With technological advancements and digital transformation, numerous industries have been disrupted by new entrants. These new entrants see opportunities in leveraging technology to change the way the industry operates. Today 87% of companies believe that digitisation will disrupt their industry (Source: Deloitte Insights).
The hospitality industry, F&B industry and many others have all been disrupted. Let us look at one such industry. The hospitality industry where Airbnb has revolutionised the way travellers stay the night when they travel.
State of Hospitality Industry
The hospitality industry has always been dominated by hotel chains such as Marriott and Hilton hotels. Travellers have little choice apart from staying in hotels while travelling. Travellers had to contend with peak season pricing and room availability issues during peak seasons.
What is Airbnb?
Airbnb, is an online marketplace for lodging in vacation rentals. It was founded in 2008. The company operates in the hospitality industry. As of 2020, Airbnb has over 6 million listings worldwide with a presence in more than 65,000 cities in 191 countries, overtaking giants such as Marriott and Hilton (Source: Business of Apps).
How did Airbnb succeed?
Airbnb saw an opportunity in letting homeowners to lease their homes on a short-term basis to travellers. To help connect homeowners, called “Hosts” in Airbnb speak and travellers, Airbnb leveraged technology to build an easy to use and convenient platform. With this service, homeowners were now able to rent out their homes to travellers on a short-term basis which was not possible before. For consumers, Airbnb offered choice and affordability compared to the traditional hotel. With these, Airbnb was able to grow its revenue from USD 0.4 billion in 2014 to USD 3.4 billion in 2020.
How did consumers benefit?
There are two key benefits for travellers who use Airbnb, choice and affordability.
When consumers had to find a place to stay, they could choose from the vast number of listings available and also the type of property they wish to stay in. The types of properties available were from single rooms to entire homes.
Previously, travellers had to book pricey hotel rooms especially during peak travel season. With Airbnb, they were also able to book accommodations at relatively cheaper prices compared to hotels.
With these benefits, the number of Airbnb users grew from 6 million users in 2012 to 150 million in 2018.
How did homeowners benefit?
Previously homeowners were not able to rent out to travellers for a few days which meant homeowners were missing out on this large consumer segment. With Airbnb, homeowners were able to rent out their homes or spare rooms to travellers on a short-term basis thereby earning an additional income. The result of this was the increase in the number of listings on Airbnb from 1.2 million in 2015 to 7 million in 2019.
Conclusion
It is crucial for businesses to adopt digital transformation in order to stay relevant. Airbnb is not the only example of a company disrupting an industry by leveraging technology.
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