Is Airbnb Really Disrupting the Hotel Industry? A Look Behind the Scenes.

9 May 2017

Much Ado About Nothing or a True Disruptor? Examining the Hype of Airbnb

Digital technology has changed the business world considerably over the years. For starters, it has allowed for an increase in successful disruptive business ventures. But why is digital disruption so effective? Let’s look at the Airbnb case study, one of the bigger market disruptors in recent history.

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What is Airbnb

Airbnb is an online platform through which one can rent accommodation from homeowners. The company does not own any property; they merely help broker a deal between a potential renter and the owner of the property to let, taking a small commission for every transaction. As an owner, you can register your flat, cottage, house or villa to be put on the market for rental. People looking for accommodation in a specific area, and whose criteria are met by the lodging on offer, can then book directly with you.

The Airbnb case study: a digital context

Airbnb’s formula is very much a logical product of its time. We buy and sell products and services and share our experiences online using apps that are linked to our social media accounts. Technology has come so far that we don’t even need to do much research anymore. Your geolocation helps all these digital tools define which specific product or service is nearest to you.

So, is Airbnb an example of an industry disruptor?

Digital disruption is the process of slotting into the digital reality described in the previous point and offering a product or service that was not offered before. Through this disruptive approach, the competition has no viable alternative to what the disruptor is offering, essentially rendering them unable to compete in any way.

Let’s look at our Airbnb case study. In the hospitality industry today, key players are hotel groups. These groups have their own marketing and business development strategies, pricing structures and communication channels. Their main competitors are the more agile online travel agents or OTAs. These OTAs can claim high commission fees, as hotels get up to 60% of their bookings through them. But OTAs are still dependent on hotels to generate business. They’re stiff competition, sure, but not market disrupters.

Airbnb completely bypasses OTAs and hotels. They essentially tap into the real estate market to offer holiday accommodation of all sizes and shapes, for any duration of time and according to a constantly evolving pricing structure that’s in line with the demand and availability of any hospitality market. Airbnb appeals to the same target demographic as the hospitality sector. Furthermore, they actually offer the same basic service: accommodation. But their product is different, modern, agile, mobile, social and—quite literally—homely and comfortable. Through agile business development strategies that embrace all things digital, Airbnb turned that product into their brand.

Being a disruptor works

Digital disruption is a powerful tool for any business. The Airbnb case study is but one of many examples we have seen over the years across different industries. Think of Spotify for digital music distribution, Netflix for audio-visual content distribution or Uber for transport. The concept of disruption can be applied to virtually any sector.

As a business, you should find a way to propose value your competition cannot, in a way that will make it difficult or impossible for them to compete with you directly. If you succeed in doing that, you will be the disruptor of the market you operate in. And, more importantly, you will be the successful business that found its way to the consumer by being smarter, faster and better.

To find out more about digital disruption, how to disrupt and how to deal with disruptors, download our eBook: Disrupt or become disrupted. If you have any additional questions, get in touch.

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