Is Airbnb really a disruptive force in the travel space or is it nothing more than a super-cool website? Pamela Whitby goes in search of answers

Once in a while a new business comes along that threatens to disrupt the traditional hospitality industry. In 2008 that company was arguably Airbnb.

The timing it seems was perfect. The global economy was in turmoil and people were trying to find ways to either save money or make money. Here was a business which allowed people to rent their homes, a room or even a sofa for additional income. But it also meant that cash-strapped consumers didn’t necessarily need to forego the annual holiday. Accommodation could be found on Airbnb’s website that didn’t break the bank – and it might even be stylish, fun and unique to boot.

Fast-forward four years and in 2012 the start-up is reportedly valued at over $1billion and is ranked number 19 on Fast Company’s Top 50 of the world’s most innovative companies list.

The success is in the sharing

Speaking at EyeforTravel’s Travel Distribution Summit in London last week, Christopher Lukezic, Airbnb’s head of communications for EMEA spoke of a third wave sweeping the global market place of the internet. The first wave was driven by commerce and saw the rise of online retailers like Amazon and Ebay. Next came what is now coined Web 2.0 or the rise of social interaction online. The third wave is one of collaboration and sharing. “People used to boast about what car they drove, now they boast about the car-sharing club they joined,” says Lukezic, who argues that while people still want access to products they no longer need to own them. Airbnb’s success, he says, is in tapping this new paradigm of sharing and collaborating and is rooted in community spirit.

Of course it hasn’t all been plain sailing. While meteoric growth may be good on one level, it also draws the attention of the world’s regulators. In a recent court ruling in San Francisco, Airbnb, like all hotels in the city, will now have to pay a 50-year-old ‘transient occupancy tax’ (currently 14% of the booking value) which so far it has avoided. If other city regulators follow this could hit the business model. Then there was horror story last July that went viral after a member’s property were ransacked by guests Airbnb had connected them to. Airbnb now offers advice on how to avoid such a scenario but it doesn’t stop people from revisiting their home insurance policy which may not cover such incidents. This too could push up prices.  

Should hotels be worried?  

In spite of this, if the numbers being bandied about – and the number of times the start-up’s name was mentioned at the Travel Distribution Summit– carry weight, Airbnb may be a force to be reckoned with. Since launching in 2008 it is said to have enabled more than 4.5 million bookings on 100,000 active listings in 192 countries. Moreover not only is it adding a thousand rooms daily, but bookings are growing at a not-to-be-sneezed-at 40% every month. Not just for people on a budget, it also caters for travellers looking for that all important holiday ‘experience’ as Don Birch writes about here. If you want to rent an island or stay in an airplane-styled-tree-house, Airbnb will not disappoint.   

So should hotels be worried? We put the question’ to a handful of big hotel names last week. “Only time will tell,” one large hotel chain told EyeforTravel. “Last year everybody was talking about Groupon, this year it has barely had a mention. Let’s wait and see if next year, we are still talking about Airbnb.”

Another felt strongly that Airbnb was getting far too much “free press” at the conference. “This is not a new concept and there is plenty of competition out there. It may be a nice website but that’s it.”

The point is a valid one, though for the record we absolutely were not being paid to market Airbnb! He may also have to think somewhat differently if predictions materialise that sometime this year, the start up will book more rooms per night than Hilton Hotels, the world’s biggest hotel chain.  

Of course there is competition aplenty in this space. HomeAway, the vacation rentals business which had 530,000 paid listings by December 2010, is just one but others are popping up all over the show. But perhaps the key point that this hotelier makes is on the issue of the website design. Many travel businesses have still not yet grasped the importance of an aesthetically pleasing, well-designed user-friendly website that integrates social media and actively engages its community. But this is one thing Airbnb, founded by two designers, does extremely well; it fully understands that when a space is brilliantly photographed, bookings soar. Recognising this, it even offers members a free professional photography service when they decide to list.

 Airbnb is undoubtedly riding the third wave and is sweeping up some competition like UK-based Crashpadder along the way. Will it be around next year? We think so but even if it isn’t, others would do well to take a leaf out of the company’s design book.