Airbnb Takes Aim At An Industry That Once Dismissed It

This week, Airbnb hired hotelier Chip Conley, yet another sign of where the hotel industry is heading. But years ago, experts in the space refused to take Airbnb seriously.

In late 2011, as Airbnb surpassed 100,000 active property listings, Fast Company reached out to several hotel industry experts for perspective on our profile of the company. We wanted to learn whether insiders felt the Silicon Valley startup was as disruptive as it claimed to be--and their reactions were surprising, to say the least.

"Quite honestly, I had to google what [Airbnb] actually means, which shows you how much we pay attention to it," said Konstanze Auernheimer, an analyst with travel research firm STR Global, which tracks data from more than 14 million rooms at 150,000 hotels.

Auernheimer's response may sound shortsighted in retrospect, but it was at the time a common viewpoint of traditional critics, who wrote off collaborative consumption as a niche market or fad. But it also served as an early signal that the dormant hospitality space was unprepared for (if not flat-out unaware of) the sea change that Airbnb heralded. With more than 10 million nights booked and a reported $2.5 billion valuation, the company's success in the sharing economy can no longer be ignored. And this week, in yet another powerful sign both of Airbnb's ambitions and where the industry is heading, the startup hired hotelier Chip Conley as its head of global hospitality.

In his new role, Conley, the founder of the boutique Joie de Vivre hotel chain, will run a Dublin-based "hospitality lab" designed to train Airbnb's hosts as if they were hotel concierges. Classes will educate hosts on best practices, from proper guest response times to cleanliness standards. It's a move squarely aimed at further stealing away market share from hotels, which are likely feeling forced to take the company seriously, just as automotive players have been forced to reckon with services such as Zipcar and RelayRides.

But like any novel business in a stagnant but still-strong industry, when Airbnb was first gaining prominence, it was greeted with skepticism. In 2011, when I connected with Bill Carroll, senior lecturer at the Cornell School of Hotel Administration, he was far from fazed by Airbnb's potential, especially since he contended that it couldn't serve corporate and group bookings, a significant part of the hotel market. "It's a gnat on the dog's tuchus," Carroll told me. "It might itch, but it's not a game changer."

Then he added, "But maybe I'm wrong. Maybe I'm just an old fart."

This week, Airbnb revealed that 4.5 million guests had used the service this year alone, with 175,000 of them booking Airbnb listings during one peak night this summer--demonstrating that it has more of a presence than a gnat on the backs of its competitors.

Still, to be clear, the hotel industry isn't in danger of crumbling anytime soon. Legal issues facing Airbnb aside, there are still giants dominating the space, such as the InterContinental Hotels Group (IHG), which saw $1.8 billion in revenue last year, and Hilton Worldwide, which is expected to soon be taken public with a valuation of around $30 billion. IHG boasts more than 157 million guest nights annually.

But Airbnb does highlight the industry's lack of innovation--representing a lost opportunity (and lost revenue) for the hotel companies.

As Airbnb cofounder Joe Gebbia once told me, "What if we let somebody book a room in someone else’s apartment, anywhere around the world, with the simplicity of a hotel? That was the real innovation. No one else was doing that."

[Image: Flickr user Mark Sebastian]

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