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EXECUTIVE SUMMARY
Introduction to Airbnb
Airbnb was founded in August of 2008 and based in San Francisco, California by Brian Chesky,
Nathan Blecharczyk, Joe Gebbia. Airbnb is a global travel community-offers end-to-end trips,
including where you stay and what you do.
It is the most trusted place for people to list, discover, and book unique accommodations accross
online. Whether you need a spare bedroom, an apartment or a villa or a private island. Airbnb
connects travelers on just one click to a more diverse and authentic range of experiences in over
34,000 cities and 190 countries.
Airbnb says: “we built on trust and commitment; together we work to ensure that our global
community has safe and positive experience while using airbnb.” Airbnb uniquely leverages on
the technology.
Airbnb had a very good 2017. It blew its own internal forecasts and made $93 million in profit on
$2.6 billion in revenue.
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I. INDUSTRY ANALYSIS
AIRBNB comes under lodging and hospitality industry.
The Current industry trends that are shaping lodging and hospitality industry:
1. Internet and big data is entering in the industry: smart service sellers are increasingly
relying on technology to gather data and wanting the delivery to be highly personalized service.
Now a day’s data is the most precious assets and modern technology is enabling business to
gather and interpret this data in the most meaningful consumer journey and it helps to anticipate
the needs of the guests before they even arrive.
2. Home-sharing reshapes an entire Industry: Airbnb has completely reshaped hospitality and
technology industry. Airbnb impinge upon the properties space, hotel chain (Accor, Hyatt,
Resorts etc.) and starting to invest in home sharing company. And interestingly together as a
team they hope to offer more options to guests and cater to a wider audience.
3. Sell a story, not just a room: property have more to offer than a bed. Share story with the
people and sell experience.
4. The era of Chatbots: Chatbots are one of the ways for hotel to easily interact with the audience
in a conversational way which do not involve real people. Largely bots are set up to respond
the commonly asked questions as its projects like its being controlled by real people.
5. A continuous shift on mobile: this is not exactly new but worth mentioning because it came
into greater focus in coming years and now mobile platform has become the key in increasing
revenue and profits. For example, keyless entry or check-ins using mobile app, greater use of
near-field technology to feed more information, greater personalization using information
gathered via mobile devices, etc.
6. Greater Efficiency in Use of Data: Business owners are flooded with all types of data
nowadays. While it is required to inform smart business decisions, it is equally important to
understand how to cut through data to make it all understandable. Tools such as revenue
management systems will be a requirement to become data efficient.
The era of bots: Chatbot’s is one of the ways for hotel to easily interact with the audience in
a conversational way which do not involve real people. Largely bots are set up to respond the
commonly asked questions as its projects like its being controlled by real people.
Mobile-first SEO strategies: Mobile-first indexing means, making hotel websites and
booking pages optimized for mobile and certainly it will be a priority for many hotel companies
in the coming months.
Blockchain technology: The aim of blockchain technology in this industry is to eliminate
third-party costs and encouraging direct provider to consumer interaction. Blockchain
companies like Abab, Lockchain, Trippki, Fujinto, Emphy, and Pally are creating platforms
which aim at cheaply and transparently connect customers to room and rental providers that
can best meet their needs, whether that be through providing an affordable hotel booking, or a
unique room in a house, or a new way of using loyalty points.
Wi-Fi-Infrastructure.
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Virtual Reality: replacement of the traditional brochures, hotels can offer more viable
experiences like 360º videos or VR presentations which provide a more
personalized/customized tour of the hotel.
Competitors of Airbnb:
HomeAway and
VRBO
Booking.com
Trivago
Homestay
Tripping.com
Hotels.com
On this tangibility spectrum we would locate the industry at Intangible Dominant, as Consulting.
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to serve and enrich society. Airbnb provide all the comforts of home to those away from home.
The Management structure differs among larger, midscale, and smaller properties. The host
has a multitude of responsibilities, he must ensure a reasonable return on investment, keeping
the guests satisfied and keep employees happy. Food and beverage, rooms division, marketing
and sales, engineering, and accounting all are functions taken to provide a remarkable
performance.
