Airbnb is an online marketplace that allows people to rent out their homes, apartments or spare rooms to travellers seeking unique and affordable accommodations. Since its founding in 2008, Airbnb has disrupted the traditional hospitality industry and transformed how people travel. In this case study, we will examine how Airbnb succeeded, its impact on conventional hotels, and the lessons that can be learned from its disruptive business model.
Airbnb was founded by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk in San Francisco in 2008. Initially, the founders struggled to attract users to their platform. Still, they eventually decided to offer “air mattresses” for conference attendees who could not find hotel rooms. This led to the first bookings on the platform and the birth of the company’s name, Airbnb. Over time, the platform grew in popularity, and by 2011, Airbnb had more than one million nights booked. In 2019, the company went public and was valued at over $100 billion.
Business Model: Airbnb’s business model is based on a peer-to-peer marketplace, where hosts can list their properties for rent, and travellers can book them for a fee. The platform charges hosts a commission of between 3% and 5% on each booking and charges guests a service fee of between 0% and 20% of the booking subtotal. Airbnb’s success is based on several critical factors, including:
- Cost: Airbnb’s accommodations are often cheaper than traditional hotels, making them an attractive option for budget-conscious travellers.
- Unique experiences: Airbnb’s accommodations range from quirky and unconventional to luxurious and high-end, offering travellers a more comprehensive range of backgrounds than traditional hotels.
- Personalization: Airbnb’s platform allows hosts to offer personalized recommendations and local insights, giving travellers a more authentic and personalized travel experience.
Impact on Traditional Hotels: Airbnb’s disruption of the hospitality industry significantly impacted traditional hotels. The rise of Airbnb led to a decrease in hotel occupancy rates and room prices, particularly in major cities where Airbnb was most popular. This forced hotels to adapt to changing consumer preferences and offer more unique and personalized experiences to stay competitive. Some hotels also began to partner with Airbnb and list their properties on the platform to reach a wider audience.
Lessons Learned: Airbnb’s success offers several classes for businesses looking to disrupt traditional industries:
- Embrace change: Airbnb’s founders recognized the changing needs and preferences of travellers and adapted their business model to meet those needs.
- Disrupt the status quo: Airbnb challenged the traditional hospitality industry by offering a more unique and affordable alternative.
- Focus on user experience: Airbnb’s success was based on its ability to offer its users a personalized and authentic travel experience.
Conclusion: Airbnb’s disruptive business model transformed the hospitality industry and forced traditional hotels to adapt to changing consumer preferences. By embracing change, disrupting the status quo, and focusing on user experience, Airbnb achieved tremendous success and changed how people travel.
Airbnb. (n.d.). About us. Retrieved January 27, 2023, from https://www.airbnb.com/about
Botsman, R., & Rogers, R. (2010). What’s mine is yours: How collaborative consumption is changing the way we live. HarperCollins.
Cheng, E., & Foley, M. (2018). Airbnb, the sharing economy, and surveillance capitalism in tourism: A case study of the Airbnb Open in Dublin, Ireland. Tourist Studies, 18(3), 259-276.
Fang, B., Ye, Q., & Kucukusta, D. (2016). Analyzing the sharing economy from the perspectives of collaborative consumption and value co-creation: A case study of Airbnb. Journal of Tourism and Hospitality Management, 4(4), 153-164.
Gebbia, J. (2016, August). How Airbnb designs for trust. In Proceedings of the 2016 ACM Conference on Designing Interactive Systems (pp. 1178-1189).
Guttentag, D. (2015). Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector. Current issues in Tourism, 18(12), 1192-1217.
Statista. (2022). Number of Airbnb users worldwide from 2014 to 2021 (in millions). Retrieved January 27, 2023, from https://www.statista.com/statistics/606953/airbnb-users-worldwide/
Wachsmuth, D., Cohen, J., & Boudreau, J. (2018). Sharing the benefits of the sharing economy? Exploring the tensions surrounding Airbnb’s impact on local communities. Journal of Urban Affairs, 40(2), 197-215.