Group1 Airbnb 3aw2p

GROUP - 1 SANIA SAWANT | SANKET MULEWAR | SARATH ALLAKA SATYAKI DUTTA | SHARON SORENG | SNEHA SHINDE

INTRODUCTION “The world’s largest accommodation provider, Airbnb, owns no property.” The Airbnb story started back in 2008, with the two founders, Joe Gebbia and Brian Chesky (Nathan Biecharczyk was invited to later), and 3 air mattresses in San Francisco, California. Their problem: they couldn’t pay rent. They set up a simple website with a map and rented out three mattresses and promised home-made breakfast. Three people came and they decided to build on it. They refined the website with money from selling cereal boxes during the presidential campaign in 2008, and took highquality pictures of the rented space to boost click-rates. In the winter of 2012, Airbnb overtakes Hilton Hotels in nights booked. Now, it has over 1,500,000 listings in 34,000 cities and 190 countries. Bookings can be made online and on mobile devices. In 2015, the value of the company was $25.5 billion.

Benefits

Needs

Approach

• A place to stay in cities where hotels are fully booked • Pay less than I would at a hotel • Travel and spend less money on accommodation

• “Live like a local” • Stay in places where there are no available(or existing) hotels • Stay in places that are not normally available to travellers

• Not to build more hotel rooms • To utilize existing and available rooms in a city • Connect people with spare rooms to people who need somewhere to stay

• • • •

Existing Hotel Chains Hostels/BnBs etc. Private Rentals Staying with friends/acquaintances

Competition

KEY ACTIVITIES

Key Activities of any platform businesses is to develop more positive network effects and reduce negative ones. Few of the key activities related to Airbnb are: 1. Enhance positive network effects between hosts and guests, by enticing more s to and participate 2. Reduce negative network effects, by making the individual hostguest transactions easier and managing complaints swiftly and learning from them 3. Grow the platform by: entering new cities, complementary offering that increases stickiness 4. Keep participants engaged, e.g. high utilization of homes 5. Keep guests returning by providing great travel experiences in accommodation and events/experiences 6. Add new customer value propositions, e.g. event hosting: creates complementary offerings to lodging, adds new hosts and offers income opportunities, increases host and guest engagement 7. Deliver on the customer proposition 8. Fine tune the processes and make it seamless for the end

TAILORED VALUE CHAIN A system based on collaborative consumption

Network Effect: Each new and host bring in new opportunities for growth

Rating-based System:

Inbound Logistics and Outbound Logistics - Managing Food & Beverage Suppliers and Partners for Laundry and other outsourced services - Outsourcing activities to increase the value provided to customers

Operations - Technology platforms like its website and mobile app facilitate the booking and other features - Free Agents as Employees

Marketing & After-Sales - Attracting potential customers through content marketing - Personalized Service Strategy & Offers - Customer Service HelpDesk

Customers’ on rental space and other services provide an authentic basis to attract customers.

Economic Incentive: An average American host in San Francisco earns $440 of profit and in some cases it could be up to $1,900 per month from renting their spaces on Airbnb website

SO HOW DID AIRBNB DO IT? • Hotels’ own direct channels are not sufficient to sell off all the rooms. Due to the high fixed costs, it is necessary for the hotels to leverage all possible distribution channels. • The distribution system consists of a number of intermediaries which charge their own share of commission. Blog and Social Media Activities

App Neighbour hood Guides

Targeting Renters and Property Owners at once! Website

Gained initial traction through cross-posting with Craigslist

Video Marketing Campaign

Print Magazines

SiteMinder’s partnership with AirBnB offers for hotels to engage the increasing number of travellers looking for authentic local experience.

AIRBNB PORTER’S FIVE FORCES ANALYSIS The threat of substitutions: HIGH • Switching costs to individuals who utilize Airbnb are non-existent. Customers can very easily choose a traditional hotel, couch surfing, B&B, and hostel as an alternative in the future

Airbnb Porter’s Five Forces Analysis

The potential threat of new entries: WEAK • For any company to pose a threat, they will need both an excellent brand equity to capture the requirements and demands of customers and access to millions in capital to venture into the and compete with Airbnb

Bargaining Power of Suppliers

Threats of new Entrants

Negotiating power of customers : HIGH • They have a broad range of services to choose (price, location, style and host rating). thereby can quickly decide on the residence where they will stay as per their budget.

Competitive Rivalry

Bargaining power of suppliers : LOW • Hosts, who wants to rent their rooms and apartments do not have an alternative method to connect with customers without using the Airbnb App.

