The travel market is undergoing a deep transformation, lead by collaborative consumption startups that are shaking up this established industry. Home swapping is one of these ideas, a travel revolution waiting to happen, Knok's founder explains. Home swap is simple: you find someone anywhere in the world that wants to spend time in your house or appartment, while you stay at that person's place. The core concept of home swapping is that instead of connecting with friends, you connect with people you don’t know, who live in places you wish to travel to. The idea of home exchange is very old and first started as in the 1950's. There are currently over 60 websites that offer different versions of this service. A lack of technology or tools that facilitate the process of doing a home exchange is the reason why this market has never grown ouside of a relatively small group of aficionados. At the home swap community Knok, of which I am the co-founder, our vision is to take this great, but underdeveloped idea to the next level and make it become more mainstream. We have done a number of things to enable everybody to travel by swapping their home: we have radically improved the user experience and the process of matching members with one another; and we provide trust in a peer to peer community. By doing this we aim to create a huge community of travelers who can save money on accommodation, stay at a real home instead of a hotel room and enjoy the local knowledge of their exchange partners.
Home swapping starts as a service you use, and becomes a way of life: people define themselves as swappers.
The long tail of matching
Home swap is a classic long-tail service: most people want to travel to Paris or New York, but not to a small village in the country. But when you reduce friction, reach a critical mass and improve matching, long-tail effects start to appear: the first exchange at Knok was Hamburg with Istanbul, and the last Malmö (Sweden) with Buenos Aires. Because of this effect, we believe that it makes little sense to create specialized swapping communities (for lets say, seniors). Instead it is important that users are able to filter by specific characteristics such as golfers, lawyers or people living by the beach when searching within a single, large community.
My first time
Trust is a key element in home exchange, but it works in a slightly unexpected way: it’s extremely important the first time you swap, but after you have done it a few times you take it for granted. It’s like leaving your first job: at the time it is a very tough decision, but in retrospect it seems almost trivial and it becomes easier and easier as you do it again. It helps that it works as a club, that you are a member of all-year round. Often the way people find exchange partners is pure serendipity! If you get a swap offer from a member in Iceland, you may suddenly find yourself researching geysers even though you have never thought spending your vacation there! [caption id="attachment_5582" align="aligncenter" width="620"]
Knok locations around the world[/caption]
The liquidity problem
In the online accommodation market, there is a trade-off between cost and liquidity. The lower the cost of the accommodation, the worse the liquidity. Hotels are 100% liquid, since you can book them immediately at any time; P2P rentals can be cheaper but are less liquid, since the supply is smaller, you have to send the host a request and often the schedules are not up to date; home swap is almost free, but is least liquid, because the offer is limited and you have to plan it well in advance. The bottom line here is that you pay a premium for liquidity. This equation can be solved by adding a new variable: the experience. Hotels, rentals and swapping don’t offer the same experience, and can be used by the same people in different situations (i.e. hotels for business, or romantic trips to boutique hotels, rentals for short term trips, home exchange for long vacations). Two elements strongly improve the experience when you are doing a home swap: the accommodation space itself (real homes that are much larger, better equipped and comfortable than hotels and rentals) and the local touch (your interaction with you hosts is usually deeper, since you really need to establish a trusting relationship).
There’s also another key difference between a home swap service like Knok and a rental service like Airbnb: People put their homes on Airbnb to make some extra money. People who join Knok don’t do it for money and, most of the time, would not want to rent their places. Every Airbnb host could also be a Knok member, but not the other way around.
The future of travel accommodation
For collaborative consumption business models to succeed, they need to offer a better overall experience than existing services. While their ethical, ideological or sustainable approaches will surely win over an initial group of early adopters, an improved overall experience by building trust between users and exploiting long-tail effects is a competitive advantage that will help these services become mainstream. And here is my prediction of what the future of the travel industry will look like: every online travel agency will offer not one, but three types of accommodation: hotels, rentals and home swapping. The number of home exchanges will increase tenfold, which will in turn improve swapping liquidity and make the experience even better, thus further accelerating the growth of the market. From my experience, once you try home swapping, you get hooked on it. Its market may not be as large as for hotels, but it already is and will without doubt become an even more powerful and popular service for a very large minority of travelers in the future. Guest post written by Juanjo Rodriguez.
Founder at Knok, a home swap community. 3rd time entrepreneur in digital and marketing. 15 years experience with startups, both bootstrapping and corporate ventures.