Those who have traveled extensively, know the best way to travel (staying with local friends in every city) is also the least expensive way to explore the globe.

Did you know that 27% of the nearly 3 billion trips (TripAdvisor survey results, 2013) every single year involve staying with friends or family? People have always stayed with known trusted contacts. Of course, most people don’t know people all over the world. This is precisely where hospitality networks come into play, providing a much larger pool of potential hosts/friends than travelers can access on their own.

There have been many hospitality networks over the past 75 years. Many have come and gone or remained extremely niche.

Why?

The challenges are numerous:

• Required geographic diversity: a travel offering generally only gains traction if an individual can use it on virtually every trip they take, which covers a vast array of locations they visit. Those who have built travel startups know this all too well. If a traveler can use a service to find someone to stay with during their trip to Charlotte next week, but not for their trip to Rome in 3 months and Lima 6 months later – then they are likely to forget about the service entirely prior to their next trip to Charlotte. If a network contains a lot of members in North America, but virtually none in Europe, Asia, and South America – the incentive for new travelers drops.
• Host Incentives: Given that a hospitality network implies no monetary exchange, cultural exchange, forming new connections, and great social experiences are the reason people host travelers. While willing occassionally, many hosts don’t have any desire to host strangers constantly. More here
• Monetization: With no money changing hands, how does a network generate enough income to warrant investing the time and energy to build and maintain the network? The only answer is they don’t. Success relies on extremely committed volunteers, who care deeply about enabling cultural exchange. There are only so many people who will undertake such massive commitments with no financial upside.
• Technology (directly related to monetization): If the network generates no money, there is virtually no choice but to rely on volunteer technologists to build and maintain the service on the side of full time jobs. No clear product leader, and dozens of developers contributing over many years is a hard recipe to success. On top of that, everyone expects mobile products now, and mobile is harder and more expensive to develop than web.
• Leadership Challenges: most of these networks have been a founder or two, who operate them as decision by committee among their volunteer base. This structure is by necessity, since the founders have no money to pay anyone.

Those are all massive challenges by themselves, meaning the chances of ever reaching critical mass are slim. Even if a network does scale, then another set of problems arise:

• Too much noise: travelers are forced to send many inquires to hosts, in the hopes that one will accept them. Those requests become impersonal and canned, which of course increases the chance hosts will reject them outright.
• Lack of trust: any community that grows large, suffers from trust issues.
• Lack of commonality: communities form around common passions, values and experiences. As they grow, they slowly begin to encompass those who do not share the same mindset. Interactions with those who do not share the core values of a community, slowly leads core contributors to spend their time elsewhere (often in newer, smaller communities)
• Freeloaders: large hopsitality networks attract those who just want a free place to stay, but aren’t interested in giving anything back to the network. These people piss off hosts to no end, decreasing the chances hosts will host future travelers.
• Spammers: the hospitality network version of spammers are guys who just desire to pick up women, which of course quickly erodes trust of women community members.

As you can see, hospitality networks have faced steep challenges in the past – and all but Couchsurfing have witnessed sluggish growth numbers. Will the shift to mobile & the growing sharing economy movement increase the chances future networks will prosper, and how does our approach with Horizon differ from those in the past?

We’ll save that for a future post.

Hospitality Network Analysis

• History of Modern Hospitality Networks
• Challenges of Hospitality Networks
• Incentives for Hosts