Originally a relatively small website created to connect hosts and travellers, Airbnb expanded at an astronomical pace over the past few years. Today, the site offers its services to more than three million people per year around the globe. Some consider the growth a result of the injection of more than $120 million in venture capital a few years ago. Others consider it a product of word of mouth advertising among satisfied users. Either way, the spike in popularity means property owners have added an abundance of new listings, which now total more than 300,000 options in 192 countries. Despite recent reporting of scandals (discussed below), Airbnb opens a world of opportunity for inn and Bed and Breakfast owners who want more exposure and clients.
A shining example of a new movement termed the “sharing economy,” AirBnb provides a direct link between the guest and the host without the need to go through an intermediary. Of course, the site takes a small commission on each transaction, a fee added in to the booking price. Airbnb co-founder Joe Gebbia spoke as a headliner of this year’s LeWeb conference in London, which focused on the sharing economy as its theme. In his own words, “the story of Airbnb is really the underdog story.” It all started when he and his flatmates decided to rent out airbeds in their living room (hence the origin of the name) to business travellers who had come to San Francisco to attend conferences. From its humble beginnings, Gebbia says he “wanted to create an experience for our guests: more than just a place to sleep. We wanted to cook breakfast in the morning, we wanted to provide a subway map for our guests, pick them up from the airport…”
In effect, the roommates formed an improvised Bed and Breakfast in their own apartment. Surprisingly, Gebbia and his other co-founder Brian Chesky managed to rake in $1,000 rather quickly. A third co-founder, Nathan Blecharczyk, joined the team and helped create the first proper website for the service, originally known as Airbedandbreakfast. To gain better name recognition, the group chose to shorten their name to Airbnb in 2009.
Worth a look: This Airbnb infographic “10 Million Guest Nights Booked” by Kelli Anderson
Once on the road to success, it was only a matter of time until Airbnb ascended the ranks of travel websites. Gebbia revealed some of the keys to his business advancing in this difficult economy: hire staff in the other countries, expand the community of hosts and plan meetups for users. For example, the site announced one such occasion in London the day before the LeWeb conference. Gebbia explained, “Entrepreneurship is about connecting two dots in a new and different way… My advice for aspiring entrepreneurs out there is to marry the problem. Find a problem that you’re so close to that you can empathise with it in a way that others can’t… You can see it so closely, that it gives you that ability to connect the two dots together” (1).
According to Dennis Jones, the CEO of the mobile phone and card transaction specialist Judo Payments, one cannot deny the role of mobile phones in people’s daily lives today. The shift from shopping in retail stores to internet-based vendors, and also from using computers to mobile phones and tablets, also coincides with a revolution in the hospitality industry. As far as parallels, Jones identifies companies like Airbnb, “driven by the sharing economy… are cutting into hotels, car sharing services, even plane sharing services” (2).
Now, a word of warning. Some bad always seems to accompany the good, right? With every decision comes the consequences. While registering for the site of course increases visibility, this practice can also incite the wrath of legal experts, especially in regions where one must license or register rooms for rent. Perhaps the most well-known episode of this sort of drama occurred this spring, when a prosecutor in the Big Apple brought apartment owner Nigel Warren before a judge for conducting unlicensed short-term room rentals. To defend their user (and in another sense, the site’s platform as a whole), Airbnb provided its own lawyers to help Warren out. Unfortunately, they lost the case, and the judge ordered the defendant to pay some $2,400 (£1,600) in fines (3).
Gebbia retorts to critiques about the site’s ambiguous legal status, “When the car was introduced in 1908, people could experience a brand new way to travel that was more efficient than a horse and buggy. Can you believe that cities tried to outlaw cars in the United States? Can you imagine driving a car for a year then having to go back to a horse and buggy? The policy-makers adjusted to meet the demands of the people. We believe it’s time for our invention, and it appears the world agrees” (1).
After the news broke of Warren’s plight, similar efforts arose in Amsterdam and Quebec to limit Airbnb’s ability to conduct business. Montreal hotel industry officials estimate that sites like Airbnb cause traditional accommodations to lose a massive amount of revenue through the diversion of reservations to property owners. Daniel Weinstock, Professor of Ethics at McGill University, brings up the memory of Napster, one of the earliest sites to pioneer sharing music online. Although authorities shut down Napster a decade ago, ultimately they made their efforts in vain, as music downloads (legal and otherwise) have never been more popular (4).
To respond to concerns about whether Airbnb’s growth necessarily means bad news for the traditional hotel industry, Gebbia stuck by the potential of his website for all sorts of rental locations, from small to large format. He continued with an illustration of this concept: “If you have a pie-chart of all the available combinations in a city, it’s not like we’re taking a slice out of the pie. We’re taking the pie and making it bigger” (1). Debatable? Perhaps, but as the age-old phrase says, “if you can’t beat them, join them!”
In fact, when one thinks about it, professional guesthouses and Bed and Breakfasts on AirBnb can take advantage of the best of both worlds. They can access the site’s click traffic without having to worry about the potential for legal concerns because they’ve already registered their properties. Plus, with an established reputation, these owners will rise above the rest when it comes to quality ratings on the site. At the very least, from the perspective of the traveller, professional offerings usually guarantee privacy and cleanliness. Anyone who backpacked around Europe as a youth and stayed in hostels knows that these details count among the most important aspects of a comfortable night’s sleep, something shared rentals popular on Airbnb can’t always offer.
Finally, the company made great strides in its attempts to reassure users on both sides of the transactions. For example, they created a 24-hour crisis management hotline, added section of safety tips to the website, and “a link to contact the CEO.” In August, 2011, Airbnb CEO Brian Chesky wrote in a blog post that the site’s “trust and safety center has ‘tips’ for choosing guests and putting up the right postings.” The company also claims a $1 million (£600,000) “host guarantee,” a form of insurance to cover property damage and theft.
So, should you list your property on Airbnb or not? Peter Tompkins, who started subletting his London flat one year ago, felt that overall it has proven a positive experience. The worst case scenario in his words happens when “a book goes missing or some cutlery goes out on a picnic and doesn’t return.” On the flip side, he states, “I have not yet had a visitor I actually disliked. And they are gone after a few days – unlike a flat sharer” (5). After a few simple clicks of the mouse, your property can join the online rental frenzy that has become Airbnb. With some luck and internet-savvy skills, soon the online traffic will translate into foot traffic for your business.
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1. Dredge, Stuart. “Airbnb co-founder: ‘We believe it’s time for our invention, and it appears the world agrees.'” The Guardian, June 5, 2013. http://www.guardian.co.uk/technology/appsblog/2013/jun/05/airbnb-leweb-london-joe-gebbia
2. Zainzinger, Vanessa. “Three thought-leaders on thinking big with mobile.” RealBusiness, May 28, 2013. http://realbusiness.co.uk/article/20058-three-thought-leaders-on-thinking-big-with-mobile
3. Stevenson, David. “City Insider: Growth – it’s back and it’s online.” Travel Weekly, June 06, 2013. http://www.travelweekly.co.uk/Articles/2013/06/06/44288/city+insider+growth+-+its+back+and+its+online.html
4. “Airbnb : une concurrence déloyale?” Radio Canada, June 4, 2013. http://www.radio-canada.ca/emissions/medium_large/2012-2013/chronique.asp?idChronique=296110
5. Heyden, Tom. “Airbnb battles: Would you stay with strangers?” BBC News Magazine, February 6, 2013. http://www.bbc.co.uk/news/magazine-21339891