Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector

TLDR

Airbnb has rapidly expanded into a multi‑million‑room‑night platform, illustrating disruptive innovation by offering lower cost, local experiences, yet confronting regulatory and legal challenges. The article examines Airbnb’s disruptive potential, its legal and tax issues, and the broader impacts on the accommodation sector, while proposing future research directions. The authors analyze Airbnb’s internet‑based business model through disruptive innovation theory, assessing its cost, amenity, and authenticity advantages while evaluating legal, tax, and regulatory implications.

Abstract

This article explores the emergence of Airbnb, a company whose website permits ordinary people to rent out their residences as tourist accommodation. The company was just recently established, but it has grown extremely rapidly and is now selling many millions of room nights annually. This rise is examined through the lens of disruptive innovation theory, which describes how products that lack in traditionally favoured attributes but offer alternative benefits can, over time, transform a market and capture mainstream consumers. The concepts of disruptive innovation are used to consider Airbnb's novel business model, which is built around modern internet technologies, and Airbnb's distinct appeal, which centres on cost-savings, household amenities, and the potential for more authentic local experiences. Despite Airbnb's growing popularity, many Airbnb rentals are actually illegal due to short-term rental regulations. These legality issues and their corresponding tax concerns are discussed, with an overview of the current state of regulatory flux and a possible path for resolution. Thereafter, the article considers Airbnb's potential to significantly disrupt the traditional accommodation sector, and the positive and negative impacts Airbnb may have on destinations. Finally, numerous questions for future research are proposed.