3. Process performance: Higher the satisfaction indicators are, higher is the process
performance. Customer satisfaction integrates all other indicators of performance in
the hospitality industry.
4. Business performance: Airbnb has closed on a more than $1 billion round of funding. It is
now worth approximately $31 billion.
1. Tangibles- Appearance of Physical facilities like Room, Bed, Kitchen. Equipment: TV,
Fridge. Personnel- Host and neighbor and communication materials.
2. Reliability- Host’s ability to perform the promised service dependably and accurately.
3. Responsiveness-Willingness of Host to help the customers and provide prompt service.
4. Assurance- Knowledge and courtesy of Hosts and their ability to convey trust and
confidence.
5. Empathy- Caring, individualized attention the Host provides to its customers.
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delighted by the Host and Stay, How was the Quality and can write a positive or negative
‘Customer Review’ for the overall stay, and likewise can spread a word-of-mouth for the
particular Airbnb. Satisfied service can lead to loyalty and customer coming back to the
Airbnb.
Moment of Truth
A critical point in time is generally characterized as an occasion wherein the client and the
association meet each other in a way that gives the client a chance to either shape or change an
impression about the firm. Such a cooperation could happen through the result of the firm, its
administration offering or both. Different occurrences could constitute a critical point in time, for
example, welcoming the client, dealing with client questions or dissensions, advancing uncommon
offers or giving rebates and the end of the cooperation.
Significance
In the present progressively benefit driven markets and with the expansion of numerous suppliers
for each sort of item or administration, moments of truth have turned into a critical reality of client
communication that advertisers need to remember. They are basic as they decide a client's view
of, and response to, a brand. Moments of truth can represent the deciding moment of an association
with its clients. This is more so because of specialist organizations since they are offering
intangibles by making client expectations. Administrations are regularly separated in the brains of
the client by guarantees of what is to come. Dealing with these expectations constitutes a basic
part of making ideal moments of truth which thus are basic for business achievement.
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Value of Blueprinting a Service
The service blueprint plan is a procedure initially utilized for service design and innovation but
has also found applications in diagnosing problems with operational efficiency. The service
blueprint outline is a connected procedure graph which demonstrates the service delivery process
from the customer's perspective. The service blueprint is one of the most widely used tools for
managing service operations, service design and service positioning.
1. Gives a review so representatives can relate "what I do" to the service viewed as an integrated
whole, thus reinforcing a customer-oriented focus among employees.
2. Distinguishes fail points, that is, feeble connections of the chain of service activities, which
points can be the target of continuous quality improvement.
3. Line of association between outside clients and representatives the customer’s role and
demonstrates where the customer experiences quality, thus contributing to informed service
design.
4. Line of visibility promotes a cognizant choice on what clients should see and which workers
will be in contact with clients, along these lines encouraging reasonable services outline.
5. Line of inner connection clarifies interfaces crosswise over departmental lines, with their
intrinsic interdependencies, in this way reinforcing constant quality change.
6. Fortifies vital exchanges by enlightening the components and associations that constitute the
services. The individuals who take part in key sessions tend to misrepresent the importance of their
own extraordinary capacity and point of view except if a shared view for an incorporated
perspective of the services is given.
7. Gives a premise to distinguishing and surveying cost, income, and capital put resources into
every component of the services.
8. Constitutes an objective reason for both outside and inner promotion. For instance, the service
outline makes it simpler for a publicizing organization or an in-house advancement group to
overview a service and select fundamental messages for correspondence.
9. Encourages top-down, base up way to deal with quality change. It enables mangers to
distinguish, channel, and support quality change efforts of grass roots representatives dealing with
both frontline and support teams. Employee work groups can make service maps and, in this way,
more clearly apply and impart their experience and proposals for changes.
