MAN497 Heppe Case Study 1 PDF

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Matthew R. Heppe Management 497 Case Study #1 Airbnb

1.

How would you illustrate and compare the business models for Airbnb, large hotels chains such as Marriott and Hilton, and bed & breakfast operators? Use the example chart in the textbook for business models as a guide (Concepts & Connections 1.1).

AirBNB

Large Hotels

B&B operators

Customer Value

Easy to book.

A first class

A quaint, more

Proposition

Global options,

experience, but

intimate

with real home

with a higher

experience.

and condos.

price tag. Large

Similar to both

Access to more

hotels also have

AirBNB and a

amenities whiles

rewards

large hotel, but

staying. Perfect

programs and a

with a more

for the value

more standard

personal touch

minded traveler,

experience

and experience.

while also allow

across different

Bed and

property owners

properties.

Breakfast

Profit Formula

to generate

Ability to book

operators will be

revenue at a

last minute and

more hands on

scale never

still know exactly

then either an

before imagined

what you will be

AirBNB or large

with very little

receiving as a

hotel, and the

technology

guest. Room

price will be

investment.

service, in room

more similar to a

experiences,

large hotel but

such as spa

with the intimate

services are

feel of an

easily accessible Large hotels

AirBNB.

AirBNB has only

B&B operators profit formula is

the technology

focus on one of having

and

providing just a well run, efficient

infrastructure

few guests at a hotels with extra

overhead, none

time a very high services such as

of the property

quality room service and

expenses since it

experience, while spas. They rely

is only providing

at the same time on high

a service to

earning profit occupancy rates

connect

and paying down and loyal

consumer with

debt on the customers in

owner. It

properties they

order to be charges both the

own. Employee highly profitable.

consumer and

costs should be

the owner with

fairly low, since

use of its service

much of the work

through fees

is done by the

based on the

owner/operator.

cost of a reservation. 2.

What are the general strengths and weaknesses of large, hotel chains such as Marriott and Hilton, bed & breakfasts, and Airbnb? Explain how you would compare and contrast those businesses.

Airbnb: The strength of AirBNB is that it is different. It currently is operating in 190 countries and 30k cities. A customer can search for the type of accommodation they want and for the price they want to pay. The stays are unique. The weakness of Airbnb is that it is relying on strangers to host people, and that has caused many problems with different areas having different laws in regards to how that can happen.

Large hotel chains: The strengths are that they are consistent, a traveler knows what type of room/experience they are going to get if they are at a Marriott in Miami or one in New York (within reason). They have loyalty programs that attract repeat customers and frequent travelers. They can offer amenities that AirBNB hosts usually cannot. The weakness of these

chains are that they have a lot of overhead and high costs to operate. Much of the companies value will be wrapped up in hard assets such as real estate. B&B’s: Strengths would be that they are much more simple to operate than an entire hotel, and still would provide solid profitability for the owner/operators. Low employee costs would be another strength, as well as offering unique experiences to guests. Weaknesses could be seasonality issues with staying booked fully or repair costs if something major needs repair.

3.

In what ways has the lodging consumer changed, and how does Airbnb’s customer value- proposition meet this change?

One way the lodging consumer has changed is that they can now travel cheaply with low costs airlines such as Frontier and Spirit, and with that people are traveling more frequently but on a budget so they will be looking for lodging that is more of a value. A typical hotel room is usually more then a 1 bedroom condo per night on Airbnb in many areas, and the traveler gets amenities like a kitchen in order to cook food.

4.

What key factors may determine the success or failure of Airbnb?

One key factor will be regulation by different municipalities in regards to short term rentals. Many places have already begun this such as Denver and its regulations. One key piece of legislation in Colorado right now is whether on not to tax personally owned STR as commercial property, which would triple the current property tax.

5.

What recommendations would you make to Airbnb to improve its competitiveness in accommodation market while mitigating any current and future risks?

Airbnb may want to implement more rules for the hosts in order to provide guests with somewhat more of a standard. Airbnb may want to consider having its own supply chain or branded towels, sheets, pillows, ect for hosts to purchase and use and discounted rates compared to similar products....