Airbnb: Analysing the impact of disruptive innovation
The idea behind Airbnb started off simply enough. Those with a spare room could rent it out for a night or two and earn some extra cash.
But now it has expanded into a worldwide domination of accommodation providers offering up ensuite rooms, granny flats or even whole houses.
Airbnb has followed in the footsteps of the likes of Uber – taking something that already exists and simplifying it.
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But some would argue that Airbnb is now far removed from its core values of just a room for rent, and is being used as a substitute for hotels and contributing to a housing shortage.
While some may say it is a disruption, others believe it is complementing the tourism industry.
Hospitality NZ accommodation advisory council chairman Nigel Humphries has been a motelier in Te Anau for 20 years.
There were about 294 Airbnb listings for the town last week.
He believes that Airbnb is not so much a disrupter to the industry as a disrupter to society.
“Families/workers can’t get rental houses and are even being kicked out so owners can put these houses on the short term market.
“This affects employment and growth. If we can’t get staff, or provide accommodation for staff, this is a worry for all employers.”
“Families have to leave town because they can’t get a rental; not good for anyone and not to mention how stressful this is for the families.”
All of the accommodation industry needed to be following the same rules and contributing to the regional tourism levy, he said.
Airbnb guests make a significant contribution to New Zealand’s economy. A report by Deloittes states in 2017, they earned $660 million in GDP and supported more than 6000 jobs.
There were 578,000 stays, accounting for 1.5 million nights booked in New Zealand through Airbnb last year.
Home Legal online guidelines state that at the moment BookaBach has more than 12,200 holiday rentals and Airbnb has more than 15,000, with the owners declaring income.
In the past year, the number of Airbnb guests to Southland has increased by more than 80 per cent.
In data provided by Airbnb, as of July 1 there were more than 590 active Airbnb listings in Southland, with more than 34,500 nights booked in the past year and 53,000 guests hosted.
That represents an 84 per cent increase in inbound guests across 19,000 trips from the previous year.
Due to popularity, Queenstown Lakes District Council is proposing short term peer to peer renting limit, which would introduce a 90-day-a-year cap in the centre of town.
Airbnb Australia-New Zealand public affairs manager Julian Crowley and Australasia regional manger Brent Thomas were in Queenstown last month to discuss the proposed change.
Crowley said the debate had gone to the extreme, from laissez faire (keep the industry free of government intervention) to some in the hotel industry wanting “to put the genie back inside the bottle”.
Thomas said there was no need for that.
“The fact of the matter is hotels in New Zealand are healthy and their future is as bright as ever. What’s more, many local traditional hospitality providers are joining our community.”
Stats NZ data shows that 2017 was a record year for hotels in New Zealand, including Queenstown, where occupancy had increased to 79.5 per cent in 2017 – an all time record annual high.
Thomas rejects the view that it had moved away from its core values. “Airbnb spreads the benefits of tourism to the people and places that traditionally missed out like the suburbs and regions.”
Wellington-based think tank, the New Zealand Institute of Economic Research (NZIER) works on projects that measure the impact of disruptive technology.
Chief executive Laurence Kubiak said what was interesting about Airbnb was the way it had redistributed people.
“Hotels are concentrated into urban areas. But if you stay in Airbnb you could be anywhere, so the spatial distribution is quite different.”
He believed Airbnb had brought a partial rather than total disruption.
“There definitely has been some disruption. The fact that hotels are so concerned about it says something.
“But Airbnb is not a substitute for staying at a hotel, it’s more complementary, so it’s more of a partial disruption.”
The market was quite different between a hotel user and an Airbnb user, he said.
Hospitality NZ Central Otago president Chris Buckley is not anti-Airbnb; in fact it could could complement commercial accommodation at peak times, he said.
“But it does have knock-on effects such as visitors staying at home and cooking rather than visiting locally owned restaurants and bars.”
It was definitely effecting his business and other bar/restaurants operators, he said.
“Ultimately less staff will be employed to cover shifts and less money will be spent throughout the business and community.”
Having entire houses available rather than just single rooms had changed the dynamics in neighbourhoods, he said. Increased noise was an example.
Along with capping the number of nights homes can be rented to short-term visitors, Queenstown Lakes District Council is also looking at the number of people who can stay in accommodation.
“If it goes unchecked, I would expect it to have negative consequences throughout the country.”
Auckland-based Tech Futures Lab general manager Sarah Hindle, who teaches disruption innovation, said Airbnb was a classic example of a business platform that “cuts out the middle man” in a massive way.
That model had been repeated in several industries, including Uber and Airbnb, she said.
“We’re living in quite a different time than most of us have ever lived in.
“Most of us have done life in quite a linear way, but we now have all these factors and multiples and a speed of change that we’ve never seen before.”
She did not think trying to regulate the industry was the answer.
“Are we a country that looks at disruption as something we put the brakes on?
“We do live in a time of disruption and I honestly don’t know where it’s going to take us. But it’s a great opportunity in society to decide what kind of world we want to live in.”