Professional Documents
Culture Documents
Group 3
Type: Group
Team members:
Executive Summary
Introduction
Literature review
Industry Overview
Work Cited
Executive Summary
Introduction
Airbnb is an online platform connecting people with extra space in their homes with travelers
who need a place to stay. It was launched in 2008 and has changed how people travel and
experience different destinations worldwide. Airbnb acts as an intermediary between hosts and
guests, providing a secure and convenient way to book and pay for various types of
convenience. Hosts can share their culture, lifestyle, and local knowledge with guests while
earning money from unused space. It also allows guests to enjoy more authentic, diverse, and
affordable experiences than they might find in conventional hotels. The concept of Airbnb was
born when its founders, Brian Chesk, and Joe Gebbia, faced the problem of finding a hotel room
during a busy conference in San Francisco. They decided to offer air mattresses in their living
room to some of the conference attendees and created a simple website to advertise their service.
They called it “Air Bed & Breakfast,” which later became Airbnb.
Since then, Airbnb has grown into a global phenomenon, with more than 7 million listings in
about 220 countries and regions as of September 2021. It has also expanded its offerings to
include activities, experiences, adventures, and online events that guests can book through the
platform. (Guttentag)
The potential expansion of its services to include car rental could further diversify its offerings
and revenue streams. This report will consider various strategies, including partnerships with
existing car rental companies, fostering car-sharing services, and integrations with ride-sharing
services. It will also explore challenges and opportunities such as insurance, cleanliness, fuel
Literature Review
This literature review aims to provide an overview of the literature relevant to Airbnb’s potential
(i) the concept and characteristics of the sharing economy and peer-to-peer platforms,
(ii) the current state and trends of the car rental industry,
(iii) the benefits and challenges of incorporating car rental into accommodation platforms,
(iv) the regulatory and insurance issues faced by car rental services.
(v) the technological trends that could affect car usage and ownership. (vi) the possible
The literature review synthesizes the findings and implications of various studies, reports, and
articles and identifies the gaps and opportunities for Airbnb’s strategic move.
(i) Understanding the Sharing Economy and Peer-to-Peer Platforms: The sharing economy
is a socio-economic phenomenon that involves the sharing of underutilized assets and resources
among individuals through digital platforms. One of the primary forms of the sharing economy is
peer-to-peer platforms, which enable users to exchange goods and services directly without
intermediaries. Botsman and Rogers (2011), in their book “What’s Mine Is Yours: The Rise of
illustrating how it has transformed various industries such as transportation, hospitality, media,
and fashion. They explain the mechanisms of peer-to-peer platforms, such as reputation systems,
6 social networks, and payment systems, which Airbnb could use as a model for its car rental
Hamari and his colleagues explored the motivational factors driving participation in the sharing
economy. They found that users are motivated by extrinsic factors, such as economic benefits,
convenience, and sustainability, and intrinsic factors, such as enjoyment, altruism, and a sense of
community. These aspects are also crucial for Airbnb, which has already capitalized on them in
(ii) Assessing the Car Rental Industry: The car rental industry is a global market that provides
vehicles for rent to individuals or businesses for the short-term or the long-term. The industry has
experienced significant growth in recent years due to increased travel demand, changing
report (2023) on the global car rental market provides an extensive overview of the industry,
noting that it generated $87.4 billion in revenue in 2022, with an annual growth rate of 3.8%
from 2018 to 2022. The report also identifies the key drivers of industry growth, such as rising
disposable income, urbanization, tourism, business travel, and online platforms. Moreover, the
report analyzes the industry’s competitive landscape, highlighting the major players such as
Enterprise Rent-A-Car, Hertz Global Holdings Inc., Avis Budget Group Inc., Europcar Mobility
Group SA., and Sixt. The report also emphasizes the importance of insurance, car maintenance,
and regulatory compliance for car rental operators. These factors suggest a viable opportunity for
Airbnb to diversify its services and enter the car rental market. (IBISWorld) 7
are online platforms that facilitate booking short-term or long-term lodging for travelers or hosts.
