With more than 1,000,000 listings in 34,000 cities across 190 countries, Airbnb has enjoyed explosive growth since their humble beginnings in 2008. Valued today (pre-IPO) at more than $25 billion, this nascent company dwarfs the market valuations of Hyatt, Marriott and Starwood, and is valued at “just” $2 billion short of Hilton Hotels, a company founded almost 100 years ago. Airbnb has 800 employees, Hilton has 152,000.
While hotel chains have been slow to recognize this “startup” as a threat – a vice president for Ritz-Carlton allegedly claimed in 2014 to have not heard of Airbnb – the reality is that the hotel category is being disrupted from the outside. Just like Amazon is now a major competitor for TV show pilots, Uber is killing taxi companies in many cities and Netflix killed Blockbuster (Blockbuster played a big role in their demise, too).
“Neither RedBox nor Netflix are even on the radar screen in terms of competition.” Blockbuster CEO Jim Keyes, 2008
While you may not think of Airbnb and Ritz-Carlton in the same category today, Ritz-Carlton would do well to pay attention because Airbnb is not going anywhere and here are five reasons why:
Income for Hosts
Let’s start with the most obvious reason. Airbnb allows anyone to become a “host” and rent out unused space, be it a single room, an entire apartment, yacht or castle to anyone willing to pay for it. While many cities have been quick to slap an accommodation tax on to the bill, many hosts now depend on Airbnb to pay their mortgage or rent and landlords are capitalizing on renting out vacant properties.
Exploration
We’re wired to explore. Our sense of discovery and exploration brings us to the four corners of the world in search of something we can’t get at home. Not only does Airbnb allow us to stay in towns and cities that may not be traditional tourist destinations, it allows us to explore for a fraction of the cost of a typical hotel stay.
Corporate travel
Not content with addressing the budget traveler market, Airbnb, just like Uber, is targeting the corporate market by expanding its Business Travel program, starting a worldwide rollout of tools that will make it easier for companies to book accommodation through Airbnb directly. These tools allow corporations to track employee travel itineraries and collect financial data. It might be time for that Ritz-Carlton executive to start paying attention. Companies like Google already allow employees to book their own travel based on a daily allowance and if they spend less than budgeted, are able to donate the difference to charities of their choice, making a less expensive trip more attractive even to corporate travelers.
Culture
Inspired by advice from early investor and Paypal founder Peter Thiel and documented in this strongly worded letter that CEO Brian Chesky wrote to Airbnb employees in 2013:
“Our culture is the foundation for our company. We may not be remembered for much after we are gone, and if Airbnb is around 100 years from now, surely we won’t be a booking website for homes. We will be far past this in our evolution (not to mention that kids 100 years from now will be asking their grandparents what websites were).
The thing that will endure for 100 years, the way it has for most 100 year companies, is the culture. The culture is what creates the foundation for all future innovation. If you break the culture, you break the machine that creates your products.”
It is this fanatical approach to culture that inspired Nina Mufleh to apply for a job at what she considered her dream company. Not your average applicant, Nina was so determined to land a job at Airbnb that she produced a growth plan for the company in the Middle East. You can see her non-traditional resume here.
Belonging
For me, the most important and foundational reason that Airbnb will succeed is its core value of “Belonging“. In 2014, while handling massive growth, the company began to realize that the Airbnb community had dramatically increased in size since its foundation. It became time to ask the questions: “Why do we exist?” and “What is our Purpose/Big Idea?”
“It turns out the answer was right in front of us. For so long, people thought Airbnb was about renting houses. But really, we’re about home. You see, a house is just a space, but a home is where you belong”, explained Airbnb CEO Brian Chesky. “And what makes this global community so special is that for the very first time, you can belong anywhere”
Belonging is something we all pursue. We want to know our place in other’s lives, in our communities and in the world. We’re all different, we all seek acceptance and we all want to know where home is. By aligning the brand with this purpose, Airbnb is securing its relevance amongst those who identify as different, those who want to stand out and those who long for a place to hang their hat.
It is this purpose that inspired the company to broadcast one of the first TV commercials to recognize the struggle of those who don’t conform to “typical” standards or expectations. Aired following Caitlyn Jenner’s acceptance speech at the ESPYs last week, the “transkind” commercial was both inspiring and groundbreaking.
Like all great brands, their story is not what they do or how they do it, it’s why they do it. For as long as Airbnb helps people belong, through accommodation today and other initiatives in the future, it will have a place in our hearts and ultimately our wallets.
This article may be reprinted when the copyright, link to article and author bio are included. ©2015 Storyforge, LLC. Please contact us for inquiries.
Barry Chandler is the co-founder of Storyforge, a brand strategy company focused on helping companies discover their purpose to allow them achieve their vision, build preference and drive margin. Barry has been building award winning businesses since launching his first company in Ireland in 2003. His last company, a digital marketing agency, was acquired in 2012 by a California based publicly traded entertainment company which then hired him as Chief Marketing Officer. It is his belief that the greatest brands seek to change the world, improving the lives of their associates, partners and customers.