Tag Archives: travel

The Raging Ripple Effect of AirBNB

Ripple Effect: the continuing and spreading results of an event or action.

I’m pretty sure Brian Chesky and Joe Gebbia had no idea what they were unleashing when they decided to rent out an air mattress in the front room of their San Francisco apartment in the fall of 2007. The idea made all kinds of sense: there was not a hotel room to be had, there was a huge conference in town and they were perpetually short on their rent. It seemed like the perfect win-win – and, at first, it was.

But then came the Internet. AirBnB was born and would unleash unintended consequences that would change the face of tourism, up-end real estate markets and tear apart neighborhoods in cities around the world..

For the past two decades we have seen the impact of simple ideas that can scale massively thanks to the networked world we live in. In a physical world, there are real world factors that limit growth. Distribution, logistics, production, awareness – each of these critical requirements for growth are necessarily limited by geography and physical reality. 

But in a wired world, sometimes all you need is to provide an intermediary link between two pools of latent potential and the effect is the digital equivalent of an explosion. There is no physical friction to moderate the effect. That’s what AirBnB Did. Chesky and Gebbia’s simple idea became the connection between frustrated travellers who were tired of exorbitant hotel prices and millions of ordinary people who happened to have a spare bed. There was enormous potential on both sides and all AirBNB had to do was facilitate the connection.

AirBnB’s rise was meteoric. After Chesky and Gebbia’s initial brainstorm in 2007, they launched a website the next spring, in 2008. One year later there were hosts in 1700 cities in 100 different countries. Two years after that, AirBnB had hosted their 1 millionth guest and had over 120,000 listings. By 2020, the year Covid threw a pandemic sized spanner in the works of tourism, AirBnB had 5.6 million listings and was heading towards an IPO. 

Surprisingly, though, a global pandemic wasn’t the biggest problem facing AirBnB. There was a global backlash building that had nothing to do with Covid 19. AirBnB’s biggest problem was the unintended ripple effects of Chesky and Gebbia’s simple idea.

Up until the debut of the internet and the virtual rewiring of our world, new business ideas usually grew slowly enough for the world to react to their unintended consequences. As problems emerged, new legislation could be passed, new safeguards could be introduced and new guidelines could be put in place. But when AirBnB grew from a simple idea to a global juggernaut in a decade, things happened too quickly for the physical world to respond. Everything was accelerated: business growth, demand and the impact on both tourism and the communities those tourists were flocking to. 

Before we knew what was happening, tourism had exploded to unsustainable levels, real estate markets went haywire and entire communities were being gutted as their character changed from a traditional neighborhood to temporary housing for wave after wave of tourists. It’s only recently that many cities that were being threatened with the “AirBnB” effect responded with legislation that either banned or severely curtailed short term vacation rentals.

The question is, now that it’s been unleashed, can the damage done by AirBnB be undone? Real estate markets that were artificially fueled by sales to prospective short term rental hosts may eventually find a new equilibrium, but many formerly affordable listings could remain priced beyond the reach of first time home buyers. Will cities deluged by an onslaught of tourism ever regain the charm that made them favored destinations in the first place? Will neighbourhoods that were transformed by owners cashing in on the AirBnB boom ever regain their former character?

In our networked world, the ripples of unintended consequences spread quickly, but their effects may be with us forever.

Why I Hate Marketing

I have had a love-hate relationship with marketing for a long time now. And – I have to admit – lately the pendulum has swung a lot more to the hate side.

This may sound odd coming from someone who was a marketer for the almost all of his professional life. From the time I graduated from college until I retired, I was marketing in one form or the other. That span was almost 40 years. And for that time, I always felt the art of marketing lived very much in an ethical grey zone. When someone asked me to define marketing, I usually said something like this, “marketing is convincing people to buy something they want but probably don’t need.” And sometimes, marketing has to manufacture that “want” out of thin air.

When I switched from traditional marketing to search marketing almost 30 years ago, I felt it aligned a little better with my ethics. At least, with search marketing, the market has already held up their hand and said they wanted something. They had already signaled their intent. All I had to do is create the connection between that intent and what my clients offered. It was all very rational – I wasn’t messing with anyone’s emotions.

But as the ways we can communicate with prospects digitally has exploded, including through the cesspool we call social media, I have seen marketing slip further and further into an ethical quagmire. Emotional manipulation, false claims and games of bait and switch are now the norm rather than the exception in marketing.

Let me give you one example that I’ve run into repeatedly. The way we book a flight has changed dramatically in the last 25 years. It used to be that airline bookings always happened through an agent. But with the creation of online travel agents, travel search tools and direct booking with the airlines, the information asymmetry that had traditionally protected airline profit margins evaporated. Average fare prices plummeted and the airline profits suffered as a result.

Here in Canada, the two major airlines eventually responded to this threat by following the lead of European lo-cost carriers and introduced an elaborate bait and switch scheme. They introduced “ultra-basic” fares (the actual labels may vary) by stripping everything possible in the way of customer comfort from the logistical reality of getting one human body from point A to Point B. There are no carry-on bag allowances, no seat selection, no point collection, no flexibility in booking and no hope of getting a refund or flight credit if your plans change. To add insult to injury, you’re also shuttled into the very last boarding group and squeezed into the most undesirable seats on the plane. The airlines have done everything possible to let you know you are hanging on to the very bottom rung of their customer appreciation ladder.

Now, you may say that this is just another case of “caveat emptor” – it’s the buyer’s responsibility to know what they’re purchasing and set their expectations accordingly. These fares do give passengers the ability to book a bare-bones flight at a much lower cost. It’s just the airlines responding to a market need. And I might agree – if it weren’t for how these fares are used by the airline’s marketers.

