Air Bnb - Air Bnb case assignment PDF

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Summary

Air Bnb case assignment...

Description

Alyssa Berteletti - AirBnb

1. Customer Value Proposition

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Profit Formula

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Digital platform Group size can vary Differentiated experience Extensive variety of accommodation s Options with direct host contact Easy to book

- Marriot/Hilton

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First class experience 24hr service & security established brand name extravagant amenities provided large facilities limited room size

- Bed & Breakfast

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affordable accommodation intimate experience laundry close location to major highways

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Low operating costs in comparison to “traditional brick-andmortar” due to the fact that Airbnb doesn’t own the properties - Hosts are not subject to regulation and taxation - Transaction fee Profit Margin: - -fixed cost with the creation of the platform - less operating expenses & costs - legal fees

More - Relatively large expensive operating cost room rates - Price varies upon room - Spa and other availability amenities - labor costs fairly low Profit Margin: - Cost of wage and - low operating cost maintenance if - high profitability fairly high - Reliant on high occupancy rates - Expanding the business through mergers and acquisition Profit Margin: - more expensive operating cost - amount of revenue made is reliant on the level of occupancy

Actions taken in response to COVID-19 pandemic - Provided safety and cleaning guidelines for hosts (inhibiting the spread of covid) - Generated $17 million in funds to support long-term hosts

- Increased its sharing-economy model; created virtual - Revised cancellation policies to offer refunds - Raised $2 billion in private equity funding and debt to support operation amidst the pandemic - Cut (1900) one quarter of their work force Business Model AirBnB does not prove to be completely more resilient than rivals, the company dropped 16% within the market. However, they are not limited to only accommodation as hotels are, they creates “experiences” and entered the “online experience” making them more agile. 3. AirBnb Strengths

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Weaknesses

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No fixed costs due to no ownership of property Large number of rooms Safe and supervised Low, affordable price in comparison to hotel chains Dual rating system for hosts and guests Strong property portfolio No strict regulations and taxation Sharing concept allows for flexibility Competitive pricing Legal Issues Safety issues Discriminatio n Lack of

Marriot/Hilton -

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Bed & Breakfast

Facilities Amenities Services Diversified revenue generation Strong property portfolio On-site free parking Quick access to highway Reputation Hotel loyalty Security 24/7 service

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Taxes and regulation High fees Significant operating cost

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Cheaper rooms Personable and intimate experience Tax advantages Hosts can offer information about local attractions Average operating costs

Food options usually fixed and limited Lack of amenities and

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accountability Easily imitated Inconsistency among hosts Reliant on hosts for profitability

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services High wages Small number of rooms No control on community issues

4. The advancement of technology throughout the many years created a change among consumers. Consumers can now weigh different options and research which is best fitting for their needs. Before AirBnB, Hotel prices would skyrocket throughout certain times of the year such as holidays, with the possibility of no rooms even being available. AirBnB has met this change by creating a more convenient experience than hotels, with a lower price as well. For instance, a hotel room in New York City on January 1st can go for hundreds if not thousands of dollars, an Airbnb however would be more around the price range of $100-$300 dollars. Additionally, Airbnb offers a unique variety of location settings such as an apartment, townhome, allowing customers to choose the exact setting and location suitable for their needs. Airbnb’s customer value-proposition is continuously changing the accommodation market introducing a new issue for hotels. 5. First, an efficient business model which is based on transparency and trust with hosts and guests, this is entirely necessary for the success of the company. Additionally, their rating system in which hosts, and guests have the opportunity to give a review on their stay. This influences hosts to create a welcoming, clean experience as well as encourages guests to leave it this way upon the end of their stay. Another key success factor is the use of their online digital platform. AirBnB used the rise in technology to its advantage, the website is well designed and very simple to use not only on a computer but a smartphone as well. The level of accessibility aids in the booking and listing of rooms. The sharing economy is also a key success factor, the fact that they do not personally own any of the properties allows for them to be more flexible and take away the cost of maintenance. Lastly the factor of regulation can determine the failure or lessprofitability of Airbnb. For instance, in Colorado, they are discussing whether or not to tax these businesses as a commercial property, this could potentially triple the property tax. 6. - Liability: there are a number of things that can possibly go wrong when letting a stranger stay in your house. Hosts and guests can be confronted with issues such as such as, destruction of property, and the possibility of assault. Hosts encompass the most liability, they have the possibility of being exposed and involved with an injury or death. - Legal and financial issues: The possibility of emergency eviction of a guest, large parties being thrown without permission, Theft, discrimination. - Regulation issues: Considering the criticism on behalf of local and global businesses that AirBnB was participating in unfair business practices. They have a continuous fight in trying to prevent this due to the increase it would have on property taxes. - One recommendation I would have for AirBnB is to improve safety precautions and research a suitable type of insurance for hosts. This can mitigate the possibility of a host

experiencing un-repairable damage to their property and can replace ‘X’ amount of Money/Items if ever stolen....