Airbnb—everybody’s talking about it. Inc. magazine named Airbnb the 2014 Company of the Year; PBS recently aired a weekend feature about Airbnb operations in New York City; and a Google search on “Airbnb” currently yields more than 51 million hits—no small feat for such a youngster in the lodging industry.
Airbnb is a disruptive innovation. Clayton Christensen, professor of business administration at the Harvard Business School, describes a disruptive innovation as a process by which a product or service takes root initially in simple applications at the bottom of a market and then relentlessly moves up market, eventually displacing established competitors.
The traditional hospitality industry has historically provided a lodging service. Airbnb is the innovation that disrupted this service by making simple lodging options accessible to consumers. The company is moving into established markets and market stakeholders are pushing back. The industry finds itself sitting with Airbnb at the same table, and there are lessons to be learned on both sides. (See Related Article: The Lodging Industry Tech Challenge)
Quality and Complexity
One of the characteristics of a disruptive business is that it offers access to simpler services that may not appear as attractive as existing solutions when compared against traditional performance metrics. This was true of Airbnb in the early days—sleeping on an air mattress in a stranger’s home did not appear as attractive to most guests as staying in a hotel. This model, however, rapidly changed. As the Airbnb community morphs from a simple service provider into a complex industry player, the ability to orchestrate quality lodging experiences that rival the performance of traditional options will significantly influence Airbnb’s success.
Gatekeeping and the Mission of Belonging
Brian Chesky, Airbnb co-founder and CEO, describes Airbnb as “a global community created to offer, for the very first time, a place we can all belong.” The company has grown from renting an airbed in a San Francisco apartment to being the gatekeeper of 1,500,000+ listings in 190+ countries in just eight years—an enviable accomplishment. But gate keeping can be a tough job, especially when the number of gates increases exponentially in such short period of time.
Anatomy of a Great Lodging Experience
Great lodging experiences are science at the core, served up with passionate, artistic flair. “World class” is the kind of experience Airbnb aspires to offer, the kind of lodging experience that comes to fruition through establishing a strong cultural foundation based on historically successful metrics with a house built with the passions of those who aspire to share the places they call “home” with the global community. To realize this lofty aspiration, Airbnb must instill quality, in all its forms, in its offerings if it is to continue displacing traditional lodging offerings.
Bright futures are informed by the past. There is much to be learned from proven principles. For example, Airbnb lodging experiences are, and will continue to be, compared to traditional lodging experiences. Guests often judge quality (sometimes unknowingly based on previous experiences) against traditional performance metrics such as expectation management, service recovery, amenity management, and a myriad of other guiding hospitality concepts. Most Airbnb hosts are not familiar with these concepts. Consequently, they are, understandably, frustrated and disappointed when guest reviews reflect unrealized expectations.
Expectation Management and Value Perception
Effective expectation management is the fundamental element of positive value perception. Airbnb has an opportunity to facilitate and significantly improve the quality of community spaces through an enhanced information exchange that informs and fosters an understanding of expectation management. Hosts’ familiarity with tried and true standards and the ability to manage information in a way that creates realistic guest expectations helps them understand and implement accepted lodging tenets that work for their circumstances. Educating guests about the nature of Airbnb listings before they rent Airbnb spaces is a method of creating realistic expectations. Guests and hosts alike benefit from clear, concise descriptions that highlight the differences between Airbnb spaces and traditional hotel stays. To encourage useful guest feedback, posing questions about specific elements of Airbnb experiences that exceed, and fall short, of expectations encourages honest discourse that provides actionable feedback for hosts, clarification for guests, and valuable analytics. Collectively, these educational efforts create realistic expectations, generate quality experiences, enhance value perception, and drive growth.
The Road Ahead
“Belonging,” is an admirable core mission concept, but it brings to mind nonprofit endeavors and it doesn’t tell the whole story. Airbnb is a for-profit business and, as such, must find responsible ways to create a healthy bottom line for its members. A failed business benefits no one and, in Airbnb’s case, hundreds of thousands (some might argue the number is in the millions) of stakeholders all over the world stand to suffer should the company stumble. True innovations are made of intelligence, passion, talent, and hard work—all evident in Airbnb’s short history—but maintaining the high level of momentum Airbnb has experienced thus far can only continue in the long term with a proactive approach to ensuring consistent quality in the Airbnb community.
As Airbnb matures, how can expansion be managed without losing the competitive advantage achieved by offering simple services? If Airbnb continues to innovate faster than its competitors and answers this question by focusing on quality, bolstering its foundation with sound lodging principles, and building upon the foundation with the same passion, entrepreneurial spirit, and social generosity demonstrated since the first guests slept on an air mattress in a San Francisco apartment, then the company’s competitive advantage will stand the test of time; community members will, indeed, have an ever-increasing number of world class spaces to share; and the company will continue to disrupt on a grand scale.
About the Author
Diane M. Vondrasek is an energy consultant for HVS and a former quality assurance systems engineer in the commercial nuclear power industry. She strives to help her clients understand the environmental and regulatory context in which they operate and implement results-driven solutions. Her citizenships (U.K. and U.S.) and diverse experience provide underpinnings for a robust belief in interdisciplinary collaboration, both domestically and globally. When Vondrasek obtained her M.S. degree in hospitality information management, she found a professional home in blending her passions of energy, technology, and travel.