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For hospitality industry the Servicescape is the most important part. For any business to
flourish in this industry, they must provide greater experience to the customer, supposedly
special lightings, signatures, scents, arts and Music as to attract the customers.
The Servicescape varies from hotels to hotels, depending upon the desire of the customers, for
example the Servicescape in a 5 Star Hotel may be totally different from that of a 3 Star Hotel.
V. INDUSTRY SECTION
The strengths and the weaknesses of Airbnb:
STRENGTH:
The major strength of Airbnb is its brand image and public image.
The low pricing model which they follow is also among the strengths it has.
Their employees who are well trained and efficient in their working.
They have a proper rating and review system which is really appreciated by the potential
consumers.
Their Global presence is one of the points where they get a competitive advantage. They
are present in 192 countries and 34000 cities.
They have a proper customer centric service operating 24/7.
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They provide trust and safety component to consumers and travelers get a real time
experience due to the interactions with the locals.
WEAKNESS:
Hotel industry is one of the major competitors they have which is trying to kill this concept.
The quality is the major part of Airbnb, if a consumer gets a bad experience, it would affect
it overall.
Their business model can easily be imitated by anyone.
It is violating some housing laws in some countries.
It is driving up the rental prices.
Opportunities Airbnb has:
OPPURTUNITY:
Due to high prices and low quality, Consumers look for substitutes of hotels.
Many rich people have listed their properties for rental purposes.
There are many countries where the hostel ratios are very low, and hotels are very
expensive, example- San Francisco, United Arab Emirates.
Airbnb can expand their product line also I.E travel guides, car rentals, restaurant-finder
etc.
They have a fully automated and they facilitated both hosts and guests to get connected in
a secure way.
Airbnb provided help in very crucial time as a charity activity I.E After Hurricane Sandy,
emergency accommodation in Victoria, London etc.
After a tremendous growth of mobile industry, Airbnb launched their mobile app which
helped consumers to reach out to consumers easily.
They should do the proper research and look for the market where this business model is
not introduced well, or it is untouched.
As we saw there are a lot of places where hotels are less or expensive, they should target
that segment first.
The need to differentiate their services in pricing or any other aspect whichever is
applicable for that segment.
They need to do the proper research about the competitors and what services they provide
in what price brackets and try to provide accordingly.
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They should make a proper tool to set the prices for different places on different season or
occasions.
Promotional activities should be their one of the main focus, they should use different
marketing strategies to reach the consumers.
They should provide easy access to consumer through apps or websites.
They should focus on providing better customer service because it can make a difference
in this industry.
They should focus on providing the tremendous experience to the consumers.
They should provide additional services also other than lodging I.E car rentals because that
would be an additional advantage to them.
They should focus on hiring good employees and providing those a good work culture, so
they can increase the productivity.
Future of Airbnb:
It is real hard to predict about any industry but as we took hospitality and lodging industry and in
that we took Airbnb as the company. By looking at the several interviews of the experts, we could
predict the future by these points:
Airbnb is a new concept and it is slowly adapted by the consumers and it is making a mark
in the market based on that we can say that it is going to grow in the future as consumers
are becoming more attracted to this concept.
As, we can see that it got more listing accommodations than any other chains in the world,
we can see that it is giving a tremendous competition to any existing chain in the world.
In an interview the Product chief of Airbnb Joe Zadeh gave us the hint that Airbnb is going
to expand their product line by covering everything or we could say providing everything
what you need during your stay. This will shake up all the existing competitions and
provide a point of difference to Airbnb.
If they expand to this area and succeed to achieve it then it would be an amazing experience
to the consumers and they would become loyal to the brand and they won’t wish to switch
it.
Airbnb has become so popular that it has increased the listing of Airbnb. More listing
means they would be able to board more consumers and it will grow their business
tremendously.
But Airbnb must maintain its quality and services the same because more listing can affect
the quality and that could be a threat to the growth in the future.
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Firstly, the host of the rental place decides a fixed price which consumers have to pay. It is
known as nightly stay fees.
Cleaning fees, decided by the hosts.
