Airbnb is an old idea with a new tech twist
29 AUGUST 2014 10:22 AM
Hoteliers shouldn’t worry about Airbnb. However, they can learn from it, writes Airbnb’s head of global hospitality and strategy, Chip Conley.
Additionally, for the past two decades, people have rented their second homes on Vacation Rentals by Owner, better known as VRBO, or their extra bedrooms on Craigslist. (Both those companies were founded in 1995.)
Despite these historical precedents, many in the hotel industry believe Airbnb sprouted out of nowhere. Airbnb’s innovation was the creation of an effective, modern digital interface and a connected, loyal community that helped broaden the marketplace of guests and hosts interested in home sharing. By marrying technology and trust, in just six years, Airbnb has grown to more than 17 million guests, with 70% of these guests from outside the U.S. On a global scale in 190 countries, Airbnb helps turn strangers into friends.
I’ll admit that when I was asked, as a hotelier who’d founded Joie de Vivre Hotels and subsequently created more than 50 boutique hotels, to give a speech on hospitality innovation at Airbnb’s funky headquarters in March 2013, I didn’t know what to think of the company. And, when I started working for the company soon after that, I didn’t understand the lingo (“shipping product,” “reducing friction,” etc.). I also was about twice as old as many of the employees. But, just as I was curious about them, it was clear this design-oriented tech company was genuinely curious about the generous spirit that defines hospitality.
The three founders of Airbnb started their company at the same age I started mine: 26. The parallels of Airbnb to what boutique hotels represented back in the mid-80s when I started my company are uncanny: experience-driven travelers looking to “live like a local,” staying in neighborhoods rather than downtown and often paying prices that were moderately below the better-known chain hotels. Traditional hoteliers dismissed boutique hoteliers like Ian Schrager, Bill Kimpton and me more than a quarter century ago with a lack of understanding that predictability and ubiquity were no longer the Holy Grail for a modern traveling public that was becoming more adventurous.
One piece of the puzzle
Airbnb is only one piece of the growing collaborative economy. David Brooks writes in the New York Times, “People are renting out their cars to people they don’t know, dropping off their pets with people they don’t know, renting power tools to people they don’t know.” He goes on to suggest that middle-class stagnation and the lingering Great Recession have created a new set of micro-entrepreneurs. There’s a growing number of freelancers and consultants who piece together their income based upon a disparate collection of skills, interests, hobbies and what the market will bear.
Airbnb’s data in New York City is a testament to this trend. Eighty-seven percent of New York City hosts are renting out their primary residence, with 62% of these hosts saying this supplemental income helped them meet their rent or mortgage payment. Almost half of the New York hosts who reported earnings had household incomes at or below the city’s average. The demand side of the equation is led by millennials who often base their lodging decisions less on the physical attributes of their accommodations and more on inspirations and aspirations, such as having a unique, casual and home-like experience.
Many hoteliers believe this is a fad, but I’m not so sure. While our efforts to teach the art and science of hospitality to hundreds of thousands of global hosts are still in the early stages, Airbnb guests already score their Airbnb experience higher than the average score of global hotel chains (based upon Net Promoter Score). And 70% of Airbnb hosts and guests review their experience, another sign that the Airbnb community is engaged and committed to this sort of travel.
I don’t believe hoteliers should worry about Airbnb’s emergence, but there’s much to be learned by this burgeoning platform.
Part of the reason you shouldn’t fret is because the average length of stay is more than five nights, so some of Airbnb’s core market is extended-stay guests. Additionally, a sizable portion of Airbnb’s thrifty guests would never have made the trip or would have stayed on a friend's couch if Airbnb didn’t exist. And, in most U.S. markets, Airbnb represents a small percentage of the total lodging revenue. Even in our largest American market, New York City (with about 25,000 listings), Airbnb represents a small percentage of total lodging revenue in that market.
What can a hotelier learn from Airbnb? More and more guests, especially millennials, want to live like a local and connect with hosts who can become friends. Help your guests find authentic, local experiences they wouldn’t find in the typical travel guidebooks. Members of the growing global middle class, many experiencing international travel for the first time, are looking for more space for less money, and they don’t require daily maid service.
All travelers are looking for a well-designed technology platform with online retailers like Amazon defining the standard to which hoteliers need to aspire. So make sure your website is state-of-the-art. And just as “revenue manager” became a new job category in our industry two decades ago, data scientists are the new career frontier for hoteliers. Mining data—to find guests as well as intuit their specific needs—is becoming a competitive differentiator for smart hotel companies.
An even playing field
As we move forward, Airbnb wants to ensure we have clear, fair rules for home sharing. This practice is often governed by a patchwork of confusing 20th-century laws that never imagined a 21st-century sharing economy. The laws are vastly different in the 34,000 cities in which Airbnb operates.
Our community wants to pay its fair share, and we strongly support sensible regulations for home sharing.
For example, this summer we started collecting and remitting occupancy taxes in Portland, Oregon. We will soon do the same in San Francisco. We will take the lessons we learn in these cities and move forward. We’re also always looking to help Airbnb hosts make their homes the safest on the block. For instance, earlier this year, Airbnb committed to shipping its U.S. hosts free smoke and carbon monoxide detectors if the host requested them.
Additionally, Airbnb can make a positive impact on the environment. We can help communities grow their lodging supply without having to waste precious resources building hotels that will be mothballed after major, one-time events. For instance, 20% of the international visitors traveling to Brazil for the World Cup stayed in Airbnb lodging.
Airbnb also can be a leader in providing immediate disaster relief assistance globally, as demonstrated during Superstorm Sandy when more than 1,400 New York City hosts opened their homes to those who needed a place to stay.
Airbnb isn’t a new idea. It’s an old one that has been updated for the age of technology.
No one has led the development, creation, and management of more boutique hotels than Chip Conley, founder and former CEO of Joie de Vivre (JDV). At age 26, Chip’s mission was to “create joy” by building a company that USA Today called “the most delightfully schizophrenic collection of hotels in America.” During his nearly 24 years as CEO, JDV grew to become the second largest boutique hotel company in America. (Chip is no longer an owner or leader of Joie de Vivre’s management business – now part of Commune Hotels – but remains a partner in several hotel properties.)
Honored with the 2012 Pioneer Award – hospitality’s highest accolade – The San Francisco Business Times named Chip the Most Innovative CEO – and JDV the 2nd Best Place to Work in the entire Bay Area. Chip received his BA and MBA from Stanford University and holds an Honorary Doctorate in Psychology from Saybrook University, where he is the 2012/2013 Scholar- Practitioner in residence. He served on the Glide Memorial Board for nearly a decade and is now on the Boards of the Burning Man Project, the Esalen Institute, and Youth Speaks.
He joined Airbnb as Head of Global Hospitality & Strategy, where he’s sharing his proven methods with hosts in nearly 200 countries.
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