On November 10, Kylie Granat wrote an article, Namibia demands Airbnb hosts register with the state. The article had mixed responses.
Airbnb disrupted the market. It created a new market and value chain that did not previously exist and which eventually ‘disrupted’ the existing hospitality market and value chain. There is absolutely nothing wrong with what they did. With the introduction of Airbnb, there came many new ideas and innovations. Consider how these new developments can assist other businesses in achieving their goals. The digital revolution poses so many opportunities for small businesses, opportunities they would never have had even 10 years ago. The digital revolution is not the problem, it is reluctance to change that causes the problem.
Let’s start by creating an overly simplified scenario. Jack and Jill have hotels next door to each other. Both hotels do very well in the current market. Bill, one of their other neighbours, opens a hotel too. His hotel is cheaper and more modern. Both Jack and Jill lose 50% of their occupancy to Bill’s new venture. Jack decides to do renovations to improve his sales. It works, and Jack’s sales are back up. Jill believes she needn’t spend money if her model has worked well so far. Rick, another neighbour, realises their location has potential and joins Airbnb. Jack, Jill and Bill lose some business to Rick. Jack hires a marketing agency to improve his strategy and online presence. It works, and Jack soon exceeds his previous sales. Rick gets a website and does a bit of marketing and his occupancy goes back to what it was previously. Jill still thinks she will be fine.
The government announces that Airbnb users have to register their properties as an accommodation establishment. Jill is overjoyed and gets her staff members to protest outside Rick’s house for two days until the government approaches him about registration. Rick’s Airbnb account is closed for two months while he sorts out his logistical issues. Jill waits for business to go up, but nothing happens. All Rick’s would-be customers go to Jack and Bill’s establishments due to their strong brand identities. Rick eventually gets back into business and, shortly afterwards, Jill goes out of business.
Whether competitors come in a direct me-too format (where they do business in exactly the same way you do), or they compete with you in an indirect way (with a completely different, but globally successful business model), they are still your competitors. Sitting idly by while they take away your market share is detrimental to the future of your business.
Some business operators simply can’t afford to drastically change their way of doing business, especially if they don’t have the knowledge or expertise. This is understandable, but go back to basics – what sets you apart from your competitors? Would you objectively choose your own company above your competitors? If so, why? You need to leverage on this and then, through very simple and effective steps forward, get back your competitive advantage. Plus, you need to know and understand your customers and their needs, desires and wants.
Keep in mind, “if you do what you always did, you get what you always got”. This is especially relevant when people aren’t open to changing their business model. Instead, the industry around them changes drastically and, after tapping out all possible resources to protect their conservative business style, they start pointing fingers at their competitors and claim they’re not playing fair.
Just remember the record industry when MP3 and digital music distribution started up. They brought all their lawyers and their entire garrison to fight the new trend. The only result was that the record industry as we knew it doesn’t exist any more. It has been taken over by iTunes, Spotify and others. If they saw it as an opportunity and went for it aggressively, dynamically and progressively, the world would look different for them today. I am of the belief the same will happen in the tourism industry. As far as I can see, only TUI is moving with speed, deploying blockchain and changing their business model drastically. So far with great success. But the new CEO, Fritz Joussen, is an engineer with 20 years’ experience in the mobile and Internet business.
The Hospitality and Tourism Industry has gone through, and will continue to go through, further massive paradigm shifts and if you want to sustain your business, you have to be fast, you need to adapt accordingly and change your go-to market, business model and the way you approach and gain prospects. So don’t waste your time with complaining.
This said, it is also very important to note that, in reference to Kylie Granat’s article, there is certainly a need for regulations to be implemented to establish fair and level competition. Airbnb has created a completely new market and a completely new clientele. Airbnb encouraged homeowners to rent out their rooms in competition with established hospitality businesses. It is obvious that those private operators have to be compliant with the regulations, getting registered, accredited, pay tax and levy like any other market player in the hospitality industry.
However, this has not been the case for many Airbnb operators and this is what authorities need to follow up on. It is not about protectionism, but rather ensuring that rules and regulations are equally valid for all market players.
Certainly, an Uber driver should have a valid driver's licence, roadworthy vehicle and comply with any laws regarding transporting people for money. Similarly, an Airbnb host should have to comply with any laws regarding registration for property offering accommodation to foreigners for money.
Considering the rapid rate at which the industry is changing, growing and new technology is arriving constantly, it is important to remain relevant. Do this by keeping up with trends and embracing new ideas. If a disruptive entity enters the market, don’t be afraid to follow their lead for a while.
See what makes them successful and learn from that. Find your Unique Value Proposition, build on it and find ways to combine it with current trends. Most importantly, if anything happens to slow down the disruptive entity’s success, don’t get your pitchforks and chase them out of town. Look at how you can prevent similar issues or solve their problem for yourself. Obstacles present opportunities, not dead ends.