With flight tracking tools, you can track flight prices for future trips. These tools will send you an alert when fares change substantially in either direction. This kind of information puts a lot of power in the hands of the customer, but airlines like WestJet and Air Canada use their “Bare Bones” basic fares to game this system.

While it is possible on some tracking tools like Google Flights to set your preferences to exclude “basic” fares, most users stick to the default settings that would include these loss-leader offerings. They then get alerts with what seem to be great deals on flights as the airlines introduce a never-ending stream of seat sales. The airlines know that by reducing the fares on a select few seats for a few days just enough to trigger an alert, they will get a rush of potential flyers that have used a tracker waiting for the right time to book.

As soon as you come to the airline site to book, you see that while a few seats at the lowest basic fare are on sale, the prices on the economy seats that most of us book haven’t budged. In fact, it seems to me that they’ve gone up substantially. On one recent search, the next price level for an economy seat was three times as much as the advertised ultra-basic fare. If you do happen to stick with booking the ultra-basic fare, you are asked multiple times if you’re sure you don’t want to upgrade? With one recent booking, I was asked no fewer than five times if I wanted to pay more before the purchase was complete.

This entire marketing approach feels uncomfortably close to gas lighting. Airline marketers have used every psychological trick in the book to lure you in and then convince you to spend much more than you originally intended. And this didn’t happen by accident. Those marketers sat down in a meeting (actually, probably several meetings) and deliberately plotted out – point by point – the best way to take advantage of their customers and squeeze more money from them. I know, because I’ve been in those meetings. And a lot of you reading this have been too.

 When I started marketing, the goal was to build a long-term mutually beneficial relationship with your customers. Today, much of what passes for marketing is more like preying on a vulnerable prospect in an emotionally abusive relationship.

And I don’t love that.

Is the Customer Always Right?

You can’t always get what you want
But if you try sometimes, well, you might find
You get what you need

The Rolling Stones – 1969

When I retired from marketing 11 years ago, I did a brief stint running a tourism business, putting together custom bike tours. I thought it would be an ideal semi-retirement gig – riding bikes and hanging out with others who loved road cycling. Like many customer facing businesses, we lived and died by ratings. Because we were an experience curator, we regularly dealt with dozens of other tourism-based businesses. We were all dealing in the same currency – those elusive five-star ratings.

In theory, I think customer ratings are a good idea. But there is a dark side – the overly entitled customer that wields the threat of a negative review over the head of a proprietor. By the end of the season, all the operators we were dealing with were burnt out and frustrated. Overt entitlement sucked all the joy out of being in the tourism biz. This trend got much worse as we were pulling out of Covid. It was as if the entitled had doubled down on their demands during the pandemic. That was when I decided to hang up my cycling shoes. Life was too short to stress about catering to a bunch of whiny, demanding guests who threatened to bring the wrath of a bad TripAdvisor review down on me.

The internet’s early promise was to democratize markets that were traditionally asymmetrical. Suddenly, everyone had a voice. And, at first, it was wonderful. But predictably, we found a way to screw it up. Compared to the dumpster fire that is social media, online ratings are not pure evil, but they do have their dark side in a culture full of entitled customers.

If you doubt that North America is narcissistically entitled, I direct you to Jean Twenge and Keith Campbell’s book, the Narcissism Epidemic. Based on years of extensive research, it shows how we have fostered an age of entitlement that lives by the maxim that everyone should be treated special. That is now the baseline of expectation. We have brought this on ourselves, by insisting that we – and especially our children – receive special treatment. But, as any statistician can tell you, we can’t all be above average. Sooner or later, something has to give.

This is especially true in tourism. We all long for that magical, once-in a lifetime vacation. In fact, we now demand it. But that is impossible to deliver on. Just check into the most popular vacation destinations in the world: Paris, Rome, Barcelona, Venice and London. All are creaking under the weight of unprecedented numbers of tourist. And the supporting infrastructure can’t support it. Those places are popular because they have a sense of romance, history and magic. Everyone wants to experience strolling through the secluded streets of Rome at twilight, stopping to toss a coin into the Trevi Fountain.

But the reality is far different. Last year, Rome was invaded by an onslaught of 35 million tourists. Crowds ten to twelve deep push towards the fountain, crushing each other and providing the ideal environment for pick pockets. It’s gotten so bad; the City of Rome is looking at instituting a ticket reservation system to see the fountain.

That is the reality. Over tourism has stripped Rome of its magic. But marketing continues to push the elusive dream of the ideal Roman Holiday, leading us to believe that we’re entitled to that. Everyone else can put up with the crowds and the hassles. But not us – we’re special. And that expectation of special treatment unleashes a vicious cycle. Disappointment is sure to follow. We’ll voice our disappointment by leaving a nasty review somewhere. And some poor tourism operator who’s just trying to keep up will see his or her business slip away as the negative reviews pile up.

I do believe this idea of customer entitlement is particularly prevalent with North Americans. We have constructed it on pagan alter of crazy consumerism, as this post from on the Zendesk Blog by Susan Lahey explains, “ U.S. culture, especially American consumer culture, focuses a lot on making people feel special. After being treated like this in enough scenarios, people come to expect it. Then, when they don’t get their way, they’re upset. They feel like they have a right to act however they want towards others until they’re appeased—which winds up isolating the consumer and shaping their view of the world as ‘me against them.’ “

Lahey provides a counter-example of sustainable consumerism –aligned to a culture that embraces egalitarianism. You’ll find it in what are supposed to be the happiest countries on earth – Finland, Denmark, Iceland and Sweden: “One thing these countries have in common is a set of social norms called the Jante Laws, which say that no one is more special than anyone else. Far from making citizens unhappy, it seems to make them more resilient when they don’t get what they want.”

Less entitlement, more resiliency – that doesn’t sound like a bad plan for the future!