Case Analysis essay
Airbnb utilizes the sharing business model, whereby owners and operators come into an agreement about the use of assets. The sharing model allows organizations to hire the assets of other firms to lower the cost of production. In the case of Airbnb, the company hires the services of organizations with spare capacity (Varlaro & Gamble, 2017). The sharing business framework has been beneficial to the company. Airbnb is able to avoid the taxation and regulations associated with the brick-and-mortar establishments due to its involvement in the digital marketplace. Instead, the firm offers intermediary services between customers requiring lodging services and owners.
Analysis
The implementation of various strategies has been the source of Airbnb’s success. The organization offers a technological platform that results in low operating costs. Instead of developing hotels and motels, the company links owners with customers. For every customer that seeks services from owners, the firm obtains a percentage of the money. The low operating costs enable Airbnb to maximize profits.
The organization takes advantage of the differing in size and target consumers. All firms operating the tourist accommodation sector offer lodging services. However, they differentiate their services to maintain competitiveness. Airbnb finds owner-operators with smaller beds and breakfasts. Since the customers search form accommodation services for a few days, the company offers smaller, cozy, home-like ambience (Varlaro & Gamble, 2017). Besides, the homes and properties in rural areas have historical backgrounds that provide consumers with a memorable experience. The customers also obtain the opportunity to learn and understand the community’s culture.
Airbnb has been able to leverage the changes in consumer experience and rate. Instead of emphasizing property ownership, the organization focuses on sharing or renting (Varlaro & Gamble, 2017). Subsequently, the peer-to-peer rating system assists in controlling quality and governing the community of hosts and guests. The system rates both guests and hosts to ensure the attainment of high-quality standards. The framework also eliminates the expenses that Airbnb would incur in employing workers for assessing and evaluating all owners operating in the platform.
Through the sharing business model, Airbnb has been able to avoid the regulations and taxation associated with the hotel industry. In the hotel industry, rules exist to protect customers from unsafe accommodations (Varlaro & Gamble, 2017). The laws also protect them from discrimination based on race or social class. However, concerns have been raised that Airbnb and its users do not comply with these laws. As Airbnb operates in the digital marketplace, the organization generates revenue without meeting the required taxes and regulations.
Recommendation
For Airbnb to achieve long-term success in the hotel industry, it should change the target market. The organization should consider providing both cheap accommodations and local events. Concerts, sporting, and local festivals would enable the firm to attract individuals from different regions, hence increasing the demand for accommodation services. The company should also coordinate with government agencies to develop a level playing field in the hotel industry. Compliance with the law will enable Airbnb to maintain a good public image and reputation. As a result, it will attract more potential customers, leading to increased revenue and profits. Finally, the company should emphasize the provision of exceptional customer service. The website is designed appropriately to facilitate the smooth transfer of information between the company, owner-operators, and consumers. When customers have better experiences, they leave positive reviews that market the business to other potential consumers.