Airbnb is one of the leading accommodation platforms in the world, offering over 7 million
listings in more than 220 countries and regions. In recent years, Airbnb has diversified its
differentiation from competitors. The study also suggests that additional services could generate
additional revenue streams for accommodation platforms by increasing customer loyalty, cross-
selling opportunities, and commission fees. These findings indicate a positive outlook for
(iv) Addressing Regulatory and Insurance Challenges: One prominent challenge car rental
services face is complying with regulations and laws governing vehicle ownership, operation,
and safety. These regulations vary across countries, states, and cities and may impose restrictions
on licensing, registration, taxation, insurance, emissions, parking, and traffic rules. In addition,
car rental services also face insurance challenges, such as covering liability, collision, theft, and
damage costs for both renters and owners. A 2015 report by Dillahunt and Malone presents a
detailed account of these regulatory and insurance challenges faced by car-sharing services, like
car rental services. The report provides examples of how car-sharing companies have dealt with
these challenges, such as partnering with insurance providers, offering different insurance
options, and lobbying for favorable regulations. The report also identifies the best practices and 8
recommendations for car-sharing operators, such as conducting market research, educating users,
and collaborating with stakeholders. Airbnb must navigate these complexities to expand into car
(v) Evaluating Technological Trends: Technology is a crucial driver of innovation and change
in the car industry. Technological advances have enabled new modes of mobility, such as electric
vehicles, autonomous vehicles, and connected vehicles. These technologies could disrupt the car
rental industry by changing how people use and own cars. Papers such as Sperling’s (2018)
analysis of the future of car ownership and Burns’ (2021) work on the impact of self-driving cars
highlight the transformative power of technology on car usage and ownership. Sperling argues
that car ownership will decline due to the rise of shared mobility, electric vehicles, and
autonomous vehicles, reducing the cost and convenience of owning a car (Sperling). Burns
predicts that self-driving cars will revolutionize the transportation system by creating new
business models, such as robot taxis, robot shuttles, and robot delivery. The potential trend
towards vehicle access rather than ownership could influence Airbnb’s strategic approach to car
(vi) Exploring Partnerships and Integrations: Another possible strategy for Airbnb to enter
the car rental market is to partner or integrate with existing mobility services, such as ridesharing
or ride-hailing services. Ride-sharing services are peer-to-peer platforms enabling users to share
rides with others, such as Uber Pool or Lyft Line. Ride-hailing services enable users to book
rides from professional drivers like Uber or Lyft. These services are complementary to
accommodation platforms, as they provide convenient and affordable transportation options for
travelers. Lits et 9 al. (2019) researched to identify the synergies between ridesharing and
accommodation platforms. They found that ride-sharing users are more likely to use
accommodation platforms than non-users and vice versa. They also suggested that partnerships
or integrations between these platforms could bring added value to users, such as offering
(vii) Ensuring Cleanliness and Fuel Management: A final aspect that Airbnb must consider
for its car rental services is cleanliness and fuel management. Cleanliness refers to the car's
interior and exterior hygiene and sanitation, affecting user experience and satisfaction. Fuel
management refers to the monitoring and replenishment of the fuel level of the car, which affects
the operational efficiency and cost of the service. Zhu and Hartmann (2020) pointed out the
importance of cleanliness and fuel management in car rental services. They conducted a survey-
based study to examine how these factors affect user satisfaction and loyalty. They found that
cleanliness and fuel management significantly positively affect user satisfaction, affecting user
loyalty. They also suggested that car rental operators implement effective quality control
measures, such as regular inspections, cleaning protocols, feedback systems, and user incentives
or penalties. Airbnb, which already faces cleanliness challenges with its accommodations, must
address these issues carefully for its car rental services. ( Zhu and Hartmann) In conclusion, the
literature review suggests that Airbnb’s potential expansion into car rental services could be a
promising strategic move that could enhance its competitive advantage, 10 diversify its revenue
streams, and increase customer satisfaction. However, the company must address several
challenges, including regulatory and insurance issues, cleanliness, fuel management, and the
(i) Global Car Rental Industry: The global car rental industry has experienced remarkable
growth in the past decade as more people travel for business and leisure purposes. The industry
is projected to reach over $100 billion by the end of 2023, indicating a large and lucrative market
for Airbnb to tap into (Statista). One of the main factors driving this growth is the emergence of
the sharing economy, where consumers prefer to rent rather than own assets, such as cars,
homes, and bikes. This trend reflects a shift in consumer behavior and values and a desire for
(ii) Market Segmentation: The car rental industry can be segmented by various criteria, such as
type of car, service, and end-use. By type of car, the industry offers options ranging from
economy to luxury cars, catering to different customer segments and needs. By service, the
industry includes ride-hailing services, such as Uber and Lyft, car-sharing services, such as
Zipcar and Car2Go, and station-based mobility services, such as bike and scooter rentals. By
end-use, the industry serves business and leisure travelers with different preferences and
demands. Another emerging segment in the industry is the demand for environmentally friendly
options, such as electric and hybrid cars, which appeal to eco-conscious customers.
