In 2007, the rise of the sharing economy began when Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, founders of Airbnb, had the brilliant idea of connecting travelling renters with hosts. Since then, the now household-name has become the world’s leading digital platform of its kind, used in more than 100 countries and by over 8 million guests. What started as renting out airbeds in three founders’ San Francisco apartment has turned into a global phenomenon that is now revolutionizing the hospitality industry.
What is Airbnb?
Airbnb is a digital market platform that connects people in need of short-term accommodation with informed hosts who provide a comfortable environment and local experience to guests. Effectively, it is an online alternative or addition to hotels or ‘bed and breakfast’ lodgings.
A Brief History of Airbnb
In October 2007, Brian Chesky and Joe Gebbia, two entrepreneurs and designers, launched Airbnb. As the legend goes, when 650 guests attended the Design Studio at Industrial Design conference in San Francisco, the two took a chance into a new business by renting out their loft and 3 airbeds. This test-run was a success and the duo found it to be a worthwhile venture. October 2008 saw Nathan Blecharczyk joining the Airbnb team of then-three and the web platform was officially launched.
Today, Airbnb boasts more than 3 million listings in 65,000 cities around the world. In recent years, the success of the platform has enabled the company to expand its offer with new services such as ‘Experiences’ and ‘Trips’.
The Benefits of Airbnb
The success of Airbnb stems from the fact that it appears to offer more advantages than standard accommodations.
Flexible Payments
Airbnb commitments are necessary for either a few hours or an extended period of time, enabling hosts to set accurate and flexible payments for their guests.
Affordability
Affordability is paramount to the success of Airbnb: its median overall price is roughly 50% cheaper than the typical hotel rate. This is due to diminished overhead, admin costs, and zero interest in turning a profit.
Authentic Experiences
Not only do Airbnb hosts offer a friendly and flexible environment to their guests, they also often offer the opportunity of truly local experiences. Hosts are usually eager to get to know the people who stay with them, hear their stories, and may even take them to local attractions as part of their offer.
The Impact Airbnb’s Impact on the Hospitality Industry
The rapid growth and success of Airbnb over the past decade is disrupting the hospitality industry in numerous ways, both for better and for worse.
Value to Consumers
From the consumer’s point of view, the success and expansion of Airbnb has been a relief. With no sign-up fees, easy access to honest online reviews, plus a wide variety of locations and rates, travelers can now enjoy unforgettable experiences in unique settings.
Rise of the Sharing Economy
The growth of Airbnb has spurred a global shift towards the prevalence of the ‘sharing economy’, where people rent, borrow, and exchange goods and services in a more peer-to-peer fashion.
Changing Roles of Hotels
A study conducted by the Harvard Business School found that the presence of Airbnb listings in a given market caused a 9-year decrease in hotel performance, as well as leading to a 5-year decrease in hotel employment.
Differentiation
One strategic response hotel chains have developed to maintain their competitive advantage is to differentiate their offer. Some have chosen to pursue a strategy of providing experiences and amenities to hold interest, such as exclusive luxuries, guest-request lounges, pet-friendly hotels, and special events.
It is safe to say that the success of Airbnb has had an undeniable impact on the hospitality industry. Over the past decade, the site’s availability and accessibility have revolutionized the traditional hotel industry, enabling much better value for its customers and greater scope for their experiences. Through its attraction of hundreds of millions of users and excellent experiences, the company continues to prove its place as a powerful disruptor and leader in the hospitality industry.
