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Airbnb's Inroads Into the Hotel Industry.
By Matt Kurtz
Monday, 23rd June 2014
 

Airbnb offers accommodations in nearly every major hospitality destination worldwide, rates are often lower than comparable hotel rooms, and its popularity is rising—what does this mean for hotels?

Travelers looking for lodging in their destination cities have traditionally taken one of two courses: stay at the home of a friend or relative or book a room at a local hotel.

Over the past six years, a kind of hybrid option has emerged, allowing for guests to book rooms in the houses, apartments, condominiums, trailers, treehouses, boats, and even castles of other people.

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The experience can have as much in common with couch surfing as with staying at a B&B or boutique hotel, but it is also quickly becoming more sophisticated, with some listings rivaling four- and five-star luxury hotel suites in destination cities. Tens of millions of travelers have opted for such accommodations, and the numbers are growing.

Airbnb, an online community marketplace connecting lodgers with hosts, leads the hospitality charge among a growing contingent known in business circles as a “disruptive service”—that is, a platform that through its innovation disrupts the established way of doing business in a given industry.

In the world of lodging, Airbnb has managed to increase the amount of available lodging supply without building a single structure or room. In the words of Sangeet Choudary, an expert in networked business models, “Airbnb enables anyone with a spare room and a mattress to run their own [bed and breakfast] and benefit from a global market of travelers.”

Does Airbnb’s rise threaten the livelihood of the hotel industry? What can hoteliers learn from the service in terms of keeping demand satisfied and booking rooms at their hotels?

Background

4Hoteliers Image LibraryAirbnb traces its roots back to October 2007 when co-founders Brian Chesky and Joe Gebbia put the idea forward of renting out rooms in private residences to accommodate travelers in sold-out hotel markets.

The two rented out the living room of their own San Francisco loft and even offered breakfast to their guests.

Chesky, Gebbia, and third co-founder Nathan Blecharczyk officially launched Airbnb in August of 2008, and over the past six years, the company has taken off with the simple principle of matching people with space to rent with travelers who need a reasonably affordable place to stay.

Since 2008, more than 11 million guests have stayed in one of Airbnb’s 600,000 listings worldwide.

The rapidly expanding room count offered through Airbnb is on a trajectory to surpass that of the world’s largest hotel chains, including InterContinental Hotels Group

The rapidly expanding room count at Airbnb is on a trajectory to surpass that of the world’s largest hotel chains, including InterContinental Hotels Group and Hilton Worldwide.

Airbnb’s CEO Brian Chesky hammered this point home earlier this year by tweeting that 'Marriott wants to add 30,000 rooms [in 2014]. We will add that in the next two weeks.'

Read the full story HERE.

Matt Kurtz, an Associate with the HVS Houston office, performs site inspections, analyses, and valuations of hotels throughout the South Central and Western United States. Matt earned his BS in Public Policy, Planning, and Development, with a concentration in Real Estate Development, from the University of Southern California. He received his MS in Hospitality Industry Studies, with a concentration in Hotel Finance, from NYU. Contact Matt at (818) 915-6024 or mkurtz@hvs.com.

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