Airbnb is a long time coming result of consumer behavior shifts in the hospitality and travel industry. During the C2 Conference in Montreal on May 25th, the head of global hospitality and strategy at Airbnb, Chris Conley, perfectly explains that Airbnb’s success stems from “following trends of disruption in the hospitality business and understanding shifts in consumer behavior.” Like at any successful company, Airbnb is simply an example of how businesses with a competitive edge remain relevant because they understand their target audience’s pain points and have found a way to solve them.
Prior to World War II, the majority of American’s didn’t stay in hotels. The wealthy did experience luxury hotel living; however, many American’s stayed in boarding houses until the 1950s. During the 1950’s the country began to build interstate highway systems as a way to eliminate unsafe roads, inefficient routes, traffic jams, and the like. By improving efficiency and encouraging more drivers to get on the road, this economic development spurred family travel. That is why 1953 marked the first disruption for the hospitality industry where mainstream hotels, including but not limited to, the Holiday Inn, began opening across the US. As Conley puts it, “travelers [in the 1950s] wanted predictable, ubiquitous experiences,” and that is what hotels were able to provide.
Originally the founder of Joie de Vivre, a boutique hotel chain, Conley found the Airbnb business model interesting because “they were trying to democratize hotels, and they were trying to improve hospitality for people who were traveling, but they were doing it without their own employees.” This is how Conley came to a realization that the birth of Airbnb was preceded by the three rules of innovation.
1. Innovation doesn’t happen without foreshadowing.
From the 1950s to 1980s, the hospitality industry did experience some form of growth. In the 1970s, timeshares were first introduced to fill the void of people wanting second homes but not being able to afford them. The 1980s then introduced boutique hotels that focused on design and unique experiences. Over time, these small, yet significant disruptions began to foreshadow a majority of American’s not wanting a predictable, ubiquitous experience anymore. Instead they wanted unique and personalized experiences. Timeshares provided travellers to experience what it would feel like to live where they travelled and boutique hotels give travellers the personalized experience they were seeking.
2. Innovators address a human need that isn’t being met.
Airbnb’s founders originally came about the idea to rent out air mattresses on the floor of their San Francisco apartment during a design conference when most hotels were sold out. Since then, with the birth of Airbnb, they’ve “moved beyond air mattresses to houseboats and treehouses,” Conley said. Addressing people’s need to have a more affordable, localized experience was solved by Airbnb.
3. Overtime, the establishment embraces innovation that was once disruptive.
Since then, Airbnb has been embraced by the industry, by the greater American population, and today, globally. Over 2.2 million homes are currently on Airbnb with over 90 million users in 34,000 different cities around the world.
Being able to address a need and providing a solution for that need, Airbnb is a perfect example of a company that really understands their target audience. Conley best describes the success of companies who innovate “have got that pair of glasses on to see that foreshadowing. Great disruptors are great at understanding human psychology, and, over time, the establishment jumps on the bandwagon.”
Looking into the future, Conley believes the next trend will be for global nomads. He states that “sixty percent of Airbnb stays in Manhattan are a week or longer. There are also a growing number of global nomads who don’t have a home or a car. They have a smartphone and a laptop, and they live their lives on Airbnb.”