A couple of years ago, someone put me onto this little-known app called Netflix. Within about 15 minutes of having my TV connected to Netflix, I picked up the phone, called Foxtel, and cancelled my subscription on the spot… the $9.95 a month account that I’d opened on Netflix offered thousands of hours of on-demand, commercial-free entertainment, and had instantly removed the need for my $100 a month, ad-ridden, rerun-filled Foxtel account, forever. I’ve never looked back. These businesses are called disruptive innovators, or disruptors. They don’t create new markets they simply evolve existing markets and cause a disruption to the existing businesses trading in that market.
The current social/information space we’re living in has been dubbed “The Sharing Economy” and it is producing a myriad of these disruptors at a truly incredible rate. From Airtasker taking on traditional franchisers, to Coursera turning education upside down. These disruptors often peg their success by operating on the fringes of what is legal. It was illegal to access Netflix in Australia at that time I joined it because they didn’t have distribution rights in this country, but even so, it was estimated that Netflix users numbered over 100,000 back-dooring their way onto the service via offshore VPNs. Chris Dixon, A New York trader, refers to disruptors as Regulatory Hacks, “Startups don’t have the resources to change regulations through lobbying. Instead, they need to start with regulatory hacks: “back door” experiments that demonstrate the benefits of their ideas. With luck, regulators are forced to follow.” Uber is a great example of this for the taxi industry. Despite being currently illegal, Uber is flourishing in QLD and the QLD government have issued $250,000 worth of fines to Uber drivers… but for a company valued at forty billion dollars, it’s a joke to think fines will stop them. The ABC’s 730 program obtained emails from Department of Transport and Main Roads that highlights how effectively these disruptors can utilize regulatory hacks to gain a foot hold and eventually change the legislation to suit them.
Main Roads worker Graham Faine writes in an email to his colleagues “Do we get a sense from the ‘word on the street’ that the action we are currently undertaking is having an effect?”
Nick Marsden replies “No, It appears the Uber business is still expanding.” It becomes obvious even to these government workers, that start ups such as Uber will ultimately drive regulation, not the other way around. “How long is [The Department of Transport and Main Roads] prepared to continue to throw resources at this activity?,” asks Lance Maxwell.
It seems clear to everyone that eventually, Uber will win out, the legislation will be modified and the Taxi industry will need to either innovate, or die. In my opinion, this is the key to living with disruptors. As a software developer, even my own industry has been heavily affected by the advent of oDesk, where guys who write code like me are a dime-a-dozen. In order to continue to run a successful business in the age of disruptors, I could no longer afford to just be good, I had to be innovative… So I used my programming knowledge to build a web based real estate agency, TheOnsiteManager, which is, itself, a disruptor of traditional real estate offices. My agency is an example of a disruptor that benefitted onsite managers by allowing tiny little individual restricted letting agents to compete with the might of heavily resourced franchise agency offices. But accommodation managers are also a traditional business model and their industry is not immune to disruptors any more than the software industry or the taxi industry – and that brings us to AirBnB.
If you haven’t checked AirBnB out yet, as an onsite manager, you probably should – this is your disruptor… and as I looked at oDesk for the first time and gasped at my own fate, onsite managers should check out AirBnB. It’s a snazzily designed app that allows any-old-joe with a spare room to market it as a hotel. You can find everything on there from spare rooms and treehouses to luxury 5th avenue apartments and mansions in the South of France. The rates are low and the quality is varied but in many cases exceptional. The website is valued at over thirteen billion dollars and generated over two hundred and fifty million dollars last year alone. It has over a million listings and Fast Company have speculated that “AirBnB would usurp Intercontinental and Hilton Worldwide as the world’s largest hotel chain – without owning a single hotel” and like Uber taking on the Taxi industry, AirBnB has the potential to operate on the outskirts of regulations and become a huge issue for those of us working in the ‘traditional’ accommodation industry.
Carol Giuseppi is Tourism Accommodation Australia’s NSW director and acting CEO. She says that Airbnb providers are often not licensed, don’t meet safety guidelines, don’t pay taxes and aren’t run as legal businesses. She adds ‘Hotel developments take place under a lot of regulation; why should properties come into the market who want to make a profit without the responsibility?’
She may have a point, but how much power do traditional industry bodies and government regulators have to stop disruptors like AirBnB? If Uber is any indicator, they have very little power indeed. In fact, in 2013 Melbourne City Council lost an appeal to prevent apartments being let to short stay occupants. Just last week Communications minister Malcolm Turnbull, was praising AirBnB at a technology conference in Sydney as an example of technological innovation: “Airbnb has added more than 10,000 rooms to Sydney’s holiday rental market, without a single brick being laid and planning permit being approved,” he said. “In seven years, Airbnb has added more than one million rooms globally compared to the century-old Hilton chain’s 700,000 hotel rooms.” “The key to our future prosperity is to be faster, leaner, more productive, more innovative and more collaborative,” he said. “And above all, to be more agile.”
I think he’s right. Resisting disruptors is a futile game as we’ve seen with the taxi industry and Uber. Ignoring disruptors is also fought with peril. Disruptors need to be carefully watched by their competitors and innovation needs to be embraced in order to compete. GoCatch is a great app that lets you flag down licensed cab drivers in your area and a good, safe, legal, and insured, alternative to Uber, Presto is a new App that Foxtel have released to complete with Netflix for on-demand entertainment. When oDesk replaced the need for local software developers, innovation was how I coded my way out from under it. I think innovation is going to be what Queensland hospitality owners will need to embrace to compete with AirBnB, Stayz and the other disruptors of the sharing economy. It will be interesting times ahead, but when you consider the Management Rights industry was invented on the Gold Coast as a solution to conventional hotel chains, innovation is something Queenslanders have always done well and I’m confident they’ll continue to do well in the future.
– See more at: http://www.theonsitemanager.com.au/management-rights-information/3792407-Disruptors-and-what-they-mean-for-Management-Rights#sthash.kQ35TEtz.dpuf