How Airbnb Disrupted the Hospitality Industry with Network Effects
With the advancements of technology, there has come a new type of industry known as the “Share Economy”. The “Share Economy” is an industry where companies provide a platform for people to share and monetize their property with other people. Airbnb, as one of the leaders of the “Share Economy”, allows people to list their property online for other people to rent. Airbnb would be nothing besides a website platform without the people listing their homes to be rented or without the people looking for place to stay when they are traveling.
Airbnb and other major internet-based companies have utilized “network effects” to become some of the biggest and most influential companies in the world. Network effects has bought extreme value to their company as their renters went from zero to 15 million and their property listings from 50,000-500,000 over a 5-year period. These two numbers shot up together, which proves that adding more users provided more value for other users to use the platform, which led to Airbnb being valued at over $30 billion today.
Airbnb’s quick rise to success has completely disrupted the hospitality industry. Hotel industry leaders were in denial at first, but they soon realized that Airbnb would only continue to grow and steal away their customers. Airbnb is often more affordable, offers a new type of experience, and has the power of technology and network effects behind it. Thanks to network effects, Airbnb continues to scale up and capitalize on their success by offering brand new offerings and experiences to its users, which continues to set them apart from the hotel industry.