‘Tight budget? No problem. Lets just Airbnb it’

 

‘Tight budget? No problem. Lets just Airbnb it’

 

First Paris, now Japan - a number of countries are now clamping down on Airbnb

Airbnb application, viewed on tablet

Photo by: GETTY Images

 

Introduction:

Given the expansion and implementation of new technological platforms, Airbnb has integrated into the marketplace, acting as an innovative platform that organises and places accommodations for travellers globally. With the introduction of web technologies, platforms such as Airbnb can easily endorse a sharing agreement towards two parties – the owners of properties, and those who wish to borrow them (Nina, 2018). In order to best analyse the impact the transformative effect technologies have on our cultural, economic, and social world, Airbnb will be closely evaluated and analysed.

This essay will address three different sections; the first aims to establish Airbnb’s history, and role as a company since integrating into society; the second section will analyse its ownership, as well as any political or regularly debates that Airbnb have both locally and internationally; lastly, the third section will display an infographic, demonstrating the interdependence of the company alongside other competitors.

 

What is Airbnb?

Airbnb is an online community marketplace, permitting individuals to list, explore and book out accommodations globally. Airbnb is part of the ‘sharing economy’ start up, that works as an intermediary between travellers looking for a home, and individuals looking to rent their homes.  Being a pioneer of the sharing economy, Airbnb acts as a substitute or alternative option to hotels, providing accommodation to up-to 50 million guests, since founded in 2008 (Zervas, Georgios, 2017).

Since the platforms incorporated into the market, Airbnb has grown from promoting couch-surfing budget, to advocating for a more memorable, high-end experience for businesses and families (Folger, 2018).  Airbnb is well-regarded for the variation of properties provided or listed online – this includes,  apartments, single rooms, castles, and even yachts; through the use of social media, hosts are encouraged to actively advertise their properties by including photographs, and key features of the household.

 

How to set up your Airbnb

Whether you’re looking to rent out, or acquire a space, registering an Airbnb account, is free for all users. The requirements for both hosts and guests include:

How to Host:

  • Add Profile Photo
  • Verify your account to justify legitimacy
  • List your space, by modifying prices, photos, and key details or features of property
  • Total control over guest approvals
  • Service fee: Airbnb charges a 6-12% free once accommodations are booked

airbnb

How to list out your space

Image by: Airbnb

 

airbnb rental page

How to list out your space, by customising specific dates

Image by: Airbnb

 

How to Rent:

  1. Customise and insert travel details
  2. Scroll through available listings
  3. Add to your Wishlist
  4. Contact host for quarries and additional information
  5. Request service

 

airbnb homepage

How to rent a service, by customising your travel options

Photo by: Airbnb

 

airbnb

Available listings

Photo by: Airbnb

 

How it all Began

Although the initial start to Airbnb was fairly unsteady, the founders managed to find a gap in the market, and thus, strove towards constructing a valuable business. Airbnb founders, Joe Gebbia, Brian Chesky and Nathan Blecharzyk first developed their startup in 2007 in San Francisco, by converting their own property, into a ‘bed and breakfast’ hotel due to financial struggles.

In 2009, the bed and breakfast business staggeringly picked up, giving the founders the incentive and the opportunity to expand their business further – to ‘Air, bed and breakfast’ (Airbnb). After hosting conferences globally to locate people to list their rooms, and travellers to book rooms, the founders launched the website and managed to assemble up-to 800 listings, but yet struggled to cover costs. After pushing to efficiently accumulate a substantial number of investors, The Business Insider reported that Airbnb was eventually provided up-to $20,000 USD worth of fundings from investors, to employ staff and cover expenses. Similarly, according to The Telegraph, the rising utilisation of Airbnb has gathered more than 10 million nights booked in up-to 19,000 cities in 192 countries.

Joe Gebbia, founder of Airbnb expressing the positive growth and success in Airbnb over the years

 

Legal and Regulatory Issues

Although the demand for this short-term rental service reached a high incline, Airbnb began to experience legal and regulatory issues, that have left investors concerned for the overall safety of properties, and the company’s reputation. According to The Guardian, in 2015, Airbnb’s most valuable and prominent markets in the world – Paris and Barcelona, were found to be caught listing apartments illegally, and as a result has left Airbnb facing up-to 30,000 euros worth of fines.

