Remember how you went to a travel agency to book your holiday? Nowadays you just open your laptop and arrange your entire trip within minutes. Information technology and Web 2.0 made a lot of change possible and encouraged new ways of booking hotels and buying flight tickets online. New players are forcing established companies to change their business plans or even forcing them out of the market. One of these new and disruptive players is Airbnb.
How did Airbnb shake up the tourism accommodation landscape?
In order to find out how Airbnb and peer-to-peer accommodation disrupted the travel industry, we first need to define what a disruptive technology is. Disruption describes a process whereby a smaller company with fewer resources is able to successfully challenge established incumbent businesses (Christensen, Raynor, McDonald, 2015).
There are three criteria for a technology to be disruptive:
1. Initially low popularity, but later goes mainstream
2. Lacks important qualities of prevailing product, but is often cheaper and has other advantages. It later catches up with mainstream standards while preserving advantages that drove early success
3. Disruptive technologies have very different business models than incumbents
How do these criteria apply to a ‘sharing economy’ business model such as Airbnb?
Initially Airbnb had limited popularity as it was aimed at a small market segment which was not exploited by incumbents. In the summer of 2015, the amount of guests increased to 17 million which suggests that Airbnb expanded rapidly and gained incredible popularity. (McAlone, 2017)
Airbnb meets the second criterion as the company had a lack of important qualities of the traditional travel model used by established travel agency companies. Initially, Airbnb was not able to compete with its competitors in terms of brand reputation of hosts, staff friendliness and customer service skills. However, the online platform excelled in other fields such as being cheaper and easier to use than the traditional way of booking accommodations.
Finally, Airbnb has challenged companies using the traditional travel agency model by providing an online marketplace permitting ‘peer-to-peer accommodation’. One of the main challenges associated with a peer-to-peer platform is security. Airbnb has overcome this challenge by providing a secure booking platform where interaction is encouraged and trust can be established between hosts and guests.
Will Airbnb remain an established player in the travel industry?
We believe there is one relatively new technology that has the potential to be the next industry disruptor: Blockchain.
Blockchain is the underlying technology behind the bitcoin currency. It is essentially a distributed database to which data can only be added, meaning historic data cannot be lost nor corrupted. Peer-to-peer applications can also be created by using a Blockchain based network, meaning the organization will be decentralized. This will help to democratize the sharing economy by making it cheaper to create, operate and use the platform. It could coordinate the transaction process (which Airbnb is currently doing) with self-executing smart contracts. This will result in a home rental application only involving the homeowner and the renter, cutting out the middleman, in this case AirBnB.
Christensen, Raynor, McDonald (2015). What Is Disruptive Innovation?. [online] Available at: https://hbr.org/2015/12/what-is-disruptive-innovation [Accessed 20 Sep. 2017].
McAlone, N. (2017). This chart shows exactly how insane Airbnb’s growth has been over the past 5 years. [online] Business Insider. Available at: http://www.businessinsider.com/airbnbs-summer-reach-has-grown-by-353-times-in-5-years-2015-9?international=true&r=US&IR=T [Accessed 22 Sep. 2017].
