Toni Dang, 20 March 2017

Airbnb more than just room rentals

airbnb-rises-due-to-its-disruptive-business-model

Nowadays, especially in coveted big cities like New York, London, Paris or Berlin, comfortable hotel rooms are very expensive and in many cases exceed the travel budget of tourists. Airbnb "Air Bread and Breakfast" is going to change that. As an online marketplace and hospitality service company it allows users to make private accommodation available. The basic idea is: Connecting people who have a place to stay with others who are looking for accommodation. Its service came just at the right time. Town dwellers are incredibly popular among young people. By renting a private home it is more exciting and interesting to get to know a city or a region from the perspective of a resident and not just as a classic tourist. These have led to an incredible boom in the Airbnb guest rooms.

With more than 3.000.000 lodging listings in 65,000 cities, 191 countries and more than 150.000.000 users worldwide, airbnb is the biggest of its kind. In March 2017, Airbnb raised $1 billion in additional funding, bringing their total funding raised to date to more than $3 billion and valuing the company at $31 billion.

Airbnb’s success in the market

Airbnb's rise is due to its disruptive innovative internet-based business model and its unique appeal to tourists. This leads to great significance for the traditional tourism accommodation sector. Airbnb provides a trusted community marketplace for people to list, discover, and book unique accommodations around the world.

Factor for its success are :

1. Trust: Airbnb offers its "host guarantee".The guarantee covers property loss and damage due to vandalism and theft to the maximum of US$1,000,000. Also, once the guest completes a stay, the host and guest have the option of leaving references for each other and reviews of their stay, which are posted publicly, providing an online reputation.

2. Ease of use: Airbnb built an exceptionally user-friendly site that took the difficulty out of discovering and booking accommodations, also the payment is handled online.

3. Brand: Airbnb did an excellent job curating listings on the homepage so the site became more than "renting a spare room" and instead was about discovering cool/quirky/creative properties. Surfing Airbnb became a leisure activity for some, but more importantly these premier listings made it socially acceptable to tell everyone you were staying at an Airbnb place, and thus increased word-of-mouth.

4. Price: Airbnb rentals were generally 30-80% lower than available hotels.

How is airbnb operating ?

Registration and account creation on airbnb is free. After registratrion, users can book or offer lodging. If the users want to offer a lodging, pricing is determined by him with recommendations from Airbnb. Hosts can charge different prices for nightly, weekly, and monthly stays as well as make adjustments for seasonal pricing. On each booking, the company charges guests a 6%-12% "guest services" fee and charges hosts a 3% host service fee.

If the user wants to book a lodging he/she can search for lodging using a variety of filters including lodging type, dates, location, and price. Before booking, users must provide a valid email address, telephone number, and in some cases, a scan of a government-issued ID.

Challenges of airbnb

With such a large userbase there are, of course, many problem that can and still occur. While almost all airbnb experiences work out perfectly, there have been many crimes committed by users, ranging from vandalism committed by guests to sexual assault committed by hosts. Also, the legality of subletting is a big issue. The practice of subletting without the landlord's prior permission is often prohibited by residential leases. To stay important and inovative airbnb has to do future research because destinations are just beginning to respond to promising opportunities created by the rapid rise of an informal peer-to-peer accommodation sector. What will we see next? Intergrated tour guide, -car rental or even a - Personal staff service?

CouchSurfing: The cheaper way of being hosted

Toni Dang

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