Disruption: Airbnb

7 November 2016

Knowing what the business is offering has been as important as technology and a disruptive business model for Airbnb’s growth and success, explains general manager, northern Europe, James McClure

Q. Why has Airbnb’s disruptive model been so successful?

A. Disruption is often in the eye of the beholder. Airbnb represents how people have been travelling for generations. We’ve all stayed at friend’s or family’s house ­- if your friend moved to New York you’d be more likely to go and stay there and ask for their recommendations for what to see and do, so that you feel like you’re actually living in New York rather than just a tourist. Since marketplace innovations such as eBay we’ve been able to get people into your phone book who may have a spare room in New York and want to come to London who you would otherwise never know.

The other innovation that has come through marketplaces and the internet is the idea of the currency of trust online, so that you feel as though it’s a close as you can get to as a friend you choose to stay with. There’s quite a lot of skin in the game for people – you have to upload a picture of a verified ID, for example, which takes away the temptation for people to use Airbnb in a less than ideal manner. And it’s two-sided, so as the guest you get reviewed, as well as the place you’re staying.

Our fastest growing segment for hosts is over-65s

Q. Is this kind of social, digital innovation just something for millennials?

A. In the UK, our average guest is aged 35-40 and that’s similar to the average host. Perhaps the early adopters in 2011-12 did fit that stereotype but it’s now really broad, particularly on the host side - our fastest growing segment for hosts is over-65s, who make up 15-20 per cent of our hosts. It’s often people whose kids have moved away who have space in their home, and like to make a few cups of tea and tell people what’s good in their area. It’s not just Shoreditch.

Q. How can disruptive businesses address concerns within the existing market?

A. You can stay with Airbnb in over 190 countries and around 34 countries. Each city has its own style and way of going about things. We try to help to bring more tourism and money to those cities and to get out and meet the regulators to understand what’s going on. In places like London where people are free to share their home for up to 90 days before needing planning permission, we’ve been able to work out what is appropriate, so that we’re encouraging people to share their home but at the same time not taking housing off market.

In London, the hotel business is a good one to be in. Occupancy has increased for the past 15 years and it’s forecast to rise for the next two. We’ve only been around for eight years and we’ve grown from zero to having welcomed around 5,000 guests to London last summer. Hotel chiefs have said that they don’t see Airbnb as competition and some are actually making acquisitions in the home sharing space.

If you sit in your office and don’t talk to anyone you don’t really know what’s happening, so we get out and often we’ll invite our hosts and people from local government. That community can be the best way to show who you are and what you do.

There’s a big difference between the on-demand economy and people sharing assets that they have. But the idea of people building up multiple income streams rather than just one salary is a trend we continue to see. People who host with us often are freelancers and don’t necessarily have nine-to-five jobs. Tax relief is a really appropriate incentive to help people with this and we provide tools and forms to help hosts to act on their duties.

Q. Why has Airbnb launched its Community Commitment pledge against discrimination and bias?

A. No company can single-handedly solve such a large problem and given that people that use Airbnb are a broad reflection of society that also means it’s a broad reflection of people’s biases, beliefs and so on. The company is about being able to feel you belong somewhere. So discrimination has no place in our world. Reactions have been very positive. We’ve taken expert advice and engaged a broad range of people to help us with this. We’re looking to take a stand on what’s often a very tricky subject to talk about.

If you were told that your child at school was disruptive, that would mean that other people were not able to get on

Q. How does a disruptive company remain innovative?

A. If you were told that your child at school was disruptive, that would mean that other people were not able to get on. We just want to focus on how we can provide better experiences for people choosing to travel with us and give our hosts the tools that enable them to be successful entrepreneurs. One of the core values we have as a company is about being able to be entrepreneurial even as a larger company, so we do a lot of A/B testing on the website to help optimise it and look to move fast, even though we’re a bit bigger now.`

Business travel is around half of the overall travel market and we’re only just starting out there. We’re investing quite heavily in China - we’ve got a large amount of headroom in the accommodation market so that’s going to keep us busy for a while. We’re trying to create the best possible trip for people. You can pay from £8 to £8,000 a night on Airbnb from shared rooms to castles so that notion hotels talk about of a rising average daily rate isn’t something we’d look at. It’s more about being able to provide great experiences.