The media latched on because it was
new and shiny and everyone loves a good
technology story. Their product was built
with the emphasis on consumer interface
over the actual product — the inverse of
Marriott starting with a physical hotel and
evolving over time to an industry-leading
digital consumer interface. But a lot of the
early buzz seems to have faded. Investors
certainly did, but then they slowly realized
an issue. They realized that Airbnb was at
best a reincarnation of early hospitality
companies going through the maturation
phase from disjointed, inconsistent and
hard-to-secure individual locations to
formally organized ‘hotels’ at a very rapid
pace, or worse, a glorified online travel
agency (OTA) with a less desirable overall
product portfolio than their competitors.
I believe they realized this because Airbnb
also realized this. It was new, and the concept
was fantastic (just as the original concept
of B&B’s were a great way to leverage
underutilized space and create authentic
experiences — of course, somewhere along
the way people decided hotels were a
better solution to the problem, and thus the
evolution began, so…) but scaling it while
guaranteeing quality standards, service
standards, and especially security were
proving to be difficult. In response, Airbnb
dipped their toe in the traditional hotel
space. Though they don’t call it that, I’m
hard-pressed to see the difference between
a Residence Inn and an ‘apartment building’
developed exclusively for rental on Airbnb
(outside the quality of service, of course).
They’re exploring the meta-search, online
travel agency model by leveraging their
consumer base to redistribute traditional
hotels on their platform. They’re carving out
specific portions of their portfolio for specific
functions – such as corporate housing or
daily ‘business’ rental units (sounds a lot like
Marriott’s brand strategy doesn’t it?).
Airbnb’s problem today is that they’re
solving problems that IHG solved decades
ago. How do you create secure, scalable,
quality consumer experiences in a way that
is also profitable for owners? You build
Holiday Inn Express, that’s how. How do you
build an engaging digital consumer
experience? You do it by building Hyatt
World and integrating the purchasing and
on-property experience into a single
application. It turns out Airbnb wasn’t so
much disrupting anything on the hospitality
side, they were recreating the wheel by
starting with a very shiny block of stone.
Given these challenges, I remain skeptical
that Airbnb will disrupt the traditional
hospitality industry in any meaningful way
(and the growth statistics on hotels certainly
support my skepticism).
AIRBNB’S PROBLEM
TODAY IS THAT
THEY’RE SOLVING
PROBLEMS THAT
IHG SOLVED
DECADES AGO
To make matters worse, it appears
the lead they (perhaps) once had over
the OTAs in distribution and product
differentiation may have also been more
appearance than reality. Both of the major
OTA conglomerates (Expedia and Booking)
distribute hundreds of thousands of ‘home
rentals’ varying in size and scale from lofts
to castles. Even Marriott, a hotel company
with such an established user base that it
operates with advantages similar to an
OTA, has integrated the sharing economy
into their brand portfolio (as have Hyatt,
Accor and many others).
So where does all this leave Airbnb?
Well, they’re profitable, so while they may
not have been the disruption engine they
were originally forecasted to be, they have
certainly carved out an attractive niche that
appears to be more additive to the travel
and leisure space than it was competitive.
That said, the future of the company remains
somewhat unclear given the leadership
changes in late 2018. My guess: it picks one
of two paths forward. Leverage its still semi-
distinct portfolio of product to build out a
true 3rd player in the OTA market by fully
integrating the product it was (supposedly)
destined to kill. This feels most likely as the
decentralization of the hotel marketplace
is what made OTAs so profitable in the
first place, and this problem is even more
amplified in the distributed ‘home-sharing’
marketplace. Or they may double down
on the reimaging of the future hotel in
building out the Airbnb brand as a true
‘home away from home’ model similar to
startups like Sonder, which a recent Forbes
profile unironically referred to as ‘Airbnb-
style Apartments’ being developed into a
different kind of accommodation.
Regardless of the path they
take, I believe two things:
1. Hoteliers and their representative
companies should be very proud of the
consumer experience and marketplace
they’ve built. It may not be disruption-
proof, but it certainly proved to be much
more resilient than many believed.
2. Airbnb should pick a path forward
quickly before the Sonders of the world
‘disrupt’ them just as the Marriotts
of the world out-digitize them.
Elevating the Art of Business Travel
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