Below displays a Twitter post by ShareBetter San Francisco, highlighting the controversial issues between Barcelona operators and Airbnb’s lack of communication regarding the laws of the property.

 

Tweet by ‘@ShareBetter SF’, a Twitter page designed to raise awareness of illegal housing, demonstrates the rivalry between Barcelona and Airbnb

 

Similarly, ‘@Share_Better’, shares that Airbnb has taken advantage of cities such as New York and thus been caught of illegally listing properties.

 

Airbnb’s Business Model

The Sharing Economy:

Businesses have been caught in the midst of the rapid developments and increasing utilisation of digital technologies. The increasing pervasiveness of technological features that has enabled companies to manufacture a reliable business model, is known as ‘the sharing economy’.  Lutz and Newlands (2017) defines ‘the sharing company’, as a phenomenon that has lead to new economic and social opportunities.; thus with the increasing adoption of sharing platforms such as Airbnb, Kooper et al states, that when resources are shared across multiple users, the platform is automatically worth greater.

Peer-to-peer accommodation:

Guttentag (2013) argues that although peer-to-peer accommodation is a basic model utilised in the lodging industries, Airbnb particularly stands as a leader in the market. Since launching in 2008, Airbnb have managed to carefully adopt the features of the Web 2.0 technologies, and generate a trustworthy platform between hosts and guests. A key feature that Airbnb utilises to differentiate them from alternative lodging companies, is the implantation of the  ‘rating and review’ system. By adhering to Airbnb’s initial, core values, the company hopes to ‘build trust within the community’, and thus by establishing these reviews, Airbnb is able to gain a trustworthy reputation in the market, amongst its competitors. Additionally, online reviews such as these, are important for services such as Airbnb, as they hold a great influence over both existing and potential travellers (Guttentag (2013).

 

reviews5.png

The above demonstrates the Rate & Review, travellers are given to complete post stay.

Photo by: Airbnb 

A Host's Guide to Airbnb Review System

Airbnb prompts users to fill out their experience on their tablets

 

Photography

Additionally, by utilising the best of technologies advancements, Airbnb encourages all users to display high-definition photographs of their services, in order to best present their property. Controversial to most lodging companies, Airbnb provides professional photograph services to hosts, hoping to improve the presentation of their listings.

airbnb-before-after-location-listing

A before and after display of listings, to better market hosts properties

Photo by: Neil Patel

 

Another core advantage Airbnb advocates, is its motto “Belong Anywhere” – a mission statement that differentiates Airbnb from competitors. By advertising this motto, Airbnb hopes to help, and connect people, all around the world, through its generated platform. By facilitating an interaction between users on the market, an interest to meet new people and a need to explore new attractions may therefore be sparked. Additionally, Airbnb promotes itself as a “trusted community marketplace”, that encourages users to discover new spaces, through a trustworthy platform (Lutz, 2018).

 

Revenue Model:

As briefly mentioned earlier, Airbnb earns commission from both parties (guests and hosts), once a booking has been confirmed. In order to maximise revenue Airbnb charges:

  • Guests, a 6-12% of the booking fee
  • Hosts, a 3% additional charge, for every settlement finalised

By doing so, Airbnb reduces and avoids indirect costs, presenting themselves as more affordable, and thus giving customers an incentive to select their services offerings over alternative lodges such as hotels.

 

Utilising Data:

A key attribute that Airbnb has acquired over other competitors, is the utilisation of data, to determine host preferences. The customisation and wide range preferences Airbnb offer, allow the connectivity between travellers searching for a place to stay, and those wishing to rent their space. By contributing preferences such as desired neighbourhoods, the platform is able to precisely match users with their wanted accommodation.

 

Airbnb’s internet ecology

An internet ecology constitutes of a technological system, where multiple parties are inter-connected and or dependent on particular technologies, thus effecting the way the service is overall conducted (Looi,2001).

Airbnb is a trending market leader, that directly connects hosts, and travellers together, hoping to provide a fulfilling, memorable experience. Due to Airbnbs inclusion into the market, the company still faces competitors in the lodging industry, that offer similar experiences. A few key competitors that Airbnb are currently up against include:

  • Homeaway – The largest provider of vacation rentals, that unlike Airbnb, does not establish a relationship between the travellers and owners of the property
  • booking.com – A booking system that mirrors a hotel system; it does not charge travellers a booking fee, like most lodging services. The rental properties are professionally managed unlike Airbnb, causing fewer conflicts between hosts and travellers
  • Hotels.com – This service, unlike Airbnb, gives users direct access to all service apartments and hotels. The service is instantly bookable, and offers its entire inventory at all times – a key feature that Airbnb does not always provide. Discounts and deals are also offered – a key attribute that draws customers into their website.