Airbnb takes commission from the set- price of the hosts which stays around 3 %.
Airbnb also charges your guest who books the rentals as a service fees.
Vat.
Airbnb charges guest service fees to the guests, as a 6-12% of the total nightly price (basic
price + cleaning fees)
Conversion fees.
Every host wants to have a better visibility and responses, so they opt for the online google
ads, Airbnb charges 12-15% on that.
b. PROMOTIONAL ACTIVITY
Airbnb’s major mantra is “Live like a local” through which they target travelers to have
an exclusive experience through the perspectives of locals of that area.
Airbnb tries to reach to its consumer through traditional method as well as modern
method. They advertise through Tv commercials, outdoor hoardings and social media
also.
They make value proposition through the specific content about a specific location, so the
travelers could get a real insight of a place, they are going to visit.
Airbnb also uses various brand partnership to get the exposure of media and get publicity
among the consumers.
Whenever they do an event, they make sure they include as much social influencer as
much they could. That includes bloggers, youtubers, journalists etc.
They also use social media analysis to get the portals to know the target market.
They believe in high quality imagery, so they provide a professional photographer to all
the hosts to provide the good quality pictures for their site.
They provide charities to the good causes that attracts a good amount of attraction from
media to it.
d. EMPLOYEES ROLE
“Brian Chesky believes in the statement that, “The stronger the culture, the less corporate
process a company needs”.
The employees play a significant role in Airbnb. The service industry has an important rule because
services are intangible, so you can only expand your business through a good experience which
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you can provide through your employees. Airbnb creates change and empowers its employees on
all levels, which affects the success of the company on a huge level, both monetarily and culturally.
Employees are the face and marketers of Airbnb without them the service isn’t possible. They are
the mediator between the hosts and the company. They generate the listing through which the
booking of the consumers. They are the ones who work on the content marketing, deciding the
prices and applying all the marketing strategies. The employees use their creativity to create a new
innovative events or strategies to reach out to consumers. They are the ones who try to think a one
step ahead to beat the competitions and differentiate their services in the market. Without the help
of the different departments of Airbnb, they won’t be able to achieve the growth and targets of the
company.
e. INTERNAL MARKETING
The components of internal marketing are staff, motivation, training, rewards, quality and
culture. These are the major components which work for any service industry, they do the
same for Airbnb.
It helps them to maintain the motivating culture employees which helps them to maintain the
efficient quality and it increases the productivity of employees. These aspects help this
company to increase their growth.
“Culture is a thousand things, a thousand times. It is living the core values when you hire;
when you write an email; when you are working on a project; when you are walking in the
hall. We have the power, by living the values, to build the culture.” Chesky says.
The different incentives or rewards which provide to the employees which helps them motivate
enough to work for the mission of the company are these:
$65 phone stipend, $100 commuter stipend or $35/month in bike subsidy, great healthcare
and dental plan, $1000 Education stipend, $2000 in Airbnb credits/year. Two weeks of
office leave during Christmas and New Year on top of 15 days of PTO. Flexible WFH and
remote policy (combine PTO with a remote working period to extend your time abroad).
Medical Insurance
Maternity and Paternity Leave
$2000 travel credit annually to use on Airbnb listings.
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In-depth Interview of Alexander Limpert, CEO of GuestReady
GuestReady operates in many big cities, like London, Paris, Hong Kong, and Singapore which are
vastly different and unique in their own ways. We have employed a data-driven management
approach to benchmark the cities we operate in against each other and to measure progress
systematically.
Airbnb is a highly analytical company which leverages data science every day. Do you see ab
opportunities for GuestReady to share their data with home-stay services and vice-versa? What
collaborative benefits could come out from this?
We currently mainly focus on listing our properties on Airbnb. However, we plan to work closer
with other platforms in future. This will provide us with data on how properties perform on
different platforms which might yield interesting insights for these platforms. Getting data from
Airbnb or other platforms might also help us better regarding pricing and forecasting demand. Data
is highly valuable though and often sensitive. It is evident that Airbnb is extremely careful with
sharing their data and the same goes for other platforms. I imagine data sharing will be limited to
partial data or high-level insights only if at all.