Inter-firm rivalry : HIGH • There are several high-quality Airbnb competitors with networks and websites similar to Airbnb. For example sites like OneFineStay.com, Tripping.com, HomeAway.com, Expedia.com are working hard to overthrow Airbnb from its throne.

Threat of substitutes

Bargaining power of Buyer

COMPETITIVE ADVANTAGE

FIRST TO MARKET for transaction- based temporary housing site

EASY OF USE Search by price, location & check-in/check- out dates

HOST INCENTIVE

LIST ONCE

PROFILES

DESIGN AND BRAND

Browse host profiles, and book in 3 clicks

hosts post one time vs. daily on craigslist

BUSINESS MODEL Airbnb business model is an aggregator business model just like Uber and OYO. They don’t have the business model like hotels such as Hilton and Marriott. Airbnb’s biggest assets are the individuals and the hosts who are the key components in the Airbnb process

A one sided matchmaking model • With a bottom-up P2P model, Airbnb connects normal people so they can rent out spare rooms to each other. A professional service democratized • Depending on the Rental Price, up to 12% commission is charged. Other platforms use posting fees where people just swap goods and services.

2 Billion+

Trips booked (worldwide)

560 m

Budget & Online

84 m Trips w/Airbnb

REVENUE AND COSTS • For Hosts : Free hip and Free access to list properties. Hosts pay about 3% of booking fee. • For s : Free to browse as they pleased. Prompted to pay a charge for reservation. Guests are responsible for about 6 to 12% fee • For Photographers: Freelance photographers go to a hosts location and click high-definition photographs of the rooms. Photographers are paid directly by Airbnb

Revenue Channels

Cost Structure

• Commission from Hosts Every time someone chooses a host’s property and makes payment, Airbnb takes 10% of the payment amount as commission. This is one of the components of Airbnb fee structure. • Transactions from Travellers When travelers make payment for stay they are charged a 3% fee for transaction. This amount adds to the Airbnb revenue.

• Salary to Permanent Employees Employees working in the physical office are paid monthly salary and other benefits. • Technological Setup and Running Costs Websites, Servers are paid by Airbnb. Electricity bills, office rents are also incurred as costs. • Payment to freelance photographers Photgraphers are paid a decided amount to click best quality pictures.

SUSTAINABILITY EVALUATION • Competitive Imitation

• Disruptive Innovation

• Threat to Affordable Residential Housing

• Negative Impact on Employment

• Legal Tax Issues • Violation of Health and Safety Laws • Social Media Horror Stories

• Data Security and Privacy Flaws

Economy

Technology

Society

Environment

• Expansion and Scalability

• Promotes Green Travel Experience • s Sustainability Awareness

PARTNERS

• Travellers are the people who book the listed available spaces from local hosts • Travellers have the option to search for a property by filtering them according to rent, amenities provided, location etc • Airbnb has opened a large source of new guests by expanding into the business travel world

NON KEY PARTNERS

• Brings initial funding to the table • The funding helps with developing the functionality, apps, algorithms, but also for acquiring customers • Investors bring down the (weighted) cost of capital (WACC)

TRAVELLERS

• Supply side of Airbnb platform • Bring home and units to the table • There are two types of host • Rental Host • Event Host

INVESTORS

HOST

•

•

Airbnb hires freelancing professional streets/eve nts/property photographers in some cities Maps, payment platforms, cloud storage, identification platforms are important but they are not proprietary any longer

•

Insurance companies

CUSTOMERS

• • • •

Frequent Traveller Minimalist frugalist Freelance, nomad Live in small families

PERSONALITY

• TYPE OF ACCOMODATION • Room, unit, house • HOME/LOCATION • Country, city • LOCATION TYPE • Countryside, suburb • CARE ABOUT SHARED ECONOMY

LIFESTYLE

• TRAVEL TYPE • Business travel ,Leisure travel • Tour of multiple destination or single destination • DEMOGRAPHIC • Married or couple • Age bracket • INCOME BRACKET •

HOSTS

GUESTS

• • • • •

Openness to experience Conscientiousness Extraversion Agreeableness Neuroticism

REFERENCES: • https://www.innovationtactics.com/what-is-strategy-examples-uber-airbnb-tripadvisor/

• https://www.innovationtactics.com/business-model-canvas-airbnb/ • https://salvadorbaille.com/2016/12/05/what-porter-has-to-say-about-your-platform-strategy/ • https://tampub.uta.fi/bitstream/handle/10024/100387/GRADU-1482240821.pdf?sequence=1 • https://digit.hbs.org/submission/airbnb-reinventing-hospitality-with-network-effects/

• https://techcrunch.com/2011/05/09/airbnb-social-connections/