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PRINCIPLES OF ENTREPRENEURSHIP (ENT530) BUSINESS MODEL CANVAS (25%)

BUSINESS MODEL CANVAS FOR AIR BNB

PREPARE BY

: Nurul Narunadia binti Katiman

STUDENT ID

2017272192

GROUP

: BA2243A

CHECK BY

: Sir Ariff Kamal

SUBMISSION DATE

: 20 JULY 2020

WHAT IS AIRBNB AND HOW DOES IT WORK? A community built on sharing

Airbnb began in 2008 when two designers who had space to share hosted three travellers looking for a place to stay. Now, millions of hosts and travellers choose to create a free Airbnb account so they can list their space and book unique accommodations anywhere in the world. And Airbnb experience hosts share their passions and interests with both travellers and locals. Airbnb is an online marketplace that connects people who want to rent out their homes with people who are looking for accommodations in that locale. It currently covers more than 81,000 cities and 191 countries worldwide. The company’s name comes from “air mattress B&B.” For hosts, participating in Airbnb is a way to earn some income from their property, but with the risk that the guest might do damage to it. For guests, the advantage can be relatively inexpensive accommodations, but with the risk that the property won’t be as appealing as the listing made it seem.

Trusted services Airbnb helps make sharing easy, enjoyable, and safe.They verify personal profiles and listings, maintain a smart messaging system so hosts and guests can communicate with certainty, and manage a trusted platform to collect and transfer payments. And their global community support team is standing by 24/7 in 11 different languages to help make things right with rebooking assistance, refunds, reimbursements, and insurance programs for both homes and experiences.

THE ADVANTAGES OF AIRBNB Wide Selection Airbnb hosts list many different kinds of properties—single rooms, a suite of rooms, apartments, moored yachts, houseboats, entire houses, even a castle—on the Airbnb website. Free Listings Hosts don’t have to pay to list their properties. Listings can include written descriptions, photographs with captions, and a user profile where potential guests can get to know a bit about the hosts. Hosts Can Set Their Own Price It’s up to each host to decide how much to charge per night, per week, or per month. Customizable Searches Guests can search the Airbnb database—not only by date and location, but by price, type of property, amenities, and the language of the host. They can also add keywords to further narrow their search. Additional Services In recent years Airbnb has expanded its offerings to include experiences and restaurants. Besides a listing of available accommodations for the dates they plan to travel, people searching by location will see a list of experiences, such as classes and sightseeing, offered by local Airbnb hosts. Restaurant listings also include reviews from Airbnb hosts. Protections for Guests and Hosts As a protection for guests, Airbnb holds the guest’s payment for 24 hours after check-in before releasing the funds to the host. For hosts, Airbnb’s Host Guarantee program “provides protection for up to $1,000,000 in damages to covered property in the rare event of guest damage, in eligible countries.”

THE DISADVANTAGES OF AIRBNB What You See May Not Be What You Get Booking accommodations with Airbnb is not like booking a room with a major hotel chain, where you have a reasonable assurance that the property will be as advertised. Individual hosts create their own listings, and some may be more honest than others. However, previous guests often post comments about their experiences, which can provide a more objective view.

Potential Damage Probably the biggest risk for hosts is that their property will be damaged. While most stays go without incident, there are stories of entire houses being trashed by dozens of partygoers when the Airbnb hosts thought they were renting to a quiet family. Airbnb’s Host Guarantee program, described above, provides some assurance, but it may not cover everything, such as cash, rare artwork, jewelry, and pets. Hosts whose homes are damaged may also experience considerable inconvenience. Added Fees Airbnb imposes a number of additional fees. Guests pay a guest service fee of 0% to 20% on top of the reservation fee, to cover Airbnb’s customer support and other services. Prices display in the currency the user selects, provided Airbnb supports it. Banks or credit card issuers may add fees if applicable. And while listings are free, Airbnb charges hosts a service fee of at least 3% for each reservation, to cover the cost of processing the transaction. It Isn’t Legal Everywhere Before listing their properties on Airbnb, would-be hosts need to check their local zoning ordinances to make sure it’s legal to rent out their properties. Hosts may also be required to obtain special permits or licenses. Cancellations Due to COVID-19 On March 11, 2020, the World Health Organization declared a global pandemic due to the novel coronavirus. In response, Airbnb adjusted its extenuating circumstances cancellation policy on March 14. The newest adjustment was made on March 31. 3 Reservations booked on or before March 14 with a check-in between March 14 and May 31, 2020, are eligible for a full refund for coronavirus-related reasons. To facilitate this, Airbnb has set aside a fund of $250 million that will be used to help hosts impacted by the cancellations, paying them 25% of what they would have received for a normal cancellation.4 Reservations made after March 14 are not eligible for this policy and subject to standard cancellation procedures. Reservations made before March 14 but with a check-in date after May 31 will be revisited in “the coming weeks.” 4 The new policy “doesn’t apply to Airbnb Luxe, Luxury Retreats, or domestic bookings in mainland China, which all have their own policies.” Airbnb has set aside a $10 million support fund to assist “our community in mainland China directly.”

