Companies like Airbnb that operate in the sharing economy don’t own assets and don’t provide services directly to customers; they function as third-party clearinghouses, enabling property owners and individu-
als to monetize their unused assets and time.
Lodging site Airbnb has grown at a staggering pace and offers more than a million
listings in more than 34,000 cities in nearly
200 countries. The company’s valuation
has soared to an estimated $13 billion—
more than traditional hoteliers Hyatt,
Wyndham and InterContinental. With a
simple business model, Airbnb hosts its
website, provides 24/7 customer support,
vets property owners and guests for safety,
and oversees the peer-review system.
Everything else is out of its hands.
Business travel remains a small percentage of Airbnb’s business but is growing
quickly. Given the company’s web-focused
business model and steep growth, should
traditional hoteliers be worried? Indeed,
we think Airbnb is a real threat to traditional hotel brands. As they grow and adapt
to shifts in market trends, these types of
sharing models will become more and more
acceptable to core hotel guest segments.
While Airbnb has drawn attention for its
role as a disruptive channel, its impressive
valuation is likely built on the expectation that the company is an “eyeballs” play
like the darlings of the social media world.
While this may be valid, if you view Airbnb
with an “Edge” mindset, you can see a different business philosophy at work.
What is Edge Strategy? When growth
slows, many companies look beyond their
core businesses, often overlooking enormous, untapped sources of profit that exist
in the near field. Companies deploying
Edge Strategy, however, look to the boundaries between core and non-core operations for opportunities; tremendous operational leverage can be realized through
exploiting resources and capabilities that
have already been acquired or developed.
Any company that recognizes how it can
monetize the underused or spare aspects
of its assets and resources is using an
How Hotels Can Beat Airbnb
at Its Own Game
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