Latest funding values Airbnb above hotel giant Marriott

Online accommodation site Airbnb will announce a $25.5 billion valuation following its latest cash injection of $1.5 billion from investors.
Written by Asha Barbaschow, Contributor

Online accommodation startup Airbnb may soon be worth $25.5 billion, following the raising of $1.5 billion in its latest funding venture, a source close to the deal told AFP.

A group of American and Chinese investment funds were involved in the discussions, which are aimed at expanding Airbnb's offerings in Asia, according to the source, who asked not to be named.

The funds are General Atlantic, Tiger Global Management, Kleiner Perkins Caufield & Byers, GGV Capital, Horizon Ventures, Hillhouse Capital Group, and China Broadband.

The deal could be announced as soon as next week, the source added.

At $25.5 billion, Airbnb would be worth more than hotel giants Marriott ($20.90 billion), Starwood ($14 billion), and Wyndham ($10.01 billion). Hilton Worldwide is valued at $27.7 billion.

Airbnb does not own a single hotel, hostel, or even a bed; rather, it makes its money by taking 3 percent of the transaction from the property owner, and 6 to 12 percent of the transaction from the traveller upon the two parties exchanging their services.

With a user base of more than 35 million travellers, Airbnb has said that its sales have surged from $250 million to $850 million in the space of two years, although no plans for an IPO have been announced by the company.

Airbnb's forecast $25.5 billion valuation will see the company join the ranks of taxi-service startup Uber, which is currently seeking to raise in excess of $1.5 billion in its next funding round to see the self-described ride-sharing company valued at $50 billion.

The Australian Labor Party launched a discussion paper earlier this year that examined Australia's sharing economy and the benefits of the peer-to-peer market, as well as the potential regulations that may need to be implemented.

Shadow Assistant Treasurer Andrew Leigh said in the discussion paper that while the federal opposition supports the likes of Airbnb, it believes existing regulations need to be addressed.

State governments in Australia are also getting involved, with the New South Wales Minister for Finance, Services, and Property Development Dominic Perrotet also calling on governments in Australia to do more on a regulatory basis to accommodate and integrate emerging tech startups such as Airbnb and Uber in the local market if it wants the country's economy to thrive.

"Millennials are a generation who prize access over ownership, they have been raised to ride with Uber, to holiday with Airbnb, to fundraise with Kickstarter, and to borrow from SocietyOne," said Perrottet. "These companies are creating a new group of what I call everyday entrepreneurs."

Just last week, NSW opposition leader Luke Foley announced his plans to introduce a private member's Bill to regulate ride-sharing services, such as those offered by Uber, calling on the state government to embrace the digital age.

"People are voting with their feet -- hundreds of thousands used Uber last year. And the public should be free to choose the services they want without fear of retribution from government," Foley said.

"The parliament should regulate to protect consumers and drivers by putting in place some basic standards. We need to find ways to encourage and facilitate the sharing economy."

Photo-sharing and messaging app Snapchat had its valuation pegged around the $19 billion mark after announcing its intention to raise $500 million earlier this year. This valuation came about a year after Snapchat had turned down a $3 billion takeover offer from Facebook, with the social media giant instead snapping up fellow messaging platform WhatsApp in February last year for $19 billion.

Personalised pinning platform Pinterest was recently valued at $11 billion, after securing more than $367 million in its bid to raise $577.9 million earlier this year. The digital scrapbooking-style service caters for more than 70 million monthly visitors, with more than 30 billion links, images, and ideas uploaded by its users.

With AAP

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