Sharing platforms have disrupted several markets, and that is likely to continue as long as those platforms can offer services at a rate that beats commercial options. Airbnb started a trend by allowing individuals to monetize a personal asset, like a spare room. Dealing with an empty nest? With Airbnb, you can put that space to work. As the first to market for this type of service, Airbnb enjoyed robust predictions for future profits. Original eMarketer predictions expected this alternative travel site to add 17.6 million new users, but several factors have combined to drive that number down to a much less exciting 6.1 million.
What's Disrupting the Disrupters?
As asset-sharing platforms have grown, two major issues have started to plague this business model: safety and competition. These issues crop up whenever there is a new market. With self-driving cars, recent crashes have caused investors to pull back until the technology is more mature. With Airbnb, it's less about the technology and more about vetting both users and renters.
Is Safety First?
When booking a stay at a hotel, security systems, on-site guards and other safety features are already in place. Plus, consumers can look at online reviews that have years of service behind them. With Airbnb, every provider is different. There is no brand associated with each room for rent. In addition, scandal seems to dog the footsteps of this lightly regulated platform.
Recent reports cover everything from human traffickers using Airbnb rentals for anonymity to renters being detained by police as potential burglars. With all of the negative press, some cities are cracking down on the room sharing economy. And, that's before you look at reports like a recent study by Injury Prevention that details the lack of CO2 detectors, first aid kits and fire extinguishers at rental properties.
Here Comes the Competition
While these factors are hitting every room sharing service, competition is a big part of what is knocking down market share estimates for Airbnb. When Airbnb entered the market in 2008, there was no competition. Today, some of the largest travel sites in the world also offer similar services. Expedia operates HomeAway and VRBO while TripAdvisor Rentals puts room shares on the same site that handles car rentals, flights and entertainment bookings. With some of the most popular travel sites getting in on the action, Airbnb is struggling to expand.
Keeping Up with Original Predictions
Even with the fears surrounding stranger danger and the scandals that hit the news, Airbnb is continuing to show double digit growth. With the largest property portfolio on the market, Airbnb can leverage their size to market to consumers. Some of the competition focuses on specific niches like vacation rentals, but their large inventory gives Airbnb more flexibility. The addition of Airbnb Plus helps reduce safety concerns, and may pave the way for a rental experience that is more similar to what you get from a travel agent.
By breaking their inventory into categories and marketing some properties for niche markets, Airbnb can stay competitive at every level. The launch of their "Collections," program might be just the start. A loyalty program is also in the works, so those with current bookings will be encouraged to come back. There are many avenues for growth available to this innovative company and some are already in the works.
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