Business unusual: Airbnb

analyses how Airbnb dominates as a means to finding flexible accommodation while not holding any property itself


Feeling crowded? The population is growing and with limits to capacity, the value of space has been driven up. Culturally there’s less drive to settle at a young age. For those planning the long and varied life, it’s discouraged. Consequently there’s no drive to invest in property, or even commit to living in one place for any fixed time at all.

Airbnb is the largest provider of accommodation in the world, but it owns no property. Initially an option for sofa surfers needing short term solutions, Airbnb can now fit all needs and purposes.

The arrangements are traded in an online marketplace, predicated on the idea that Airbnb is a safer method of making these arrangements than doing so through less transparent means. The actual management carried out by Airbnb is minimal, but it operates as a natural monopoly for creating a marketplace for space and providing as much information to users as possible. If there were hundreds of sites with a similar structure, it would be very difficult to approach with confidence.

Generating revenue through service fees, it acts as a middleman, accumulating $10bn in the process. Its influence has fundamentally altered the way accommodation can be viewed and provides users the opportunity for greater fluidity in making difficult lifestyle choices.

Though the aggregator itself has a natural monopoly, it provides a competitive market in offering accommodation. It will appeal to those who champion free markets, but undoubtedly contributes to rising prices in cities with fewer vacancies.

Though one of a kind, it follows a fascinating trend adopted by the biggest names of the last decade. Doing the rounds on LinkedIn, one doesn’t have to look far to see technology journalist Tom Goodwin stating: “Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no con-
tent. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.”

Airbnb may be the answer to marketing space, but it may be a bubble ready to burst.

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