AirBnB and the Red Ocean

I have been spending a lot of my time lately examining the Bed and Breakfast Industry. One of the hot topics right now is AirBnB.com.

I saw an article the other day that spoke of a long time Bed and Breakfast that was shutting its doors.  They totally blamed AirBnB and the local government for their collapse in business.  Ouch!  Was this fair?  It is what got me motivated to write this article.

What is AirBnB?

AirBnB has come about as a result of the ‘sharing’ economy.  You know, I have something that I own (like an extra room in my house) that I could exchange for something you own (like a room in your house, or for money).

Anyone can sign up and post a room available for short term rental.  Others sign up and look for the place they want to stay and they get connected.  You can review each other and say all of the good things and bad things about both the renter and the rentee.  Seems fair and simple.

So what’s the problem?

I guess that you could say that the government is the problem.  What I mean is that hotels and B&B’s have to play by certain rules that the local governments have set up.  These rules protect the consumer against fraud, keep the neighborhood as it was intended according to local zoning rules, ensures proper insurance is in place, AND provides a process for collecting any taxes that are mandated for short term stays.

Legitimate B&B’s have gone through the process of getting licensed, buying insurance, and pass on the taxes that they collect.  All of this takes time and money.

house 6-2013-6The problem comes when any Tom, Dick, or Harry decides that they want to pull in a bit of extra cash by renting out their house or a room.  They can post the availability on AirBnB, set up the deal and fly under the governmental radar.

Many B&B owners have reported the ‘illegal’ B&B’s posted on AirBnB.com, only to be told that there is just not enough personnel available to be shutting down these rentals.  In some places, like New York City, there is more attention on this issue and regulations are being put into place to try to get it under control.

Since I first wrote this article, NYC has enacted some strict regulations.  Click on over to see an overview.

A short business lesson about the ocean of competition

There is a great business book entitled, “Blue Ocean Strategy” by Kim and Mauborgne.  It describes the concept of sharks swimming in the ocean.  If the ocean is red, it is filled with blood, from sharks who are all feeding on the same prey.  If the ocean is blue, then you are out there all by yourself and don’t have to fight off the other sharks to get at your target.

They claim that if your business is offering the same benefits as everyone else’s, then you are swimming in the red ocean.  The competition is fierce.  The goal is to swim in the blue ocean, by offering benefits and results that are in demand, yet others have not figured out how to offer them.  They call this ‘making the competition irrelevant’.

What’s a B&B owner to do?

Today’s B&B is not like your grandma’s B&B.  It is not just a room in someone’s house that you stay in for a night as you motor your way across Great Britain.  Today’s B&B offers you an experience.  Each one focuses on a different experience.  It may be Victorian elegance, romantic fireplaces and jetted tubs, beautiful views, gourmet breakfasts, afternoon happy hours, and on and on.  No longer are successful B&B’s just offering a room.

Things change around us and as they do, it is up to the business owner to become aware and then decide how they want to make changes and adjustments.

In the case of AirBnB, they just opened up the ocean to a whole new school of ‘sharks’.  No wonder the ocean is red!  The savvy B&B owner is figuring out how to make that crowded field irrelevant.  They are focusing on the experience that they offer, the type of guest they want to have come to their inn, and how to relate all of this on their website.

Take responsibility

AirBnB has created change.  Change is inevitable and we don’t always know where it will come from next.  But, let’s not sit around and moan about it.

All businesses face change that they had not planned for.  Whether it is the economy of 2008, the shift from baby boomers to millennials,  the introduction of the internet, or mobile devices, a successful business will be looking to make changes itself.

Take responsibility for keeping your business thriving, no matter the changes around you. Otherwise, you have lost your power and are at the mercy of the unknown change that is just ahead.

A Post Script…

I hear that AirBnB is very interested in getting the ‘illegal’ offerings under control. There are links to pages that will help you with the local ordinances.

Also, legitimate B&B’s are being encouraged to also post on AirBnB.  Some have had good results and others not so much (kind of like anything, right?)  AirBnB is not the enemy. There are just some kinks to be worked out… in my opinion.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *

* Copy This Password *

* Type Or Paste Password Here *