This dynamic was only made possible when the low-cost ubiquity of the Internet combined with the rich media capabilities of the Web and user-friendly browsers. Those elements collapsed the switching costs and truly transformed the playing field. Threat by substitution is also playing out in the hotel space. We know from the data that slow supply growth and a recovering economy are driving favorable supply-demand dynamics and, as a result, revenue per available room is expected to accelerate. But are we safe with this assumption when we consider the threat of substitutes? Can we depend on controlled supply growth when Airbnb has expanded to 19,000 cities across 192 countries, spawning dozens of copycats? Shouldn’t we view the 10 million roomnights booked through Airbnb as “new supply” and isn’t this new supply driven by an accelerating substitution effect fueled by plummeting switching costs thanks to the social web? Although Airbnb’s bite is relatively small in comparison to the global hotel sector, the fact remains that switching costs are falling. Yes, leisure travelers tend to be the sweet spot for Airbnb, but are we so sure the model won’t extend to the lucrative business traveler anytime soon? As more and more travelers experience Airbnb and as the company’s supply base broadens and segments according to traveler type … well, we’ll just have to see. Get the full story at HotelNewsNow.com