jmarbach.com

I hardly ever give full write-ups on specific companies, but Airbnb is an exception because of their sustained growth and disruptive offerings. Take a look:

In the past year the market for short-term property rentals listed on Airbnb has grown exponentially. On any given night throughout the year, there are over 2,000 reservations booked each night in property locations around the world. One of Airbnb’s leading advantages is the company’s reach in more than 8,000 cities and over 160 countries. As existing customers continue to boast the renters ability to extract “more value for less price”, it’s certain that the company will reach its target of 1,000,000 reservations in 2011.

Founder & CEO Brian Chesky makes it clear in the recent TV interview that the company is positioning itself for long-term growth in the market for short-term rentals. Chesky compares Airbnb to eBay: He notes that eBay made a billion dollar industry from selling things in your house; he wants to create a billion dollar industry by selling the house. Airbnb takes their 6-12% cut in a pricing style similar to eBay’s transaction success fee.

There is certain indication that Airbnb has the leverage in existing markets to soon become a major competitor offering a hybrid product in-between hotels and vacation rentals. Easy to use functionality and a trusted review system are at the core of Airbnb’s continued success. This is confirmed by the standard protocol of Airbnb’s search system which lists the most recommended listings first. The process of listing your rental is as simple as creating an account and adding a description to your listing. Additional tools such as a built in Craigslist posting tool help drive additional traffic to the listings. In fact, the excellent UI is even a nomination for “Best Design” by The Crunchies.

I believe that Airbnb is really just at the tip of the ice-berg right now. Their enormous value proposition offered to every property owner with unused space around the world is just beginning to gain traction in many international destinations (“Airbnb London” and “Airbnb Paris” are breakout searches on Google). Many travelers see the benefit of becoming immersed in the destination itself with local people as something that does not compare to the homogeneous quality of a hotel room. Several substitutes have risen in the wake of Airbnb’s success, but my guess is that hardly any of them can compete with growth similar to Airbnb.

Here’s to the year of the air bed!

Yesterday I was flying home from Augusta, Georgia on U.S. Airways and I noticed that the monthly edition of the airline magazine contained enough subsentence to occupy my short and rare flight. However, I realized that the magazine is almost totally irrelevant to the the airlines most profitable customers, frequent fliers, who stare at the glossy cover next to the safety card several times every month. Allowing travelers to have Wi-Fi access is a trend that has fliers more fliers disregarding the airline magazine and seeking carriers with Wi-Fi for more productivity and personal entertainment.

Recently many of the major U.S. airline carriers have decided to go ahead with an investment in offering in-flight Wi-Fi for a fee, provided by the third party company Gogo, which operates under the parent company Aircell. The rationale behind the decision is that the airline executives believe their customers desire in-flight internet enough to chose one carrier over another, just for access to the internet. To support this belief, Mashable published the results from a recent survey, showing that over 3/4 of frequent fliers would change airlines to have Wi-Fi. Now, in March 2010, most airlines have taken action and are implementing the service on select planes in their fleet, which operate routes that would have a high Wi-Fi demand.

Now, why is this relevant to the airline magazines? For the passengers who subscribe to the Wi-Fi service, this will mean that their entertainment will likely be fulfilled via their Wi-Fi device, and not the magazine. The magazines exist now as a place for the airline to entertain their customers with reviews and promotions of destinations they serve and other mildly interesting travel articles. Meanwhile, the same information is available and more accessible with Wi-Fi, making the passenger likely to disregard any of the useful information within the magazine.

As fewer passengers become interested and engaged in the airline magazine, its likely that advertising revenues will drop significantly because the advertiser will no longer be reaching their primary target. Instead, the primary target demographic which the advertisers are seeking will be on the internet. In other words, the advertisers will likely look to reach out to these travelers through a new media form, the internet! Thus, the internet advertising world will yet again trump traditional media forms, as travelers become increasingly digital and mobilized citizens. While the addition of Wi-Fi service in flight is not a guarantee that airline magazines will one day be discontinued, it is certainly an indicator that the advertisers should modify their ad budgets to attract those customers again, on the internet.

Photo by RetroCactus under Creative Commons