Airbnb Shows Its Hand. What Next?
AirBnB is open for Business Travel. You wouldn't have seen it coming 4 months earlier if you were listening to the industry leaders.
Chip Conley, AirBnB: "... I can't see we'll be going after the core business guest." Arne Sorensen of Marriott agrees pointing to the record numbers hotels are posting. Hoteliers are told they have nothing to worry about. Or do they?
AirBnB is a classic case of Disruptive Innovation: an innovation that creates a new market and in a few years, moves to an existing market to disrupt.
There is no reason for any of the hospitality leaders to spook the hoteliers. AirBnB, for obvious reasons and the brands because, well, they are in the business of building the "brand" to collect licensing fee. At its core, AirBnB is a technology company. Last time a new technology came up against the brands, we got Rate Parity and RoomKey.
The pace of disruption in this case (time between denial and announcement) is less than 4 months. 4 months! If you are a hotelier, dependent on the actual performance of your hotel, please read on.
If you are asking "is AirBnB a threat?", you are doing it wrong. Before we get to why, let's take stock of where we are. Everyone agrees that the AirBnB hosts should abide by all the laws and pay their fair taxes. This includes AirBnB though they think the laws need to be revisited. To best understand AirBnB, you should try it first hand. If you have not experienced AirBnB, let me indulge you a bit:
The AirBnB Experience
Recently, I had my first AirBnB experience. I registered late for a conference and found most hotels booked solid. So, I headed to AirBnB. The AirBnB UI is gorgeous but the beauty is not just skin deep. Every user interaction is thought through in great detail.
I had a few specific questions I needed answered before booking. I sent my question through AirBnB's messaging system to a property that seemed to fit the bill. While waiting for a response, I found a couple of other places that looked promising. On the messaging page for a new property, my original question was autopopulated. Just one click needed! In a matter of couple of minutes, I was able to select and communicate with 5 desirable properties. I had never experienced this in my entire hotel booking experience, ever!
A few minutes later, the answers started pouring in. I finally found the answer from a property I liked. I was feeling so productive! Just as I was wrapping up the booking, AirBnB reminded me that there were people who I have asked questions of. Perhaps I should let them know so they don't waste their precious time responding to me.
This, ladies and gentlemen, is technology in the service of hospitality. Helping both hosts and guests. The AirBnB magic continued. AirBnB technology kept me in touch with my host all through my stay and reminded (forced!) me to write a review.
Riding the dual trend: Software and Millennials
To understand AirBnB, you have to understand two big trends underway:
Millennials are the dominant group of the labor force today and growing (35% Millennials, 31% Gen X, 31% Boomers). The Millennials are the core business guest of tomorrow. A group AirBnB denies going after.
Software is eating the world.
AirBnB grew on the back of Millennials, starting in a downturn. It brought affordable and unique lodging options to a generation that's techsavvy but does not have much spending power. Born in the silicon valley, AirBnB brought strong technical chops to the table. To make sure they were "doing it right", they hired Chip Conley as their Hospitality Czar. Conley made sure every aspect of AirBnB technology was in the service of hospitality. The results speak for themselves. AirBnB has benefitted from the two trends Millennials looking for better experience on budget and software eating the world.
For most Millennials who have experienced AirBnB, the hotel booking/stay process is jarring. Due to historical reasons, the hotel industry embraced technology in a haphazard way. Brands, OTAs, and review sites imposed onerous and often conflicting technical demands on hotels. The result is a user experience that is not the best either for the guests or the hoteliers.
So what's a hotelier witnessing an about turn by AirBnB in less than 4 months to do? Treat the AirBnB threat as an opportunity to learn. AirBnB has shown how and what technology Millennials prefer to use. And now, you can too. Luckily, software is getting cheaper. It is in the cloud, for rent, on every device, without long term contracts, and is user friendly.
Don't wait for the next downturn and remember, anything can happen in 4 months.