BH sat down with Airbnb’s general manager for the UK and Ireland, James McClure, to tap into the brand’s DNA and understand what boutique hotels can learn from its emergence.
Love it or hate it, there is no denying that Airbnb has clearly tapped into something worth taking note of. The holiday rental website has grown from a student bedroom operation to a multi-million pound business, known in every country and continent across the globe.
The room-letting website, which lets anyone, anywhere in the world, list their spare space –from a traditional room to the more unconventional treehouse – on the site and rent it out to travellers. In return, Airbnb offers a professional photographer, handles the money and provides a 24/7 customer support service (including $1m insurance for the host).
With this is mind, BH visited Airbnb’s frontline – its HQ in Shoreditch to chat with James McClure, general manager for UK & Ireland.
Three young designers all shared a flat in San Francisco when the idea for Airbnb was born in 2007. When one of them moved out due to a rent increase, the remaining two, struggling to make ends meet, needed to find a way to make up the cash and quickly. With a design conference due to be hosted in the city in the next week and all the nearby hotels fully booked, they came up with the idea of renting out three airbeds on their living room floor and providing breakfast for guests. The next day, the website airbedandbreakfast.com was created – hence where the name Airbnb hails from – and six days later they welcomed their first three guests, charging each of them $80 a night.
“Right from the start, it’s been about providing spaces for people to stay in a slightly different format,” explains McClure, “and ever since it’s been this ethos that has come through and emphasised Airbnb’s history.
“Whether it’s because hotels in the area are overloaded or people are looking for more of a local or authentic experience,” McClure continues, “and it’s about meeting people and making connections, even when you’re travelling somewhere for business; that level of friendship where hosts are able to suggest that coffee shop around the corner, almost like the equivalent of staying with family or friends. It’s that type of relationship that Airbnb has looked to provide ever since that very early stage and forms a lot of the things we are doing today.”
From this friendly beginning, the concept slowly, but surely, developed into a reputable business. After a crash course in business via a dedicated mentor programme of small start-ups, the break-through came in 2009 when funding was secured to put the brand on the right path to international expansion. 2012 was the year that things really started to take off for Airbnb and the website started to gain global recognition. With the three founders still very much at the helm, the launch of various international offices followed and marked the start of the company’s global expansion. Paris, Berlin and UK HQs popped up with record time – a total of 7 offices were opened in 30 days – and an understanding that this was destined for success dawned.
McClure comments: “There was a big realisation that for this to be successful globally, we need to actually invest in local markets, to be able to, both physically but also metaphorically, be able to translate what Airbnb represents and understand that what it means to be local is different in London, as to what it is in Rio and so on.
“That’s where the market grew to as well – the concept started off in the US, but quickly grew to visitor markets that are highly popular to travellers all over the world, so it made sense for it to be growing organically in those places. Within the total travel industry, only a third of is in the US so if you’re going to be a globally successful travel brand then you have to go outside of that.”
The only way is up
The holiday rental site has clearly struck a chord with so many travellers all over the globe, with its astronomical rise into the mainstream demonstrating its strength and savvy to tap into a new market. As McClure explains, it’s the local aspect that Airbnb capitalises so well and something that is a key part to the DNA of the brand.
He says: “It’s really about that idea of living like a local – providing experiences that aren’t necessarily a new concept – we ran a survey and found that 89% of people actually wanted this idea of living like a local and so that’s one big area that Airbnb is fulfilling a desire in some areas.
“There is also the more unique listings that are attractive – treehouses, igloos, castle – such a wide variety and more than just your stereotypical urban city property.”
Many of hosts that use the site thrive on the opportunity to give visitors a unique experience, sharing their own travel recommendations almost like a friend would, and this is certainly something guests love about using Airbnb. McClure relates back to TripAdvisor and points out that one of the recurring themes in people’s reviews is the personal service, and despite material aspects of a hotel, hostel or holiday home being an important factor, ultimately the tipping point will be the standard of service they encounter. Something that McClure believes sets Airbnb apart.
McClure continues: “If you go onto TripAdvisor and the majority of five-star reviews pretty much always mention someone’s name, ‘the person who checking us in’, ‘waiter who served us at dinner,’.
The way to go from good to great is actually through providing that personal service and I think that’s what Airbnb is able to cater for in a really strong fashion. You’ve got that knowledge of the local area, but also you can communicate with your host beforehand, so by the time you turn up you almost feel like you have got to know them and it helps to break down barriers.”
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Causing a stir
The websites’ epic growth in just 7 years since its launch in 2007 hasn’t gone unnoticed by the hospitality industry, but its business strategy has sparked a strong divide from within the travel sector; hoteliers question the credentials, safety and regulation requirements of both the hosts and the travellers.
But is its presence a threat to hotels or a necessary, healthy injection of competition into the sector? With Airbnb’s head of global hospitality Chip Conley coming from a boutique hotel background, the site is still working hard to dispel some of this hostility. But, as McClure points out, the travel business is continuously growing and catering for those always on the lookout for new experiences, while encouraging more people to travel is crucial.
“I think in some way boutique hotels and Airbnb, to some extent, have been inspirational to the larger hotel groups,” says McClure, “especially when they look to move some of their sub brands around. From my understanding, some of the brands under the same group umbrella have the same set up, but how they are marketed and to what kind of audience are very different in nature.
“I think the work that boutique hotels have done have helped inform a lot of the wider industry and ultimately we are all trying to encourage more trips.”
76% of the listings on Airbnb are outside of the main hotel districts, highlighting the fact that the site is helping to bring to life areas that wouldn’t always appear on a hotel map, and in turn encouraging more people to experience something new.
This year will mark the start of a new promotional drive for Airbnb, accelerating previous marketing activities to drive brand awareness. Not only focusing on new experiences, but helping to tailor ‘the perfect trip’ for travellers too. McClure says that it’s all about understanding what the trends are, both in terms of seasonality and personal preference, and this is a key focus for Airbnb for the foreseeable future.
The holiday rental site has experienced a huge amount organic growth since its launch – Airbnb grew initially through people’s recommendations and the power of the community – and now word of mouth is still its biggest brand ambassador. Airbnb’s support network for its hosts helps to drive this strong brand profile as well.
McClure says: “We spend a lot of time dedicated to creating things for the hosts – so meet ups around London, Edinburgh, Dublin. It’s often a place for people to come together and get some tips and have a discussion – really supporting each other. It so interesting and we see lots of micro-entrepreneurs popping up all over the place.”
In terms of global market penetration, the company is aware that Asia is the real ‘one to watch’ right now, and the amount of incremental travel that will come from this area, both domestically and outbound is certainly something to take note of.
“China particularly is fast-growing, as well as emerging countries like Indonesia” explains McClure. “We’ve definitely been investing more into these markets in the last 12-18 months; I think anyone in the industry would be saying the same right now.”
Looking to the future
As the marketing drive for Airbnb prepares to step up a gear and a few staff changes coming into force already this year, 2015 is already shaping up to be a busy one. Last year 20 million trips were taken as a direct result of Airbnb, and with a new CMO now on board from Coca Cola, the brand is aiming to make people more aware of not just the concept, but exactly what Airbnb means, and in some cases overcoming certain perceptions.
“People still ask me: Isn’t it just couch surfing? So although we are present in 190 countries worldwide, we want to grow consistently and make our message really clear about what Airbnb is and the history of it,” explains McClure.