Summary of Why Airbnb Fails to Disrupt the Hotel Industry

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00:00:00 - 00:25:00

The traditional hotel industry is faring better than Airbnb during the pandemic, as people are more interested in reliable service. Airbnb may need to focus on becoming more reliable in order to compete with the big hotel chains.

  • 00:00:00 The hotel industry is organized into four categories: economy, midscale, upscale, and luxury. Luxury hotels, which account for less than 2% of all hotel rooms in the US, make the most money. Hilton, Marriott's main competitor, is only good enough to take second place in terms of revenue and total rooms. Hilton's money makers are in its upscale and midscale brands.
  • 00:05:00 The five largest hotel companies in the world are Marriott, Intercontinental Hotel Group, Hyatt, IHG, and Hilton. All of these companies have seen their revenue and number of rooms increase since the pandemic began, while Airbnb has seen its popularity decline.
  • 00:10:00 Airbnb is a platform that allows anyone to list and monetize their room, apartment, or house. The company charges service fees to both guests and hosts as a percentage of the total reservation cost. While there are no limits on how many listings there can be on Airbnb, there are hard caps on how many hotels that can exist based on zoning ordinance.
  • 00:15:00 Airbnb has a significant advantage over traditional hotels in terms of scale, and this advantage has enabled the startup to outperform its competitors at scale. Hilton, Marriott, Hyatt, and IHG are all actually asset-light platforms businesses that make most of their money on fees, just like Airbnb. So while the media and analysts spin stories about how the hotel industry is dying and is about to be disrupted, the reality is that the Hilton, Marriott, Hyatt, and every big hotel company have been operating exactly like Airbnb long before the startup even existed. Disruption can't happen if the new firm and the old incumbents are all operating in the same way.
  • 00:20:00 Airbnb is a platform that allows people to rent rooms from other people. However, this model does not work well for hotels, as it does not generate a lot of revenue. Hilton, IHG, Wyndham, and Marriott have been selling off their hotels and land for the past 20 years, and the platform business model is no silver bullet.
  • 00:25:00 Airbnb has been struggling to compete with the traditional hotel industry, as the company has been taxed like a hotel and cannot rely on the cheaper or more unique argument. In order to compete, Airbnb may need to focus on reliability, predictability, and consistency in guest experience.

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