The sharing economy—also known as the collaborative consumption or the peer economy—is disrupting many industries. The sharing economy is one where participants share products or services—such as cars or spare rooms—instead of individual ownership.
Airbnb is the one of the pioneers of the sharing economy and seems to be a major disruptor in the traditional hotel/hospitality market. (Incidentally, one of the founders of Airbnb was a student of Nelson Repenning, Professor of System Dynamics and Organization Studies at MIT Sloan; Repenning mentions this in his innovation@workTM webinar, “Useful Does Not Always Mean Used”.) Airbnb rents lodgings in more than 34,000 cities in 190 countries and has served more than 17,000,000 guests. What was once thought of as a place to find vacation housing is now frequently used by business travelers as well; as of late July 2014, the company saw 10% of its revenue from business travelers.
One would think the hotel industry would be up in arms, worried, and reacting the way the taxi cab industry is to Uber and Lyft. According to Fast Company, however, the hotel industry is not overly concerned—or so they claim. The magazine quotes Hilton Worldwide EVP Jeff Diskin as saying he “loves what Airbnb is doing … [offering a more] home-like experience.”
It appears the actual revenue impact is minimal; one recent research report found that “every 1% increase in listings [on Airbnb] in a given market would result in a 0.05% decrease in quarterly hotel revenues.” While the revenue Airbnb is siphoning from hotels is having minimal impact, its rapid growth is still worth watching. As noted in Fast Company, “At the current rate of expansion, Airbnb … will soon surpass the InterContinental Group and Hilton Worldwide as the world’s largest hotel chain.”