GuestReady and Airbnb could surely benefit from greater level of data-sharing, because not all
hosts list exclusively at one platform. Having visibility into cross-platform listing could allow
Airbnb to understand how different dates and locations affect pricing outside of their platform.
How GuestReady is helping owners to earn more from their properties, by leveraging the
data insights?
GuestReady provides more efficient services and improved guest experience and focuses on price
optimization for homeowners – having them maximize their income as hosts on Airbnb or other
vacation rental sites. GuestReady integrates service suite with a pricing tool that utilizes real-time
data of the market and ensures optimal-price and occupancy-level for hosts. We are currently
upgrading this tool with more accurate predictive features to even better understand market
behavior. To better understand market dynamic, our predictive features draw in data from a variety
of external sources which allow us to gain deeper insight and make smarter predictions for our
hosts well beyond what any current online functionality.
As we deal directly with the hosts and have spent time to cultivate a strong relationship with them
in local community, GuestReady has acquired unique intelligence around the extra value some
hosts can provide, which doesn’t necessarily always lead to higher rates on Airbnb. Leveraging
our position as a solution provider, we use these data insights to help curate more intimate
experiences for hosts and their guests, and thus our hosts command a premium on their listings,
which generates more revenue for everyone.
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Big data or small data? Which are you focusing on more, and why?
The core business of GuestReady’s is operational, so we focus more on small data at this point.
Data needed to optimize these business processes is collected and prepared by our BI team. In the
future, we plan to build a brand towards guests, where guests can book directly on our website. At
this stage, big data will become much more important for us.
Concrete examples of where we use data to optimize our operational processes are data on response
times of our guest relations team to guest enquiries, punctuality of our housekeeping staff for
scheduled jobs, guest ratings across several review categories, or occupancy and pricing levels of
the properties we manage. For occupancy and pricing, we also draw on general market data from
which we can see in real time the occupancy levels and prices of similar properties on Airbnb
across all our markets. This enables us to adjust pricing continuously and gives us a good indication
of our performance vs. the market. Luckily, I can say that so far, we have consistently
outperformed other market participants.
What’s the best use of big data you have seen in the travel industry today?
I like the idea of Hopper App which promises to predict the best time to buy flight tickets. Against
conventional wisdom, it isn’t always best to buy flights as early as possible, and it can be worth to
wait for a price decrease. While the idea of Hopper is brilliant in practice, reviews of their app
suggest that the company’s predictive capabilities are not yet always spot on. Let’s hope they can
continue to improve their app, so we can all get cheaper flights.
`
CONCLUSION
As per the analysis we came to know that the growth of Airbnb shows that this industry is going
to grow in near future. If they expand their product line they would be able to have a differential
as well as competitive advantage among their competitors.
Airbnb forecasts that it will earn as much as $3.5 billion a year by 2020 (before interest and taxes
and depreciation), which is more than the bottom lines of 85% of the companies in the Fortune
500. There would also be a 3,400% increase in similar profits from what the company had last
year.
The bottom-line growth will be a huge achievement for the house and apartment sharing company
that just a few years ago was among several Unicorns that seemed to have lot of potential, but not
much in profits. It will also make Airbnb the very first company to prove that the sharing-economy
could be turned into sustainable success.
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REFERENCES:
www.airbnb.com/
https://www.airbnb.co.in/
https://www.traveldatadaily.com/guestready-ceo-alexander-limpert/
https://www.marketingtutor.net/airbnb-swot-analysis/
https://www.theatlantic.com/business/archive/2017/09/hotels-magazine-industry-
airbnb/540525/
https://medium.com/troo-blog/airbnb-expert-predicting-the-bright-future-of-airbnb-business-
model-8962ff77ea4e
https://www.mccooltravel.com/8-great-airbnb-advantages/
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