Quelle: andremergulhaum/ pixabay.com

Quelle: andremergulhaum/ pixabay.com

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.

Quelle: FirmBee/ pixabay.com

Quelle: FirmBee/ pixabay.com

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?

toni

Zur Person: Toni Dang studiert an der European Management School in Mainz International Tourism Management.

 

 

Dieser Artikel hat 13 Kommenatre

  1. Katharina Blanckart

    I enjoyed reading your article about Airbnb as this is one completely new concept which gained popularity within a relative short time frame and I could relate to personal experience of it. You presented very well how and especially why Airbnb is so successful – it’s cheaper, easy application for usage and interpersonal aspect. I am glad that you not only focused on the good side of Airbnb but also mentioned some critical aspects as this is unavoidable when talking about Airbnb. They are still struggling with some legal issues and it becomes clear that there is some experience missing with certain issues as Airbnb is the first company to run a business like that. The benefit of it though is obvious and their success proves them right, I would appreciate it if they could solve them.

  2. Airbnb became a successful player on the hospitality market throughout the last years. Especially for travellers on a budget or young people and families, it is a great opportunity to discover a city from a private an comfortable home away from home. One of the biggest advantages for airbnb is that it is easy to use for both sides, that the host is covered by airbnb for any damages and that it’s cheaper compared to most hotels. In my opinion airbnb has a great and easy business model which offers the host and the traveler an easy service. But the challenges airbnb still has to face, are a big image problem. Next to vandalism it is often prohibited to rent your appartment by your landlords contract. Doing it anyway can cause you big problems. To face those problems airbnb wants to create new opportunities by using the peer-to-peer accomodation sector.

  3. I really enjoyed reading your article as you did not only mention positive aspects which are fulfilled by AirBnB. What I particularly liked was that you also pointed out challenges that occur in real life. Personally, you could have enlarged on how AirBnB presents problems for the hotel industry. AirBnB has been repeatedly criticized in the press since the company makes it easy for tourists to find cheap sleeping accommodation in popular cities, undercutting the prices that are usually charged by hotels. In many cities and countries, AirBnB is under pressure as the company does not comply with local regulations. Even if it offers budget accommodation, one has to consider the dark side as well.

  4. As I have also took advantage of Airbnb a few times I was really interested in reading your article about this great innovation that indeed changed the hospitality industry massively. You described very well how Airbnb is operating and why the company is crowned with success. Cheap accommodation for the customer and extra money for the host- in addition a cultural exchange that cannot be experienced in a hotel resort or a noisy hostel. Airbnb put the hospitality industry and the tourists experience definitely to another level. Still Airbnb has to face bad headlines in the media: Legal issues and security problems are damaging the reputation of the company. Anyway I still believe in Airbnb and its great idea, because behind all the critics and headlines about vandalism or sexual abuses are disrespectful tourists or impudent hosts who are, sadly, abusing outstanding innovative ideas. Maybe we should all rather start trying to change cruel human behavior instead of judging new concepts or even preventing good systems to grow.

  5. In my opinion Airbnb is a very innovative business model with a well-defined strategy:

    Airbnb has successfully been developed as a network orchestrators, known for creating a network of peers in which the users interact and share in the value creation by selling services and products, building relationships, sharing advices, giving reviews, and more.

    Even though it took Airbnb’s founders some time to get the critical mass, due to trust issues on behalf on hosts and guests at the very beginning, they have achieved a well-established user base.

    Especially interesting in my opinion is that with the launch of “Trips” Airbnb has developed to a three-sided network. By combining all its services into a single travel platform, Airbnb no longer only connects hosts and guests, but also guests with potential trip or experience providers. With the announcement of potential launches of Airbnb Flights or Car Rental it is to say that the multi-sided network may be expanded in the future.

    Airbnb’s “Trips” is a classical case of envelopment. Due to network effects and switching costs in platform markets, new entrants usually must offer revolutionary functionality to compete against a dominant platform. Through envelopment, a provider in one platform market can enter another platform market, combining its own functionality with the target’s in a multi-platform bundle that leverages shared user relationships. As platforms often have overlapping user bases, envelopment constitutes a strategic threat. With “Trips” Airbnb has entered the tours and activities market and builds a major threat to travel agencies, and other travel website companies like TripAdvisor, providing experiences and trips to its user base.

    As already mentioned Airbnb’s founders have recognized the importance of envelopment: to use Airbnb’s user base to grow in a global market and taking the opportunity to scale. Airbnb as a marketplace, it needed a network effect to grow and expand. It is a global network effect: It was important to grow in all markets. Airbnb took the opportunity to pursue its goal to combine all-important services into a single travel platform.

  6. I really enjoyed reading your article because I also have some experience with Airbnb. And all of them are positive. You described very well how the company operates and also talked about their opportunities and threats. While Airbnb is a cheap option for travellers I would be interested in how hotels react to this new competitor. Do you thing that one day classic hotels will be outdated and the majority of travellers will stay in “Homes” booked by Airbnb?

