4 min read

The Real Reason Airbnb is Eating into the Hotel Market Isn’t What You Think

Why has the seemingly simple accommodations-sharing concept grown so quickly? The answer has a lot to do with Airbnb’s platform approach. 


The sharing economy is placing a new kind of pressure on the hotel industry. Despite being once ridiculed by the hotel industry, Airbnb has rapidly scaled to become a global provider of accommodation, with more rooms booked every night than the largest global hotel chains. The narrative is by now a familiar one: a service that boasts more than 60,000,000 guests and a $25.5 billion valuation by investors. But a more important question for hotels is why? Why has this seemingly simple accommodations-sharing concept grown so quickly? The answer has a lot to do with Airbnb’s platform approach.

While some hotels look at technology as just another asset (investing as they would with beds, radios or Wi-Fi), Airbnb has embedded technology deeply inside the company DNA. “This is an end-to-end platform. From reservation, to room allocation, to customer service, to customer rating, the provider rating,” said Prakash Shukla, 2016 HFTP International Hospitality Technology Hall of Fame Inductee and ex-CIO of Taj Hotels. “Most of the platforms in hospitality do not take care of this.” In many ways, Airbnb is neither a tech company nor a hotel company, “by leveraging technology for hospitality they have created a new business model altogether.”

This sharing economy behemoth succeeds not just by offering up unused apartments to travelers, but by redefining the interaction pattern between guest and host. The technical solution for guests is aspirational to many hotels. Through the same app that a guest uses to find and book a room, they receive a deeply personalized communication channel with their host. Rather than an anonymous front desk agent, the Airbnb host and the guest both have a personal profile, and engage in familiar communication pre-, during-, and post-stay. In addition, Airbnb is increasingly focused on providing local city experts and local experiences, creating a guest experience that begins to resemble a stay at a personalized boutique hotel.

Download the new free report from ALICE and Skift to learn about how can hotels harness the power of platforms to seamlessly unify their operation and realize huge gains in revenue, efficiency, and guest satisfaction in the process.


hospitality's new platform paradigm