72. The Airbnb Effect

“Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening” – Tom Goodwin

The entry of Airbnb has revolutionized the way we look at the lodging and hospitality industry. As part of the shared economy, the brand has been perceived as the biggest competitor to traditional hotels. A report by Morgan Stanley found that “42% of Airbnb users have replaced a traditional hotel stay with an Airbnb property”. For Forbes magazine, the “Airbnb Effect” means cheaper rooms for travelers and less revenue for hotels.

One of the many reasons as to why the brand is so popular among tourists is because of its unique concept: authentic lodging experience- in people’s real homes- at an affordable price. Airbnb accommodations are preferred because guests can have the whole place to themselves at a very reasonable rate, something that is not provided by traditional hotels. Tourists love the originality and personal touch of Airbnb accommodations. Today, tourists are longing for local experiences, and Airbnb is the perfect way to experience the local customs and traditions. Interactions with the hosts and neighbors can make any solo traveler feel at home.

Listings on Airbnb are not traditional rooms and guests can book anything between castles to bungalows. The brand also has a reach to small cities or areas where hotels have a limited presence.  Today, Airbnb has pushed to provide luxury experiences where guests can rent designer homes at a higher price range.

The effect of Airbnb is felt more during festive seasons, which was traditionally the peak periods of revenue for the hotels when rooms are scarce and customers are forced to pay higher rates. Today, Airbnb is seen as a feasible alternative in such situations.

Since its founding in 2008, the number of Airbnb properties have seen an exponential rise. Airbnb offers listings in 191 countries with a total number of 4 million listings. Thus, the competition between hotels and Airbnb is intensifying.

One of the major challenges facing Airbnb is the lack of regulation. There should be efforts to regulate the home rentals that make up the Airbnb properties. The brand has also been criticized for its impact on the neighborhoods, due to the increase in traffic. There has also been a decrease in rental availability as landlords find travelers more profitable than long-term tenants. Local restrictions are other problems facing the brand today. Nevertheless, the brand is a testimony to the fact that today people are looking for expenses, which means that Airbnb is here to stay for long.

Source: BBC