Interview: Airbnb and the future of tourism

Airbnb has just been named a 2014 Technology Pioneer company. Shane Richmond talks to its co-founder, Nathan Blecharczyk, about the changing way tourist dollars are spent.

“Over the last 12 months we’ve had a US$ 250m economic impact in Paris,” says Nathan Blecharczyk. “When people spend money on food and such, they often spend it in the neighbourhood where they’re staying.

“What’s interesting is that 70% of our properties in Paris and in most major cities are outside the typical neighbourhoods that have hotels. Oftentimes the hotels where tourists stay are in one or two neighbourhoods, whereas Airbnb properties are located uniformly throughout the city. This US$ 250m got spent largely in neighbours that don’t see the impact of tourism spending.”

This change in the way tourist money is distributed is just one of the ways Blecharczyk believes Airbnb is changing the world. Founded five years ago, Airbnb has become one of the standard-bearers of the online sharing economy, the growing trend for people to rent, loan or swap their property using web services as middlemen.

Airbnb is a marketplace for holiday properties. Members can offer spare rooms or entire properties to holidaymakers and the site tracks feedback on both the ‘hosts’ and the ‘guests’. The service is experiencing tremendous growth. By the end of last year, Airbnb had reached 4 million guests, with 3 million of those added in 2012 alone.

“Right now, there are about 140,000 people staying in Airbnb accommodations every single night,” says Blecharczyk.

Major events help to boost Airbnb’s userbase. Blecharczyk says the site’s London presence grew fourfold in the run-up to the 2012 Olympics. However, word of mouth remains the biggest driver of membership. “We also see that the guests – those who started off just as a traveller – often become hosts,” Blecharczyk says.

The company has relatively few rivals. It has bought up some, including Germany’s Accoleo and Britain’s CrashPadder, but few other competitors have found a foothold. Regional competitors tend to fail, Blecharczyk says, because they cannot match the powerful network effect created by Airbnb’s reach. He says: “The advantage we bring is we have an audience of many millions of our members who want to go to all these different places, so local competitors have a hard time matching that kind of demand.”

Some might feel wary of letting strangers stay in their home, particularly if they aren’t there to supervise, but Blecharczyk says Airbnb’s community approach should offer reassurance. “Trust and quality are top of mind for us and that’s one of the benefits of our platform. We see everything that’s going on and when complaints come in we can take action so that it doesn’t happen again. We’re actively managing the marketplace,” says Blecharczyk.

He says the company analyses the vast amounts of data it gathers to assess the risk of every booking on the service and takes action where necessary. “We don’t often talk about it because to talk about it might limit its effectiveness,” he says. “There are people out there who want to game the system.”

Though he doesn’t go into detail, Blecharczyk suggests that Airbnb will expand its core offering at some point. “We’re a provider of experiences, not strictly accommodation,” he says. However, he’s keen to stress that they won’t move too far away from what they do now: “We want to be very focused on our customers today. How can we make the experiences that those people are having even better? We don’t want to go starting completely separate businesses that do nothing for our user base.”

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Author: Shane Richmond writes about technology for the World Economic Forum. Airbnb is a 2014 Technology Pioneer company.

Image: A tourist takes a picture of the Eiffel Tower REUTERS/Christian Hartmann.