 

Core Supplier: Host

The hosts are the vital, and most prominent suppliers of Airbnb; by displaying their property online, travellers are able to view the potential spaces and book places through their tablets. Although Airbnb are  still responsible for the experience travellers have, hosts ensure that the property adheres to the photographs and details displayed on the platform. By doing so, hosts are able to generate a well-established profit or everyday income, thus economically advantaging the market, and the hosts themselves. Alongside the government and additional residential groups, are key providers.

 

Below demonstrates a diagram outlining Airbnb’s internet ecology:

 

 

 

 

Airbnb? A disruptive innovation? 

Although Airbnb is well-known for its reasonable prices and easy access, Airbnb is lacking in some of the services necessary in the lodging industry. According to Guttentag  (2013), although Airbnb has reached a positive incline in terms of the overall growth of the company, the service lacks in ways, such as the security concerns. The lack of valid security is a primary concern for many users, considering the high amount of trust necessary, between both parties, upon booking an accommodation. As a result, this may cause travellers to stick to more reliable services such as booking.com and Expedia.  Additionally, although Airbnb provides the ease of booking accommodations, Guttentag (2013) argues that the platform can not adhere to the same service competitors such as booking.com, and Expedia provide.

 

To Conclude:

Airbnb is a strongly reputable company, that has influenced and transformed the internet. Through establishing a business model, that initiates a connection and relationship between travellers, and hosts, Airbnb has managed to convenient travellers, and economically advantage hosts. Additionally, by providing review systems an valuable review system, travellers are able to explore and discover all potential travel options, a key feature that highlights Airbnb as a company.

 

References

Biber, E., Light, S. E., Ruhl, J. B., & Salzman, J. (2017). Regulating business innovation as policy disruption: From the model T to airbnb. Vanderbilt Law Review, 70(5), 1561-1626. Retrieved from http://ezproxy.library.usyd.edu.au/login?url=https:// search-proquest-com.ezproxy1.library.usyd.edu.au/docview/1952350509? accountid=14757

Carson, B. (2016). How 3 guys turned renting an air mattress in their apartment into a $25 billion company. Retrieved November 4 from https://www.businessinsider.com/how- airbnb-was-founded-a-visual-history-2016-2#a-month-later-airbnb-finally-picked-up- a-600000-seed-investment-from-sequoia-capital-in-april-2009-chesky-describes-it- as-going-from-only-eating-leftover-cereal-to-ramen-profitable-14

Desta, Y. (2014). The Beginner’s Guide to Airbnb. Retrieved from https://mashable.com/2014/06/27/airbnb-beginners-guide/#gS7piG6fAOqw

Folger, J. (2018). The Pros and Cons of Using Airbnb | Investopedia. Retrieved November 4 from https://www.investopedia.com/articles/personal-finance/032814/pros-and-cons-using-airbnb.asp

Guttentag, D. (2013). Airbnb: disruptive innovation and the rise of an informal tourism accommodation sector. Current Issues In Tourism18(12), 1192-1217. doi: 10.1080/13683500.2013.827159

Looi, C.K. (2001), Enhancing learning ecology on the Internet. Journal of Computer Assisted Learning, (17), 13–20. doi: http://doi.org/10.1111/j.1365-2729.2001.00155.x

Lutz, C., & Newlands, G. (2018). Consumer segmentation within the sharing economy: The case of Airbnb. Journal Of Business Research, 88, 187-196. doi: 10.1016/j.jbusres.2018.03.019

Nina, D. (2018). The sharing economy, uber, and corporate social responsibilities. Fórum Empresarial, 22(2), 109-116.

Patel, N. (2018). How Airbnb Uses Data Science to Improve Their Product and Marketing. Retrieved from https://neilpatel.com/blog/how-airbnb-uses-data-science/

Salter, J. (2012). Airbnb: The story behind the $1.3bn room-letting website. Retrieved November 4 from https://www.telegraph.co.uk/technology/news/9525267/Airbnb-The-story-behind-the-1.3bn-room-letting-website.html

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