Gameplanner.AI's capabilities grow during its time at Airbnb. With the conservative analysis I've laid out, the chances of this acquisition providing attractive returns remains high. Also, Airbnb will be acquiring many AI researchers that would otherwise be hard to recruit in the first place due to the fierce competition for AI researchers.
Airbnb shareholders should celebrate the acquisition. The future of Airbnb with this acquisition looks exciting.