I heart Airbnb
Airbnb and other vacation rental sites are disrupting the hospitality industry, but that doesn't make it a threat. The variety it offers in terms of product and price point are attractive to travelers. At the same time it has the ability to grow lodging capacity in destinations in a sustainable way. So what's the problem?
When I met Airbnb co-founder Brian Chesky a few years ago at a tech conference in Hong Kong, I pulled him to the side and said, "I'm in the hotel business, and I think you're going to kill it. But I love it." It was an exaggeration. I don't think Airbnb will KILL the hotel industry. But I do think it has great potential to support the tourism industries and local economies of destinations where it's present — which is namely everywhere.
So what is Airbnb, and why do I think it's here to stay?
Why would someone stay at a stranger's place?
- Via crowd sourcing, travelers get access to thousands of unique and often affordable lodging options in brilliant locations.
- Using a social network, travelers and hosts review one another in an unbiased way.
- Travelers are invited to reach out to hosts before making a booking request. This acts as a means to gather needed information on a house or destination, or see if they get a good vibe from the host or not.
- Likewise, hosts may choose to accept or deny a reservation request based on guest profile, guest reviews, the way guests ask for information, their personal story or anything else they feel comfortable with.
- And because hosts are incentivized to answer queries on a timely basis to ensure their rankings are up, both guests and hosts are likely to have some level of personal interaction before any booking is made.
Some people praise Airbnb for offering a local experience, a chance to live with a local resident who can expose you to experiences off the beaten track. Others say Airbnb offers affordable options in cities like Hong Kong, which are otherwise unaffordable unless you want to sleep standing in a tiny room at Chung King Mansion. All these reasons are true. What I think is that there are also others looking for a unique (read: non-hotel) experience, where they don't have to pay for unwanted facilities and services like overzealous bellmen and room service, swimming pools and continental breakfasts.
Bill Carroll at Cornell said there was too much "hoopla" and commented on the lack of consistency amongst Airbnb listings, comparing a stay at an Airbnb home to the basics of a stable in the nativity scene. He's right when he says that "isn't a chain property."
But while many people love and patronize branded hotels, I'd guess there are people who would be happy to pay to stay in Joseph and Mary's manger. The more important fact is that most listings are gorgeous — from modest couches to penthouses. Even Conan O'Brien listed his NBC TV studio on Airbnb in 2011.
One more thing: many hotels are trying to offer the "home away from home" experience. Airbnb does it without having to try.
And for the hosts?
Aside from offering an extremely flexible platform to rent your space with customized rates, minimum stays, deposits, cleaning fees, cancellation policies, etc., it offers hosts the ability to reject reservation requests and also provides US$1 million of free insurance to all hosts against property damage.
Is Airbnb really as big as it says it is?
Airbnb has more than 500,000 listings in close to 200 countries and more than 30,000 cities around the world. It's in North Korea and the Republic of Congo. That's more than any existing hotel chain. And its growth is exponential.
But to really get an idea of how big it is, you should get on Airbnb’s website and look up your neighborhood. You'd be shocked to see how many of your neighbors are Airbnb hosts.
It's killing the hotel business.
Actually it really isn't. B and Bs, vacation rentals, VRBO, couch surfing, house swaps. These have always existed. Plus, I don't think anyone would argue against the fact that hotel chains have also been responsible for "killing" the mom-and-pop lodging experiences of destinations. Or chain businesses in general making it virtually impossible for any mom-and-pop to exist.
So why the row?
A study conducted by Boston University’s School of Management found that hotels in the Texas market took a 0.05% hit in total revenue for every 1% increase in Airbnb listings. And most hoteliers find it easier to point fingers and throw a fit without looking at the big picture. The end result? The hotel industry worldwide is furious with Airbnb's success, saying it's more of a fluke than a successful business model.
The government argues that companies like Airbnb are illegal, as hosts generally don't pay taxes from earned revenue. If you think back, this is similar to the issue faced by eBay or other small online merchants that don't collect sales taxes, but still exist. The other issue that's most prevalent and known in places like New York City is the fact that many hosts are illegally subletting their spaces. But if Airbnb is under attack for this, surely the likes of Booking.com, Flipkey and other vacation rental sites should be too. As far as I know, none of them take proper action to ensure the host has the legal right to sublet their space.
Why should we support Airbnb?
Most people don't realize the peripheral economic and social benefits Airbnb has.
- Airbnb is providing affordable lodging options in otherwise unaffordable destinations. Travelers are now able to visit these destinations and spend tax dollars in other ways — airfare, transport, food, retail, etc.
- According to IESE and ESADE-Creafutur Business School, a study found Airbnb generated US$175 million in economic activity in one year in Barcelona and supported 4,310 jobs.
- Airbnb gives individuals opportunities to earn supplemental incomes — especially important in difficult economic times.
- Airbnb provides for a more social world, and if you've ever been a backpacker you might appreciate the opportunity to speak to a host who's more likely to be a like-minded person than the operator or receptionist of a hotel.
- Airbnb could also be a catalyst for social change by helping communities in the third world develop themselves by earning extra money, or just by opening themselves to visitors from the other parts of the world and sharing their ideas (culture) with them.
What more? It's a sustainable solution.
We all know the most sustainable building method is to use an existing building. We also recognize the importance and relevance of a sharing economy in today's world. From Zipcar to bike shares, jet shares to co-work spaces, individuals realize they either need less in a world obsessed with consumerism or have something they want to share with others who need it. What most don't realize is how sustainable Airbnb is. People have space others need. So why not make that available? If you want to tax them, fine, but facilitate it.
Will it last?
Just as eBay makes it possible to democratize commerce and SoundCloud provides a platform to share free music, I think Airbnb will prove to be a leading source of lodging options and travel services of the future. It's a clear case of supply and demand, and I hope governments will enable Airbnb to operate more freely without making them responsible for the actions of their hosts.
In addition, because it's led by young entrepreneurs who "get it" and has the likes of hotel veteran Chip Conley holding the head of global hospitality role, Airbnb has the incentive to stay relevant, the ability to innovate better and the ability to bring new ideas to market faster than any hotel chain out there.
What's my point?
Craft House Founder and Director, Yvette Jong, contributes regularly to her HOTELS Magazine Blog titled, "The Good, the Bad and the Funky." Topics of discussion include all aspects of hospitality development, operations, branding, marketing, human resources, sustainability and much more.