(iii) Competitive Landscape: The car rental industry is highly competitive, with a few major
players dominating the market. These include Enterprise Holdings, Hertz Global Holdings, and
Avis Budget Group, which account for over 70% of the market share. These companies have
established strong brand recognition, customer loyalty, and operational efficiency. However,
they also face competition from newer entrants, such as peer-to-peer car-sharing services like
Turo and Getaround, which offer a more personalized and convenient alternative to traditional
(iv) Challenges and Opportunities: The car rental industry faces several challenges that affect
its profitability and sustainability. These include regulatory complexities, such as taxes, licenses,
and safety standards; high operational costs, such as maintenance, depreciation, and fuel; and the
need for comprehensive insurance coverage to protect against risks and liabilities (Dillahunt and
Toyama). However, this sector also has significant opportunities for innovation and growth.
to transform the industry by reducing costs, increasing safety, and enhancing customer
experience. Additionally, integrating additional services, such as accommodation and car rentals,
has enhanced customer satisfaction and generated additional revenue (Lits, Moreau & Zouaghi.).
(v) Impact of COVID-19: The car rental industry was severely impacted by the COVID-19
pandemic due to global travel restrictions. The industry saw a sharp decline in revenue and
demand in 2020. However, it also showed signs of a strong recovery in 2021, particularly in
regions where travel restrictions have been eased. The industry has also adapted to the changing
contactless delivery, flexible cancellation policies, and discounts and incentives to attract
(vi) Future Outlook: The future outlook for the car rental industry is positive, as it is expected
to grow at a compound annual growth rate (CAGR) of more than 7% from 2021 to 2027. The
key drivers for this growth are increased travel activity, urbanization, and the sharing economy
trend. The potential transition to autonomous cars and vehicle access rather than ownership could
revolutionize the sector by creating new business models and value propositions. This presents
an exciting avenue for Airbnb to explore (Research and Market). In conclusion, the car rental
industry offers a robust market with potential opportunities for Airbnb. However, navigating the
competitive landscape, evolving consumer preferences and potential technological disruptions
We used secondary data from the "Cornell Car Rental Dataset" to address our research
questions" (Kaggle). The dataset offers valuable features that allow us to investigate the
We selected this dataset for two main reasons. Firstly, it directly aligns with our research focus
on car rental, and secondly, it has a substantial and dependable dataset of 5,851 car rental
observations. The dataset is structured and quantitative, presented in a tabular format, with each
row representing a car rental instance and each column representing an attribute of the car
rental. The quantitative nature of the data enables us to measure various attributes, including
Key columns and features within the dataset that are relevant to our research questions include:
1. Car_Model
2. Fuel_Type
3. Total_Trips_Taken
4. Rental_Duration
5. Rental_Company
6. Customer_ID
7. Location
These columns contain essential information necessary for addressing our research questions
Effectively.
The dataset follows a world quantity view, quantifying car rentals’ features, allowing for
statistical analysis. It serves as a sample of the global population of car rentals, offering insights
into renter preferences and behaviors. It is also from a reputable source and has undergone
verification by the online data science community, ensuring its reliability. Moreover, its
extensive size, comprehensive scope, and detailed nature further enhance its reliability.
