Here’s How Airbnb Disrupted the Travel Industry

By both following historical trends and looking ahead

MONTREAL, Canada—Airbnb became the successful brand it is today by following trends of disruption in the hospitality business that have been around since the 1950s, and by understanding shifts in consumer behavior. So said Chip Conley, head of global hospitality and strategy at Airbnb, who talked about the company's role in the history of the hospitality industry at the C2 conference in Montreal on Wednesday.

Conley, who has plenty of hotel experience under his belt as the founder of the Joie de Vivre, a boutique hotel chain, was intrigued by Airbnb's business plan when he was approached to join the company three years ago. "In 2013, I didn't know what the sharing economy was. But I thought it was interesting that they were trying to democratize hotels, and they were trying to improve hospitality for people who were traveling, but they were doing it without their own employees."

He said that the hospitality industry's transformation followed three rules of innovation:  innovation doesn't happen without foreshadowing; innovators address a human need that isn't being met, and over time, the establishment embraces innovation that was once disruptive.

Conley explained that the majority of Americans didn't stay in hotels prior to World War II. There were luxury hotels frequented by the wealthy, while everyone else stayed in boarding houses. In the 1950s, the advent of the Interstate highway system helped spur more family traveling, which led to the opening of mainstream chain hotels, such as Holiday Inn, which first opened in 1953. "The first disruption of the hospitality industry was mainstream hotels. Travelers wanted a predictable, ubiquitous experience," he said.

In the 1970s, the next hospitality industry disruption happened, in the form of timeshares. "Right now, timeshares seem like the silliest thing, but, back then, it made sense. There were a lot of people who wanted to buy a second home, but they couldn't afford it. [A] timeshare was a way to do that," Conley said. The large hotel chains resisted the timeshare idea at first, before they eventually started also offering timeshare properties.

The next evolution of the industry was boutique hotel companies, launched in the 1980s by the likes of Ian Schrager (Morgans Hotel Group) and Bill Kimpton (Kimpton), as well as Conley's Joie de Vivre. Boutique hotels focused on design, and on offering travelers a unique experience.

"People didn't always want that predictable, ubiquitous experience anymore. The big hotels ridiculed us at first; they said it was style over substance," Conley said. "But it's like that Ghandi quote: 'First people ignore you, then they ridicule you, then they fight you, and then you win.'" InterContinental Hotels Group acquired Kimpton in 2014, and Schrager was tapped to create a line of boutique hotels for Marriott.

The success of boutique hotels, together with the launch of online marketplaces like Craigslist, helped foreshadow Airbnb, Conley said. "Boutique hotels proved that there was a growing segment of travelers who wanted choice, with personalized touches, and wanted to live like a local. Airbnb is like a boutique hotel on steroids, in terms of that experience."

Airbnb started in August 2008 and got its name when its three founders rented out air mattresses on the floor of their San Francisco apartment during a design conference, when most of the city's hotel rooms were sold out.

"Now, we've moved beyond air mattresses to houseboats and treehouses," Conley said. "People wanted an affordable, local experience." There are now 2.2 million homes on Airbnb, with 90 million users in 34,000 cities. And, true to historical precedent, the hospitality industry is embracing it: In April, European hotel group Accor acquired upscale London-based home rental site OneFineStay.