Airbnb has changed the way people travel. Instead of booking expensive hotels, travelers can book accommodation from local homeowners directly through the Airbnb platform at an affordable price. In this two-sided marketplace, Airbnb provides revenue generating opportunities for residents and cost saving opportunities for travelers. Airbnb benefits by charging a fee to both the homeowner and traveler. While the concept is simple, its widespread adoption was not. Homeowners feared that travelers may damage their property, and travelers wanted an accommodation that was good value for their money (i.e. location, amenities, cleanliness, price, etc.). In its operating model, Airbnb provides value to the marketplace by providing mechanisms for trust: transparency of information (i.e. reviews of homes, reviews of customers, pictures), free homeowners’ insurance to cover unlikely damages and a seamless booking process.
Airbnb continues to connect the world through the internet. Just yesterday, Thursday, November 17th, the company shared a vision of creating an immersive experience for travelers by connecting them to locals through its online network. Airbnb’s three new products include “Experiences,” “Places” and “Meet Ups.” “Experiences” include activities local to a particular region. For example, in Los Angeles, you could surf with a local, learn pottery with a local or embark on a motorcycle trip through the desert with a local. Airbnb’s “Places” product offers the chance to attend local venues with a local guide. Its “Meet Ups” product allows travelers to meet other travelers in the same area. Furthermore, Airbnb integrates its products into a single itinerary, so Airbnb can be your single app to book and plan your vacation (after it installs airline options). Airbnb is the perfect candidate to test the new products they introduced. They are taking advantage of the trust in their core business while encouraging travelers to use their new products.
The question is—how can Airbnb continue to use the internet/digitization to draw travelers? What are the drawbacks?
- Algorithms to lead to Discovery – Airbnb should incorporate algorithms to suggest activities after a traveler books a location. Currently, travelers are unaware of all the travel possibilities. Small villages in Kenya? Surf spots in Indonesia? Ice climbing in Norway? These unique opportunities take travelers a lot of time to find through traditional online research tools (i.e. Tripadvisor, Lonely Planet, etc.).
- Video Technology to Inspire – Airbnb should incorporate 360 videos and pictures in its Experiences. Travelers need to be motivated. Pictures and videos of exotic destinations inspire travelers. On Airbnb’s platform, they can offer more videos (such as 360) and pictures (HD) and better descriptions to inspire travelers to embark on an adventure.
- Book – Lastly, travelers need to book online. This can be achieved by greater payment transparency.
- GPS to facilitate traveler meet-ups. Airbnb could use GPS location for travelers to know approximate whereabouts of each other in their “Meet Up” function. This is a huge boon, because when travelers are on vacation, they are much freer in their behaviors than when they’re in their home towns. For example, people on cruises often have a “boyfriend” or “girlfriend” for the duration of a cruise. It’s like a summer camp fling. People are like this while traveling, and it could be a popular “meet-up” feature.
- AR & VR in travel. Airbnb could test AR & VR in bringing the outdoor and destination travel experience directly to people. While this may cannibalize its core business, it’s also a competitive threat in the future as AR & VR technology improves. By addressing all facets of technology today, Airbnb could prevent itself from being disrupted by new entrants.
Drawbacks of Digitization
- Reality – Videos & picture do not equal reality. Sensationalized ads for trips could heighten expectations, and reality may fail to reach them.
The digital world has brought positive changes to the way we travel, and Airbnb continues to improve the way people connect with one another in new destinations.