Airbnb is an online platform for lodging and tourism activities that transformed travel around the world. The company is accredited as a pioneer of the “sharing economy,” an economic system in which private individuals share assets and services. Examples of the sharing economy include ridesharing, home-sharing, reselling, coworking, and talent-sharing.
Airbnb is a home-sharing service as it doesn’t own the rentals listed on its platform but instead acts as a broker that takes a commission on every booking. While innovative technology certainly played a role in Airbnb’s success, what made it a disruptive company is focusing on experiences and convenience.
See what hospitality looked like prior to Airbnb and how the company shook up the industry by giving consumers what they were missing from hotels and other rental websites.
The Hospitality Industry Before Airbnb
Before Airbnb was founded in 2008, hotels were the primary option for lodging. Sure, there existed vacation rental websites before Airbnb. Vrbo (originally known as Vacation Rentals by Owner or VRBO) was created in 1995 and became the go-to place for booking short-term rentals online. While Vrbo expanded the vacation rentals market and continues to be a leader, Airbnb changed the hospitality game by offering more than home rentals.
When Airbnb entered the scene, the hotel industry didn’t consider the startup as a threat. Boston Hospitality Review notes that both the company and hotels claimed to serve different markets and have different business models. But hotels soon felt the impact of this disruptive company. According to the Bureau of Labor Statistics, a study found that Airbnb reduced hotel profits by up to 3.7 percent in 2014.
In addition to Airbnb’s growth and success, the vacation rental industry as a whole also shows strong projections. A 2020 vacation rental market analysis reported that the global vacation rental market size is expected to expand at a compound annual growth rate (CAGR) of 3.4 perfect from 2020 to 2027. The analysis states that millennials and younger generations are the major forces driving the growth of the vacation rental industry.
Let’s take a closer look at why younger travelers are moving away from traditional hotels and how Airbnb innovated the hospitality industry.
Younger Travelers Want More Than a Place to Stay
There are many reasons why millennials and Gen Z travelers are more inclined toward vacation rentals than hotels like low cost, comfort, additional privacy as well as kid and pet-friendly options. While these factors are important, another undeniable influence that’s drawing younger travelers to rentals is social media.
These days, many young adults want more than a place to stay — it must also be “Insta Worthy.” This means that the place is attractive enough to be shared with their social media followers on Instagram, TikTok, Snapchat, etc. And the more exotic, the better.
In addition to visual appeal, younger travelers are enticed by technology and unique amenities. From user-friendly booking apps to complimentary welcome baskets, they’re looking for places that offer ease and special attention to detail.
Airbnb Provides Experiences and Convenience
As noted before, Airbnb wasn’t the first to offer online booking for vacation rentals. What makes the company stand out is that it filled consumers’ need for affordability and convenience as well as their desire for memorable experiences. On Vrbo, travelers can only rent an entire house, condo, apartment, cabin, or villa.
Airbnb first disrupted the industry by allowing hosts to rent out anything from a whole house to a shared room. Travelers on a tight budget can find an inexpensive stay since a private or shared room costs much less than an entire place or a hotel.
The online platform also offers other types of lodging like campers, tiny houses, treehouses, and more. Airbnb even has a designated section called “Unique Stays” to provide inspiration for future getaways — as well as help those looking for the perfect “Insta Worthy” rental. Airbnb’s Instagram, which has 4.9 million followers, demonstrates the allure of exotic homes.
Not only did Airbnb open the possibilities for accommodations, but it also tapped into travelers’ desire for experiences. App and website users are able to explore activities related to food/drink, nature, culture, and more in any location. From bar tours to kayaking excursions, Airbnb makes it easy for consumers to plan their vacations right from their phones or laptop.
By using innovative technology to elevate experiences and convenience, Airbnb forever reshaped the hospitality industry. Connect with Mavericks Marketing today for a disruption strategy consultation to propel your business!