In 2010, I was working on an update to our U.S. vacation rental market research, and one name kept popping up: Airbnb. I began digging in. The model was odd – people rent out their primary residences or spaces within their homes – but the product and founders were compelling. They took a very design-driven, customer-focused approach, and online booking and guest reviews – largely eschewed by the vacation rental industry to date – were baked into their model from the start.
I sent a note to the Phocuswright analyst team: I’m not sure about this idea of people renting out their primary homes, but there’s something going on here. This is one startup to watch.
The story since is now well known. One in three U.S. travelers stayed in some form of private accommodation in 2015, up from one in 10 in 2011. Airbnb, now the fourth-largest online travel company in the world by gross bookings (and second by valuation), has ridden – and driven – that wave.
How Airbnb Did It
There are many factors in Airbnb’s remarkable growth. I have written about them,researched them – and spoken about them – extensively: design, booking, two-way reviews, data-driven product development and marketing, innovative growth hacking, among much else. But if I had to pick just one as most important, it would be this: They figured out early on that the host is the lynchpin.
Why is that so important? Well, how do you create some semblance of product consistency across millions of homes when you don’t own the inventory? Post-booking, the guest experience is completely in the hands of the host.
And Airbnb has created an incredible community of engaged hosts.
I witnessed this firsthand at the Airbnb Open. I spoke on a panel with Chip Conley and other hospitality and tourism leaders about how Airbnb and the travel industry could better collaborate.
With 10 minutes left, some 30-40 attendees lined up to ask questions. We couldn’t get to them all. And when the panel was over, I was swarmed by 15 or so hosts, each of whom pressed me with questions about the marketplace and how to be better hosts (while two very kind security staff observed and offered to whisk me away).
OK, 15 may not seem like a lot (for a mild-mannered travel analyst, I felt famous for 15 minutes!).
I speak at numerous travel industry events every year and increasingly, I have been asked to speak about the rise of rentals and Airbnb, among other trends. I’ve spoken about the impact of Airbnb, the competitive risks to hotels, and I frequently challenge the industry by emphasizing the changes knocking on their doors. But I’ve never been swarmed.
Maybe now and again a hotelier, vacation rental property manager or technology startup will come up afterwards with a follow-up question or two.
Chip made this observation to me afterwards [paraphrased]: “So much of the industry research is about the numbers. Of course that’s important, but the Open can introduce you to the softer side of Airbnb – its community of passionate hosts.
This is a powerful lesson for all of travel, tourism and hospitality. Airbnb has a remarkable built-in advantage: its community of highly motivated hosts, who are directly and financially incented to provide a great experience. Imagine what your last hotel stay might have been like if every employee at that hotel were similarly motivated.
Oh yeah, Airbnb introduced its Trips platform. I have lots of thoughts on that – more to come soon!
Vice President, Research
Learn more about the Airbnb consumer in the publication, From Hotels to Homes: Opening the Door to the Airbnb Traveler.