Back in my college days, after a Sunday brunch run to Taco Bell, I stepped out of my buddy Rich’s car and made the following declaration post head nod to Busta Rhymes’ “Woo Hah!! Got You All In Check”: “I wish there was a way you could buy one song instead of having to buy the whole CD.” Because why should I have to buy the entire Quad City’s “Get on Up and Dance” album when all I really want is “C’Mon ‘N Ride It (The Train)”?
This was 1996. Five years later the iPod was released, and the world would never be the same. Nor me: Apple had stolen my brilliant idea.
It’s kind of how I feel about Airbnb and the whole home-sharing idea (granted, it was never really on my mind in college—other things less entrepreneurial were—which is why I am me and not Brian Chesky). People owning residences is nothing new; the Internet is nothing new; and creating a website nowadays can be achieved by anyone.
It just came up with an idea, a platform, of how to connect buyers to sellers. Airbnb doesn’t own real estate. Airbnb doesn’t operate real estate. Airbnb doesn’t brand real estate. So how, then, is Airbnb’s valuation higher than both Marriott and Hilton?
Airbnb is part of the so-called “sharing economy”—nomenclature I’ve never necessarily agreed with. I prefer to call it the “user economy.” Isn’t that ostensibly what companies like Airbnb and Uber are doing? Using our stuff to stuff their coffers. They’ve successfully created an exchange marketplace through top-flight engineering, particularly mobile, in Uber’s case. Don’t misread: I am not begrudging these companies in the least. In fact, they are filling in a market gap and also helping to democratize travel.
There on the dais sat the messiah, er, Peter Coles, the head economist for Airbnb. (Why a home-sharing network has an economist is beyond me—but there he was.) I didn’t get to confirm, but my assumption was he was mortal and bled like all other humans do.
He—and the rest of the panelists—played to a packed house; the room actually was too small to contain all the onlookers, all hoping to get a peek behind the curtains of this digital powerhouse. The discussion—while thought-provoking—wasn’t earth-shattering (though I did learn that Airbnb charges its hosts a 3-percent fee on bookings—far less than the OTAs, but that’s a column for another day).
So, why the crowded house? Coles himself remarked that Airbnb is merely a “third-party agent matching people.” I say it’s fear of the unknown mixed with a lack of clarity on the impact Airbnb is truly having on the hotel industry. As a hotel owner, operator or brand, I, too, would be a little spooked by a company that’s only been in business eight years and has already managed to strike such fear.
Myself? I see Airbnb as much a competitor to the hotel industry as timeshare or vacation rentals. Yes, Airbnb has incredible marketing, a robust platform and has ably tapped into the “experiential” vein, but you can’t convince me Airbnb will successfully shift market share and eat into revenues. It’s a different product—one that certainly has a place, but one that still has a lot to overcome and to prove.
Enjoy the rock stardom, Airbnb. You are certainly travel’s Taylor Swift, but do you have the legs to be its Rolling Stones?