By examining the 'Car_Model' column, we can identify the most frequently rented car models.
Similarly, analyzing the 'Fuel_Type' and 'Total_Trips_Taken' columns can provide insights into
the influence of fuel type on the number of trips renters take. Further statistical analysis can
uncover correlations between variables and identify trends over time, aiding our understanding
of customer behavior and preferences in car rental. This comprehensive dataset allows us to draw
meaningful conclusions and gain valuable insights into car rental trends and behaviors.
In summary, the "Cornell Car Rental Dataset" provides a reliable and structured resource to
address our research questions effectively. Through rigorous analysis of this dataset, we can
We delved into the Cornell Car Rental Dataset to determine renters' preferences regarding
vehicle models and makes and the influence of fuel types on trip frequency. By grouping the
data according to the vehicle's make and model, we pinpointed the vehicles most favored by
renters. Furthermore, we evaluated the average number of trips renters took depending on the
fuel type, providing insights into which fuel category garners the highest average patronage.
Table 2:
HYBRID 38.47
GASOLINE 34.17
ELECTRIC 29.22
DIESEL 17.3
From the data, the most popular car among renters is Tesla, with its Model 3, Model S, and
Model X all making the top ten list for the number of trips. The Tesla Model 3 is the most
popular model, with 10,187 trips. This indicates that renters significantly prefer electric cars,
Other notable models in the top ten list include the Ford Mustang, Toyota Corolla, Jeep
Wrangler, and Chevrolet Corvette. The popularity of these models suggests that renters value a
mix of performance, reliability, and eco-friendliness in their vehicle choices. These observations
When we consider the impact of fuel type on the number of trips, hybrid vehicles lead the way
with an average of 38.47 trips. This is followed by gasoline vehicles with 34.17 trips, electric
vehicles with 29.22 trips, and diesel vehicles with 17.3 trips.
This data suggests that while electric vehicles are popular among renters (as evidenced by the
popularity of the Tesla models), hybrid and gasoline vehicles still dominate the number of trips.
This might be due to the convenience and ubiquity of gasoline and hybrid vehicles or possible
range anxiety associated with electric vehicles. Diesel vehicles, on the other hand, are the least
popular, possibly due to their environmental impact and the decreasing availability of diesel
fuel in some regions. The pie chart below depicts the distribution of rental cars by fuel-type.
Based on the study's findings, we offer the following recommendations for Airbnb's expansion
significant interest in car rentals among renters, with Tesla vehicles being particularly popular.
This indicates a potential demand for car rental services within Airbnb's customer base. Given
the significant popularity of Tesla vehicles and the growing interest in electric cars, Airbnb
should prioritize including electric and hybrid vehicles, this will offer a diverse range of eco-
friendly options and will attract environmentally-conscious renters and it also aligns with the
Airbnb should consider partnering with leading electric vehicle manufacturers, including Tesla.
Collaborating with renowned brands will enhance the company's reputation and credibility in the
rental space.
Customer Value Proposition: Airbnb's success is built on providing unique and personalized
travel experiences. Introducing car rental services should align with Airbnb's core value
proposition and enhance the overall travel experience for its customers.
Offer Incentives for EV Rentals: To further promote electric vehicle adoption, Airbnb can
introduce special incentives or discounts for customers who opt for electric or hybrid vehicles.
Lower rental rates or additional benefits for eco-friendly choices can incentivize renters to
consumer preferences. Airbnb should continuously monitor market trends and customer
feedback to adapt its offerings accordingly. Regularly updating the fleet with the latest and most
seamless car rental experiences for customers. Investing in a user-friendly interface on the
Airbnb app for car bookings, contactless check-ins, and digital verification will enhance
with key manufacturers, promoting sustainable practices, and leveraging its technological
expertise, Airbnb has the opportunity to successfully enter the car rental market. The insights
gained from this data analysis will guide Airbnb in shaping its car rental strategy, enabling the
company to tap into a lucrative and evolving market segment while addressing the growing
The project of exploring the potential of Airbnb to expand its platform to include car rental
services has made business analytics relevant to the business in several ways:
Data-Driven Decision-Making: Business analytics has played a critical role in this project by
providing data-driven insights and evidence to support decision-making. The data analysis
conducted on the popularity of different vehicle models, fuel types, and customer preferences has
informed strategic choices about potential offerings in the car rental market. By leveraging data,
Airbnb can make informed decisions about which types of vehicles to include in their rental
fleet, how to price the rentals, and which locations might have higher demand.