Hosts Renting out their space(s): apt, condo, guest room, entire house Guests Ones staying at those rental space(s) for various usage types Local/regional Real Estate Agencies A new source of revenue for agencies: renting out their properties like hotels for extra revenue Info. Tech Experts Website designer, web master, hosting company, data base MGT Outsourced Cust. Service Reps Local/regional Interior Designers In charge of creating unique looks of each and every room/space

Local/regional Photographers In charge of delivering unique looks of each and every room/space via airbnb homepage Local/regional Government Collabo with a government of major tourism attractions and buy their outdoor ad spaces, then post airbnb ads Payment Processing Channels/mediums Major bank/credit card, Venmo/Paypal Lifestyle Media Sources Tv, radio, internet, printed material channels covering or featuring lifestyle/travel editorials Local/regional Cleaning Company

KEY ACTIVITIES Recruiting More Potential Hosts The more the registered hosts and their spaces, the more the freedom of choice for guests

Online-based Advertising A great way to boost their awareness and customer consideration level

Offline-based Advertising Examples would be bus/metro station, airport, outdoor billboard

Marketing via Traditional Printed Sources Leveraging Web Search Engine

Search history data from Google, Yahoo, Bing can be used to spot potential new users

Product Segmentation A variety of staying options can be offered by budget, region, season, activity, occasion, features and many more

Collabo with Celeb Agencies Endorse big-name celebs: a great way to hype up and deliver credibility Platform Update and Maintenance Homepage gotta stay fresh to attract more customers

Customer Service Since it is C to C platform, it can easily get into hassles of agent theory: settling disputes down between parties is crucial

Visual Intuitiveness Sexy photos and videos of rental spaces can boost sales

Local/regional Event Sponsorship

VALUE PROPOSITION Convenience So easy and fast finding your place to stay even in the peak season and it is so easy to use: all you need is few clicks from the app

On-demand Business Nature Both sides get what they want ASAP: great at matching two parties

More Tailored and Customized You are no longer staying at the same old average Joe room: mix and match with your personal preference

Extra Income for Hosts More money in their pockets, what more can I say?

More Affordable Who doesn't wanna spend less? Cutting middlemen gives airbnb price advantage

More Bang for the Buck Guests usually get more space, amenities, customization for sure

Home Insurance Airbnb providers home insurance to hosts

One-of-a-kind Stay Experience You browse and choose your best possible stay experience

CUSTOMER RELATIONSHIP On-time Customer Support It is a global platform used by customers in different time zones: provides 24/7 customer support

Promotion & Loyalty Program Promotions and loyalty program which attract first time users and encourage repeat uses of original users

Efficient Dispute Settlement

Since it is C to C platform, it can easily get into hassles of agent theory. Airbnb tries its best to satisfy both ends of business transactions

Social Media Great at generating awareness and hyping up the brand via social media channels

Customized Recommendations Based on users' lifestyle and previous stays, it does a great job recommending a one-of-a-kind place for users

More Power to Customers Guests can find their best-fitting space by mixing and matching features/amenities just like choosing toppings at frozen yogurt places

Target Up-and-Coming Attractions Fast and flexible finding new tourism attractions

CUSTOMER SEGMENT A Simple Place to Stay Good for cost-sensitive travelers and whom simply needs a place to stay for their road trip

Business Travelers 1. Wants to save his or her expense 2. More space than typical hotel rooms

3. Can cook one's food of preference OR 4. More home feeling and comfortable stay

Globetrotters Great chance to stay local: get to know more about its unique cultures

Family Travelers 1. So hard to find a place which can accommodate every family member in a room 2. The more the guests, the bigger the room they need 3. In overall, it saves them a lot of money

Bespoke, Customized Users It's my way or the highway. Customers in this group is very conscious, selective about their choice and preference

Hosts Considering its C to C nature, host is another important customer segment. Hosts are also segmented according to customer segments like budget, bespoke, business, globetrotter and family traveller

KEY RESOURCES Airbnb The brand itself carries a huge value and future potential

Guest Information Profile info and usage patterns enables Airbnb to recommend better customized stay options to customers

Network of Hosts

The more the hosts, the more choices to choose from for customers

Tech-savvy Professionals Tech, online experts who are able to maintain and deliver an user-friendly website

Creative Human Capital Creative, innovative professionals who can deliver hip, sexy and intuitive images of airbnb via design, homepage, ad/commercial, public relations

Online Payment Channels/mediums 100% online-based transactions: it has a fast and smooth online system which facilitates overall transactions

Chanel airbnb.com The 1.

All

most

important

searches

and

channel

transactions

are

of executed

all: here

2. No affiliations and partnerships with other travel booking sites Mobile Apps All the features and transactions from homepage can be executed on its mobile app Word of Mouth Constantly tracks and maintains feedbacks of both hosts and guests Online Search Engine Based on user's search history on sites like Google, Yahoo, Bing Social Media Strong emphasis on social media by running its own fan pages and placing banner ads Via Various Events Local, regional, cultural event sponsorships

COST STRUCTURE

Online Payment Processing Firms Since it is 100% online transactions, transactions fees to online payment processors like Visa, MasterCard, Paypal would take the biggest chunk of cost

Online Platform Creation & Maintenance Its platform aka homepage is where the magic happens. Airbnb needs to keep it current and trendy, but also intuitive and efficient to streamline the overall transaction process.

Insurance Insurance for rental space of hosts and travelers

Human Capital The business is heavily dependent on human resources: needs to keep those highly creative talents to sustain its success.

Ad & Sponsorship Heavy online ad campaigns, moderate level of offline-based ad campaigns and event sponsorships

REVENUE STREAM Fees from Both Hosts and Guests It

has

pretty

simple

revenue

streams:

hosts

and

guests.

Hosts pay about 3% of booking fee, and guests are responsible for about 6 to 12% fee...