  7. In my opinion Airbnb is one of the most interesting developments of the past years. The importance of this innovation becomes already clear in the beginning of your article. It is incredible how fast Airbnb has grown and how successful it has become now! I think that Airbnb already has changed the whole hotel and accomodation industry quite a lot and has created entirely new possibilities for travelers.

    As I have not yet had personal experiences with airbnb, it was really interesting to read your article and especially to read about the way it actually works. Personally, I am still quite concerned about the negative sides of airbnb and the risks that you have to take as user. Thus, it is good that you already mentioned some of the challenges Airbnb has to face. It could also maybe be interesting to analyze the effect Airbnb has on the tourism industry in different regions and on the general accomodation situation.
    Anyways, I think that Airbnb is a great innovation with a lot of potential and I am excited to see what the future will hold for this concept.

  8. Isabelle Hachenberg

    Since I used the services offered by Air BnB a couple of months ago, I was really interested in reading your article. It is true that they have changed the hospitality industry massively and are a huge competitor to hotels etc. Now it would be interesting to know, what the hotel owners will undertake in order to stay in the competition.
    What I like about Air BnBs business model is, that not only the hosts and their property are rated but also the guests and how they treat the room/apartment/house. As stated in some comments above, violation and sexual abuse are a recent problem Air BnB is facing. With the help of rating both sides, those situations can be prevented.

  9. The possibilities of AirBnB are almost endless – you can choose between a room in a house, an apartment, a suite … and even a treehouse or an igloo are options to spend your vacations. There are a lot of advantages like saving money as it often costs less than a hotel room, you get an authentic experience as you live in the homes of locals. AirBnb offers a lot of options as you can decide if you want to rent the entire apartment, just a single room or even a shared room – so you get the chance to meet other travelers and also become friends with the locals. That makes AirBnB more than just a place to spend your vacation – it is an incredible experience.
    On the other hand there are still some points that demand improvement. Sometimes it does not matter how much research you do. In my opinion they should definitely work on their cancellation policy as it should be standardized. Once you book a vacation with “strict” cancellation policy you can be sure that you won’t get a refund after booking. Furthermore you have to consider that there are hidden fees – the cleaning and service charge is not included in the price.
    In addition, they should work on their customer service. You have to go through a lot of steps before you can actually make use of their “help center”.

  10. I enjoyed reading your article. Your topic is nice. Airbnb is something very innovative and in my opinion. I personally had as well some experience with Airbnb and I must say that my experience was 100% positive. I travelled a lot in Asia and I used very often Airbnb and I always enjoyed it and I felt safe, what I think is very important. Sometimes was the Airbnb offering even cheaper and nicer as a hotel. I´m totally convinced from this innovation. I hope that they will be as well the future so successful. The application is so easy to use and gives you great opportunities. It makes me just sad when I read that there was vandalism committed by guest to sexual assault committed by hosts. Something like this should not happen and Airbnb should take some consequences and do something against that. Otherwise I think that this issue could cause big problems for guest, hosts and the entire company.

  11. I enjoyed reading your article as well, not only because it was informative but the fact we all have experienced airbnb bookings. It is a innovative business model! No one ever expected to do this in the past, to share your own private space to a completely stranger. But this so strange business model is booming!
    Pricy accomodations should not be the reason,not be able to travel anymore. This business gives you the opportunity to see the world and meet new people around the globe. Sharing is caring.

  12. I really like your article! I think the Airbnb is a very intersting topic. It is very easy and comfortable to get around especially in big cities like Berlin, London or New York. I used it as well and always had positive impressions and experiences. The website is very clear and userfriendly. The communication to the one that are renting the place is usually without any problem since there is good confidence base of what I experienced. But on the other side of the coin there have been cases of vandalism or crime that is due to a growing number of user even harder to control and monitor. Furthermore Airbnb is sometimes used instead of renting appartments or rooms officially which can affect the real estate business. For example in Berlin, people complain that apartments are just used for short term rentings through Airbnb and can’t be rented by the citizens since living space is rather rare. For me its a good option to rent places while traveling, but there should be measures to stop any kind of abuses from both sides in the future.

  13. Airbnb is an important innovation of the tourism industry, and I like how you presented this concept and talked not only about its positive but also its negative aspects. I personally felt kind of intimidated by the fact that tourists have been sexually abused by hosts. However I’m sure these cases are exceptions and the benefits for both sides predominate. Especially for backpackers with a low budget it is a good way to find a cheap accommodation and experience the local culture in a totally different way. And I think this is exactly the reason why Airbnb has been such a great success all over the world. A lot of young tourists seek a culturally authentic experience and they can’t find it by staying in a hotel or hostel with only international tourists. All in all I’m convinced that despite the challenges Airbnb has to face, it will grow and establish itself further as an important part of tourist accommodation.

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