Identifying Market Opportunities: Business analytics has helped identify a market opportunity
for Airbnb to capitalize on the growing interest in car rentals among its customers. By analyzing
the data and market trends, the project has highlighted the potential benefits of expanding into
the car rental industry, providing a new revenue stream, and enhancing the overall value
Competitive Advantage: Through data analysis, the project has provided insights into the
competitive landscape of the car rental industry. By understanding customer preferences and
competitor offerings, Airbnb can strategize on how to differentiate its car rental services from
Personalization and User Experience: Business analytics can be utilized to tailor the car rental
recommendations for car rentals, enhancing the user experience and fostering customer loyalty.
Financial Viability and Risk Assessment: Business analytics has helped in assessing the
financial viability and risks associated with expanding into the car rental market. By conducting
financial analysis and forecasting, Airbnb can evaluate the potential return on investment, assess
the costs involved, and mitigate potential risks before making a significant business decision.
Expansion Strategy: Business analytics has played a crucial role in shaping Airbnb's expansion
strategy into the car rental industry. By analyzing regional demand, customer demographics, and
market trends, Airbnb can tailor its approach to different markets and deploy resources
efficiently.
Scalability and Global Reach: Airbnb's global reach allows it to leverage data from different
regions and markets to optimize its car rental services. Business analytics enables Airbnb to
identify regional preferences and customize its offerings to meet the diverse needs of customers
In conclusion, the project has demonstrated how business analytics is a valuable tool for Airbnb
to explore the feasibility of expanding into the car rental industry. By analyzing data and
leveraging insights, Airbnb can make data-driven decisions, identify market opportunities, gain a
competitive advantage, and enhance the overall user experience. Business analytics has made the
project relevant to Airbnb's business by providing valuable insights to inform strategic choices
and maximize the potential of incorporating car rental services into its platform.
Work Cited
Amplify XL. “Target Market for Car Rental Companies: What Drives Them?” Amplifyxl.com, 6
Dillahunt, Tawanna R., and Erin A. Malone. “The Promise of the Sharing Economy among
https://www.researchgate.net/publication/277658113_The_Promise_of_the_Sharing_Economy_a
mong_Disadvantaged_Communities.
Dillahunt, T. R., and Toyama, K. "Investigating perceived barriers to the use of peer-to-peer
Grand View Research. “Rental Market Size, Share & Trends Analysis Report By Vehicle Type
(Luxury Cars, Executive Cars, Economy Cars, SUVs, MUVs), By Application (Local Usage,
rental-market.
Guttentag, Daniel. “Progress on Airbnb: a literature review.” Journal of Hospitality and Tourism
consumption.” Journal of the Association for Information Science and Technology, vol. 67, no.
IBISWorld. Global Car Rental Industry Market Research Report. IBISWorld, Feb. 2023.
https://www.kaggle.com/datasets/kushleshkumar/cornell-car-rental-dataset. 17 July
Lits, Romain W., et al. “Synergies between ride-sharing and accommodation platforms:
Evidence from Airbnb and Uber.” Tourism Management, vol. 75, 2019, pp. 454-463.
Research and Markets. “Car Rental Market - Growth, Trends, COVID-19 Impact, and Forecasts
https://www.researchandmarkets.com/reports/4515615/car-rental-market-growth-trends-covid-
19.
Sperling, Daniel. Three Revolutions: Steering Automated, Shared, and Electric Vehicles to a
https://www.statista.com/outlook/mmo/shared-mobility/shared-rides/car-rentals/worldwide.
Zhu, Zhenran Roger, and Wilfred W. Hartmann. “Cleanliness and fuel management in car rental