The surprising success of Airbnb

Published: 
April 2016

Why are so many of us willing to let a stranger sleep in our bed? New research suggests that money is not the only motivation.

Shortly after Goldilocks fell asleep in a stranger’s bed, she was woken up by a very surprised bear family and forced to make a run for it.

In today’s sharing economy, where householders choosing to rent out their spare room to strangers, Goldilocks would have probably enjoyed a good night’s sleep and a free bowl of porridge, and gone on to write a complimentary online review.

Peer-to-peer accommodation networks like Airbnb are disrupting the traditional hospitality model, as tourists choose to live with the locals instead of staying in hotels. Not only can they save money in many cases, but there is the added attraction of going off the well-trodden tourist track and connecting with local communities.

The popularity of the Airbnb model is such that it is now the world’s largest hospitality company, operating in over 190 countries and with a market value of $26 billion at the start of 2016. However its success will have come as a surprise to many, including the firms of venture capitalists who turned it down for funding at its inception in 2008.

Indeed, the Airbnb concept challenges the traditional view of a home as a safe and private space. Why would people want to let in strangers when there is a real risk that they could steal the furnishings, damage the property or even burn it down?

A research project by UQ Business School is investigating the factors behind the rapid growth of peer-to-peer accommodation networks and the motivations of the hosts.

Tourism expert Professor Sara Dolnicar, who is working on the study with Dr Logi Karlsson, says the concept displays the key characteristic of a disruptive innovation. “Disruptive innovation caters for future customer needs. Initially these models perform worse than mainstream providers because the offer is not speaking to present customer demand. Once the market has transformed, mainstream providers have typically missed the opportunity to catch up with satisfying the needs under the new circumstances.

“The peer-to-peer model also flips the traditional vendor-customer relationship on its head by not only allowing customers to review the vendors, but also allowing vendors to review and choose the customers. Customers now have to sell themselves to the vendors. The power relationship has changed.

“Our research aims to help traditional accommodation providers, as well as all stakeholders in peer-to-peer networks, to understand the key drivers of success to be able to adapt to the changed circumstances in the accommodation sector.”

The researchers carried out interviews with over 240 Australian hosts, asking open questions as to their motives in renting out their room or property. Certainly money was a key factor  – either because they needed the additional income to make ends meet and pay the bills, or because it enabled them to enjoy luxuries they would not otherwise afford or even to buy an investment property.

However money was not the only motive. The opportunity to interact with others was a key part of the appeal – meeting ‘fun and interesting people’, a chance for people who live alone to enjoy some company on occasions - or simply for the love of it. “Statements that fell into this category indicated real excitement about connecting with people to the point of almost reflecting a value system geared towards being welcoming and hospitable,” says Professor Dolnicar.

One host explained: ‘I love making visitors feel at home and being a gracious hostess.” Another said: ‘‘I’ve always preferred to stay with people in their homes when travelling myself so for me it feels like a great thing to offer others.”

Another key motivation for hosts was the desire to share – whether to avoid wastefulness and put an empty bedroom or property to good use, or to share their own world with others.
Some professed a desire to ‘‘share the joys of the place where I live”, ‘‘share our beautiful place in the world” or ‘‘share our piece of paradise”, or to be “sharing our space to help travellers”.

Professor Dolnicar says: “The research shows that there is not one dominant reason but rather a wide array of factors that drive people to open their homes to visitors. At the one extreme, reasons can be highly material in nature such as providing for basics of life. At the other extreme, reasons can be highly idealistic such as continuing family traditions of hospitality.”

She believes the research will ultimately help the hospitality industry by understanding the attributes that drive the success of peer-to-peer accommodation networks. “It will help networks themselves to develop better messages to communicate with, and recruit more hosts. But it will also help traditional accommodation providers to adapt and highlight opportunities for many small businesses which could make a living of providing support services to peer-to-peer networks hosts, such as key exchange services, cleaning, gardening, pool cleaning.”

The research team aims to carry out further research to explore the concerns that people may have about opening their home to strangers. After all, Goldilocks could have been a burglar.


Sara Dolnicar's book titled, Peer-to-Peer Accommodation Networks: Pushing the boundaries, is now available to download for free.