Chief Disruptor Blog

Interview with Airbnb's General Manager for Northern Europe, James McClure - Part 1

Written by Victoria Arrington | 10-Aug-2016 13:27:38

At just 8 years old, Airbnb has exploded onto the scene as one of the world's most famous hospitality companies. Growth of such magnitude traditionally took decades to achieve in the industry, with only a few contenders ever fully rising to the top. But Airbnb's breakthrough digital innovation has allowed them to achieve a ubiquitous presence in the market in less than a decade.

...But Airbnb's success is not simply because of technological advancements. As a company, they have had to also innovate when it came to inventing fresh strategies in building their accommodation database, changing consumer behaviour and mind-set, and marketing a product that they did not actually own.

Recently, I had the opportunity to speak to Airbnb's General Manager for Northern Europe, James McClure, to hear his insight on best practice for navigating this new way of doing business, and how Airbnb is constantly evolving and innovating to stay ahead of the curve.

Airbnb is often described as the poster child for a disruptive business model based around the sharing economy. What other elements of your business model do you believe define your approach as radically different?

For us, our community is at the heart of the business. Our first goal is that we are a community-led “superbrand” first and foremost.

In the 90’s, the consumer market seemed to be led by “big” products, such as Air Jordans. But, that was not necessarily true; in reality, it was more about the people and the experience they wanted to attain, rather than the product itself. This is what was ultimately the selling point, and what consumers are actually buying and enjoying.

In a similar vein, Airbnb is about an experience. When travelling, Airbnb lets you live like a local and feel at home, which is how the vast majority of travellers want to feel according to surveys. As an Airbnb traveller, your host can be a guide to local features, such as the “best 3 coffee shops in the area”.

Also, the form of travelling offered by Airbnb is not actually that disruptive - after all, people have asked friends and family who have been to a destination previously about their favourite experiences and places that they had visited for years. Tech has just enabled us to do that at scale – and has given people a new way to gain friends everywhere.

I have noted that you have said that you believe Britain is a market leader in the sharing economy. Why do you think this disruptive business model has really taken off in the UK?

London is a tech centre, with many companies and start-ups now coming from here. Also, in the UK, we have a large amount of talent, and a bias towards entrepreneurship; in addition, UK regulation has been supportive and progressive for the tech industry.

Also, the UK is a consumer-led market that is receptive to new ways of doing things, in particular for consumers looking to save money and improve the experience of travelling.

How would you measure the impact of sharing on the UK economy?

The UK accounts for 10% of the world's sharing economy companies, more than France, Spain and Germany combined. PwC has sized up the sharing economy to be a £15bn industry by 2025, with the economic impact from Airbnb in London alone being £1.3bn.

And, Airbnb is supporting jobs not only in traditional tourist areas; the economic activity our technology enables is pretty well distributed, and happens outside of the standard hotel areas. For instance, in London, this distribution of spend goes well outside of zone 1, and helps people who economically have not been able to travel otherwise to now have the ability to come here and spend money.

We also worked with London & Partners to support this happening – after all, every borough wants more tourism. Airbnb can give people the ultimate experience of what it’s like to be a Londoner and not just a tourist.

Looking to the future, how will you continue to evolve your business model to achieve further growth and competitive advantage?

We wanted to create an experience to make people feel they belong anywhere, whether they are travelling with a partner their family, friends, or alone.

We also are looking to expand into additional market segments, such as business travellers. Google, Facebook, and Levi's are already using Airbnb for their employees’ travel. Until recently, 10% of our bookings were business travellers (mostly with cost-conscious SMEs), but, in the last year or so we have been seeing bigger corporations using us more and more.

Would you describe your approach as more revolutionary or evolutionary?

Evolutionary. After all, people who travelled years ago (back in days of caravans), would stay in friend's homes along the route; we have always stayed with friends, or at least asked for recommendations as we travelled. All we have done is enable a network to connect people in a new way – by creating an authentic and local experience, which we tap into.

Next week, we will share with you the second part of this 2 part interview, with James sharing his thoughts on digital ecosystems, the culture of Airbnb, and the key to innovation.

James McClure is Airbnb's General Manager for Northern Europe, overseeing Airbnb's market growth. Prior to Airbnb James had a stint at Arthur D. Little strategy consultancy before 8 years at Google in London, Sydney and Singapore; most recently running their APAC Emerging Markets business.