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 join 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 high-
quality 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.
 Needs
• 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
• 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
Approach
Benefits
• “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
• Existing Hotel Chains
• Hostels/BnBs etc.
• Private Rentals
• Staying with
friends/acquaintances
Competition
 Key Activities of any platform businesses is to develop more positive
KEY ACTIVITIES 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 users to join and participate
2. Reduce negative network effects, by making the individual host-
guest 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 user
TAILORED VALUE CHAIN
A system based on collaborative consumption
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
Network Effect:
Each new and host bring in
new opportunities for growth
Rating-based System:
Customers’ feedback on rental
space and other services
Operations Marketing & provide an authentic basis to
- Technology After-Sales attract customers.
platforms like its - Attracting potential
website and mobile customers through Economic Incentive:
app facilitate the content marketing An average American host in San
booking and other Francisco earns $440 of profit and in
- Personalized Service some cases it could be up to $1,900 per
features month from renting their spaces on
Strategy & Offers
- Free Agents as Airbnb website
- Customer Service
Employees
HelpDesk
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 Targeting Renters and Property Owners at once!

Social
Website
Media
Activities Gained initial traction
through cross-posting
Video with Craigslist
App Marketing
Campaign

Neighbour SiteMinder’s partnership with

Print
hood Magazines AirBnB offers for hotels to
Guides 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. Airbnb Porter’s Five
Customers can very easily choose a traditional hotel, couch surfing, B&B,
and hostel as an alternative in the future
Forces Analysis
The potential threat of new entries: WEAK
• For any company to pose a threat, they will need both an excellent brand
Bargaining
equity to capture the requirements and demands of customers and access Power of Threats of
to millions in capital to venture into the account and compete with Airbnb Suppliers 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
Competitive
stay as per their budget.
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. Bargaining
Inter-firm rivalry : HIGH Threat of power of Buyer
• There are several high-quality Airbnb competitors with networks and substitutes
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.
 COMPETITIVE ADVANTAGE

FIRST TO MARKET HOST INCENTIVE LIST ONCE

for transaction- based temporary hosts post one time
housing site vs. daily on craigslist

EASY OF USE PROFILES DESIGN AND BRAND

Search by price, location Browse host
& check-in/check- out profiles, and book
dates in 3 clicks
 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+
560 m
84 m

Trips booked Budget & Online Trips w/Airbnb

(worldwide)
 REVENUE AND COSTS

• For Hosts : Free membership and Free access to list properties. Hosts pay about 3% of
booking fee.
• For Users : 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 • Salary to Permanent Employees

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.
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 • Data Security and

Residential Housing Privacy Flaws

• Negative Impact on • Expansion and

Employment Scalability
Economy Technology

• Legal Tax Issues

Society Environment
• Promotes Green Travel
• Violation of Health and Experience
Safety Laws
• Supports Sustainability
• Social Media Horror Awareness
Stories
 PARTNERS

• Airbnb hires freelancing

• Supply side of Airbnb • Brings initial funding to • Travellers are the professional streets/eve
nts/property

NON KEY PARTNERS

platform the table people who book the
• Bring home and units to • The funding helps with listed available spaces photographers in some

TRAVELLERS
the table INVESTORS developing the from local hosts cities
•
HOST

• There are two types of functionality, apps, • Travellers have the Maps, payment
host algorithms, but also for option to search for a platforms, cloud
• Rental Host acquiring customers property by filtering storage, identification
• Event Host • Investors bring down them according to rent, platforms are important
the (weighted) cost of amenities provided, but they are not
capital (WACC) location etc proprietary any longer
• Airbnb has opened a
large source of new • Insurance companies
guests by expanding
into the business travel
world
 CUSTOMERS

• Openness to
• TRAVEL TYPE • TYPE OF experience
• Frequent Traveller
• Business travel ,Leisure ACCOMODATION • Conscientiousness
• Minimalist frugalist
travel • Room, unit, house • Extraversion
• Freelance, nomad • Agreeableness
• Tour of multiple • HOME/LOCATION

PERSONALITY
LIFESTYLE
destination or single HOSTS • Live in small families • Neuroticism
GUESTS

• Country, city
destination • LOCATION TYPE
• DEMOGRAPHIC • Countryside, suburb
• Married or couple • CARE ABOUT SHARED
• Age bracket ECONOMY
• INCOME BRACKET
•
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/