6 Ways Airbnb Changed Hospitality and the Vacation Rental Industry

Hotel chains and industry associations might be lobbying to regulate sites like Airbnb out of Airbnb August 2014existence, but you can’t deny that the site has forced change upon the industry. Like flying with low-cost airlines –another model that disrupted the status quo and forced incumbents to change their practices the site wouldn’t exist if people weren’t comfortable with using it.

Originally published by Skift last week, this article lists the ways in which Airbnb has shaken up the hospitality industry. As I discuss below, there are lessons to be learned for consumers and traditional accommodation providers. Read on to see my take on Skift’s analysis of the sharing economy giant.

Article starts:

Sharing economy companies have truly changed how we visit destinations, how we stay there, and how we move around.

Services such as Uber and Airbnb have taken the best of the web, mobile, and social to create travel products that allow people to find rides or places to stay with an ease that was previously unheard of. Their success has shown the errors of regulation in some areas, as well as demonstrated that hubris and a disregard for local laws isn’t the hinderance to success that one would assume.

Here’s how Airbnb made things better:

Transactions are safer and easier: Amounts are kept by the service until a stay is complete and all parties are satisfied. Prior to Airbnb, getting a vacation home or short-term rental involved payments that were fraught with red flags: Western Union money transfers to a guy in central Florida, a cashier’s check left at a bodega, all the money upfront for an unseen beach house on the Jersey shore.

At Airbnb users are given a level of comfort and security by being able to pay for transactions with credit cards, having amounts set aside until the trip is complete, and being able to dispute charges or request refunds. It’s not perfect, but it’s closer to a hotel-like experience than what existed before it came on the scene.

Feedback is transparent: Vacation rental sites were really just modern classifieds before Airbnb emerged. An owner or real estate agent would buy space, post their listing and the space was theirs. There was no easy way for guests to leave comments or share experiences, and no way for future guests to get advice from previous ones. And God knows how long ago those photos were taken.

But since hosts do not own their listing page on Airbnb, guests can rate and review without fear. Hosts can review back, knowing that bad guests will be called out by other hosts. That’s the advantage of Airbnb’s model: take a cut of the transaction rather than sell space.

Discovery is easy: Searching on Airbnb is like Booking.com or Starwood. You see rooms, locations, prices, amenities, and so on upfront. Sorting is an ease, and there is original content from local experts explain destinations. Since guests are often looking at lodging outside of city centers, the big maps tell you right where you’ll be. Guests can read about hosts and see previous guest reviews to determine if they’re staying with someone who knows what she’s doing, or just some dude trying to dump his crappy studio on some poor tourist for the weekend.

Pictures are nice: Looking at pictures on some old-school sites results in a “what were you thinking?” moment. Airbnb still offers to send professionals to your house to photograph the place in many markets. Genius. There’s a reason why users spend more time on Airbnb than any other travel booking site: It’s half travel planner, half real estate porn. Want to see the inside of a cool Venice, California bungalow? A Paris pied-à-terre? Go to Airbnb. It’s a Pinterest with direct booking.

The flip side is also true. When a host can’t be bothered to take a good picture, they may not be bothered to clean the sheets or empty the fridge. Or they are truly scary.

Cities are bigger: While we reject Airbnb’s characterization of what their typical hosts are like, we agree completely with their arguments for how they’ve made cities bigger. New York’s most popular neighborhoods are not the ones with the most hotels; Harlem has one good hotel, but 1,000 Airbnb listings. A simple search on Airbnb by neighborhood in other markets tells the same story.

This tells us a lot about how people like to travel now. They don’t always want to be stuck in a central district with other tourists (although many do, because that also means better transport and services) and they’re seeking out alternatives.

Rentals are safe: We’ve ignored the stories about Airbnb orgies, call-girls, and destruction because they’re so fringe as to be not worth covering. The Airbnb squatter? Fascinating but rare. If you’re a user or a host you can almost always rely on the review system to alert you of bad actors and you can pick and choose based on the criteria that’s important to you.

We pay for the Associated Press, Reuters, and news feeds from papers across the U.S. and can tell you that there’s not a day goes by when there’s not a crime at some hotel — murder, child trafficking, Crystal Meth production. But it’s a rarity at Airbnb. This will likely not last for ever — the social graph can only protect you so far once you become wildly popular — but it has worked so far.


My take:

My interest in this subject is overwhelmingly driven by what consumers get from the experience, and why they are using sites like Airbnb in ever-greater numbers. When easyJet launched in 1995 offering flights for just £1, people said it couldn’t be trusted and started to strongly question where the flaws were. Still, like online shopping and other game-changing models of the internet age, consumers used it, liked what they got, and went back for more.

Crucially, their decision wasn’t always motivated by low-prices (though that’s central to the premise). Flexibility, a fresh approach to customer service and airlines projecting themselves as another part of consumers’ lifestyle brand mix were also important. Today, consumers (especially Millennials) are displaying similar motivations and patterns of behaviour. They are discovering a brand and a way of consuming that fits with their lifestyle and values.

Making cities bigger

What also stands out from Skift’s article is a reminder that Airbnb has ‘made cities bigger’ in the sense that the focus of tourism activity has widened to the suburbs as consumers opt for lower prices on the outskirts, and an opportunity to discover outlying districts where hotels might be scarce but the way of life is a genuine reflection of the destination. For consumers seeking authenticity, a chance to meet local people and consume-local, again Airbnb offers this in spade-loads. While the site definitely takes a hefty slice of commission from service (accommodation) providers, the money renters receive invariably goes to help with household costs, rather than into the pockets of large corporations, as this article in El País about its impact on those renting rooms in Barcelona described last month.

A happy medium

While sites like Airbnb have clearly taken root, it is important not to get caught up in the hype or overlook their flaws. The site might be slick and professional, but renters are amateur businesspeople, some of whom like those on the High Street, aren’t very good. Sharing economy sites, local authorities responsible for hotel taxation and traditional accommodation providers are still yet to find a happy balance and an adequate regulatory means of protecting consumers. For the time being however, consumers – with Millennial travellers leading the way- will continue to use services like this in ever-greater numbers knowing that ultimately they have the power to denounce poor service when things go wrong.

2 thoughts on “6 Ways Airbnb Changed Hospitality and the Vacation Rental Industry

  1. It’s interesting to see what happened in the 4 years after you published this article. In the meanwhile, Airbnb became the most 3th most visited travel website worldwide and is the most downloaded (android) travel app in the US in August 2018.

    I think we are still not there yet. It wouldn’t surprise me if they will be the nr 1 most visited website in a few years. Last week I also shared my view on Airbnb and made some predictions about the travel market for 2025. Hope it’s of interest to you: https://www.geckoroutes.com/travel-insights/most-popular-travel-booking-websites-apps/

    1. Interesting perspective Maarten, thank you! What we didn’t perhaps see so well four years ago is the impact that short term vacation rentals (from a variety of platforms) have had on the life of destinations. As they have grown bigger in scale, in those four years, the impact has become very stark in places, leaving questions over the extent to which the major platforms you mention in your article shape the way that visitors behave, and the outcome on urban and rural life. Let’s see how that works out in the coming years!

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