Richard Turen
When tech fanatics get together, they look back in awe at ancient history, to the formative years when innovation and daring converged to create some of the world's great inventions. Tech folks have their history. They know their dates. They know what was important "back in the olden days of yore," when history goes back as far as 2007.
Think about it. Amazon came out with something they called a Kindle that would enable us to read anywhere without the need to bring along our books. But the real Earth-shattering moment came in Cupertino, Calif., just a latte away from the Stanford campus in Palo Alto, when the Apple company launched something they called the iPhone.
This was a powerful computer that we could keep in our pockets while allowing its magnetic fields to run circles around some of the more personal portions of our bodies. Those who were alive at the time recorded the excitement with which this life-changing invention was received.
The nontechies in the travel industry thought that this was a new phone that might make it more fun to chat with clients. The idea that the iPhone might enable any user, virtually anywhere, to become a transactional booking agent didn't hit us until a bit later.
There were a slew of tech conferences scheduled in the Bay Area in 2007. There was a sense of motherboard excitement in the air. People were telling their friends about the most recent digital highs they had experienced.
And rents in San Francisco were setting record highs. One of the landlords in the city leased a small apartment to Joe Gebbia and Brian Chesky, two guys who met while both were studying at the Rhode Island School of Design. They could not afford San Francisco rents, yet they knew they had to remain in the city, a hothouse of new tech designs and a growing number of tech-oriented venture capital firms.
The role of that San Francisco landlord in reshaping the hospitality landscape for decades to come will someday become the stuff of legends. I think it is important for all of us who sell travel to understand what Gebbia and Chesky knew about their potential end user.
Just about the time that the rent check was due, the duo made note of the fact that the Industrial Design Society of America meeting was coming to the city. And Gebbia had this idea. They kept air beds in the apartment for visiting friends. What if they rented them out to conference attendees at a great price and included a home-cooked breakfast?
They knew enough about web design to quickly build a website they called "AirBed & Breakfast." They brought on another friend, a Harvard grad who specialized in "technical architecture" named Nathan Blecharczyk.
But first, they had to pay the rent and launch the website. They needed a job that would get them money quickly. Instead of flipping burgers at McDonald's, they decided to design cereal boxes with logos such as "Obama O's" and "Cap'n McCains," for the two presidential candidates in 2008. They went to the political conventions and sold lots of cereal boxes.
In the meantime, the website was working. Their first three renters each paid them $80. These were, one could argue, the first shots fired in the hospitality revolution. After being up just a few days, the website started to receive email from places like London, Buenos Aires and Japan asking when the site would feature accommodations in their cities.
Like all great entrepreneurs, they knew they had a problem to solve and an opportunity to grab. They also had to discover who their customers might be. Finally, they had to be careful stereotyping the end user. Was this going to be a crash pad concept for dopers or folks too cheap to consider a room at the Four Seasons?
Early on, they discovered that was not the case. In fact, their users were likely better educated than the average hotel guest and, while younger on average, this was definitely not a concept limited to young people. In fact, the Airbnb concept has enormous appeal to seniors living on a fixed income.
I think it would well serve all of us who toil in travel to consider what it was that these young men in San Francisco understood that the rest of the industry had largely missed. This is what I think Airbnb has shown us since its inception in 2007.
• A personal home environment has much to offer when contrasted with a sterile hotel environment for many potential hotel guests.
• A sizable portion of the traveling public thinks that spending $700 for a nice room at a city hotel is an outrageous waste of money, compounded by on-premises ancillary prices that challenge credulity.
• Among affluent millennials, hotels are increasingly viewed as "places my parents like to stay at."
• The socializing aspects of staying at an Airbnb property are important to its success. How often does one get to spend time with the owner of a hotel?
• The Airbnb app makes it possible for users to feel like their own travel agents. This is a satisfying feeling for many, and it is also seen as a way to save money.
• The notion that a hotel might provide all-night staffing and an on-premises security force can be overcome by the sense of security provided by a private apartment or home environment in a neighborhood of the user's choosing.
• The Airbnb user believes that reviews can be curated in such a way as to render them largely reliable. They have the assurance that Airbnb reviewers have actually stayed at the location being reviewed. TripAdvisor does not require reviewers to have been guests at the hotel. Airbnb reviews do not have that credibility issue.
• The expansion possibilities are endless once you start including the private home market. Luxury homes in luxe locations around the world now form an important part of the company's portfolio.
• Airbnb's potential market can include anyone, anywhere on Earth, who would like to earn extra money renting out their home or apartment. That is such an incredibly large demographic that it is almost beyond historical financial forecasting. Where does Airbnb end? What are its limits?
Now I realize that Airbnb has its problems. Paying lodging taxes has been one of them. Theft has been an issue, forcing the company to come up with a $1 million host guarantee. Despite all that, any app-based company with more than 100 million users and 640,000 hosts has to be viewed as a major travel disrupter, a company that has turned the hospitality industry into a flurry of newly launched lifestyle brands playing catch-up and a concept that ought to be fully understood and discussed by travel agents everywhere.
I remember in the early days of Airbnb, hearing many of my colleagues refer to the concept of a shared-home accommodations platform as doomed to failure because of health and cleanliness issues. Who would want to sleep in someone else's bed?
But could it be that the Airbnb user has already figured out that housekeeping in one's apartment or home might actually be more caring and diligent than a hotel maid serving 25 rooms off a cart?
On a personal level, I am not much worried about how the hospitality industry will react to Airbnb. There are already so many homelike, gathering-place hotel concepts on the drawing board and already open that I expect a hotel ecosystem will soon exist for the Airbnb mindset. But I think travel agents need to spend some time understanding how this concept was conceived and why it was so successful. Airbnb is currently booking 500,000 stays per night. It is active in 191 countries and 65,000 cities.
How much of this represents business done through travel agents? Virtually none. How many travel agents have downloaded the Airbnb app to their personal phones? More than would care to admit. This is a case study for our times, and we best not ignore its implications.