How should destinations respond to Airbnb and the sharing economy?

Frank Cuypers

27 June 2016

As more people participate in the new sharing economy, companies like Airbnb, Inc., VRBO and Wimdu are disrupting the travel industry by offering travellers direct access to peer-to-peer accommodation rentals. A surging demand from visitors who want to travel like a local is forcing many destinations and places to respond and balance the needs of their residents, businesses, industries and other stakeholders whose lives and livelihoods are, in some cases, dramatically changing.

The resulting responses vary wildly. For example, the city of Berlin has banned Airbnb rentals, making it “illegal for tourists to rent apartments in the city through Airbnb,” in an effort to “protect affordable housing and keep the rents as low as possible for residents.” Tourism organizations in Iceland are also supporting restrictions, citing a sharp increase in tourism that they must manage carefully. Challenges here include “a dramatic increase in house prices in central Reykjavík, and a paucity of long-term rentals.” Other destinations with different goals are responding more favourably. Dubai Tourism recently announced that it is partnering with Airbnb “to help to grow and diversify the emirate’s tourism sector.” Given the wide range of responses, how can you begin to assess the impact Airbnb might have on your own destination?

Balancing the needs of industry, visitors and residents

One aspect to consider is your destination’s maturity. If your destination is in a growth stage and lacks a developed industry that can support the place experience, Airbnb could be a great tool to help you achieve your goals around attracting as many visitors as possible. However, if your tourism industry is already well-established, Airbnb could be seen as an unfair competitor that is able to avoid local regulations.

On the other hand, tourism-saturated cities like New York or Amsterdam sometimes face the problem of concentrating too many visitors in the same location. In cases like this, working with Airbnb to help spread visitors, accommodation and revenue across different parts of the city or region, could be beneficial.

Airbnb can also positively affect the quality of the accommodation experience. People no longer want standardized, one-size-fits-all experiences, so it’s up to the traditional industry to respond by enhancing their services. The high-end or boutique hotels in your city will not feel threatened by this, but the average, nondescript, less unique hotels could lose big to Airbnb if they do not adapt.

Resident needs are another key part of this equation, so Airbnb’s ability to scale is the most important threat it poses to a city. Owners of condos and other large properties who would use the tool to focus on short-term rental could destroy the social life of a whole area. Locals who live in a high-rise on Robson Street, Vancouver or in a “plattenbau” in Prenslauerberg, Berlin and meet new neighbours every two or three months might react against this kind of alienation and turn against Airbnb, Wimdu and other platforms. As many have said: The technology isn’t the problem, it’s what people do with it. Perhaps Airbnb could earn trust from officials by building in its own regulations to limit this kind of overuse.

How might the growing sharing economy affect destination and place marketers in the future?

As Airbnb and similar services continue to disrupt established industries and affect DMO strategy, It’s important to understand what the term “sharing economy” refers to. Platforms that enable free exchange such as Facebook, Tripadvisor or Airbnb consider themselves part of a sharing economy. However, more people are starting to define this term differently, leaning away from a reliance on third parties that profit from the transactions. As an alternative, they consider the only real sharing economy to be public spaces such as the internet. In this second definition, cooperative models allow for free flow of information and collaboration. See the P2P Foundation’s efforts to move toward an interconnected “Commons-based” society for an example.

Typically, today’s DMOs now see see the importance of the first definition and try to partner with relevant sharing platforms, or at least think about how to respond to them. Partnerships are popping up all over the planet. For example, NBTC Holland Marketing has a partnership with Airbnb. But the real DMO disruption will come from the second definition of “sharing economy.” Cooperative models based on crowdsourcing will grow and develop in tourism as they are in other industries. DMOs that want to be relevant in the future need to change from a consumer model into a hosting model, from broadcast to engagement and from marketing to management.

By finding ways to coordinate collaboration and to connect with their communities in the public space, the DMOs of the future can open up an effective strategy to engage visitors, local hosts and other service providers.

Featured image credit: Moyan Brenn, Flickr

3 Comments

    • frank cuypers

      Thank you Gabor. I definitely will read it !

      Reply
  1. Jos

    Nice read! Please check out our research on making places and shaping destinations regards

    Reply

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