Airbnb
Airbnb is a global homestay network founded in 2008 that allows people to market their residences online and seek short term tenants. The platform enables a variety of people to experience an authentic accommodation in any city they choose, and meet a host from the area. Based in San Francisco, California, Airbnb's mission is to provide a secure marketplace for people to list, discover, and book unique travel experiences at any price point in locations all over the world. Unlike other online marketplaces such as Craigslist, Airbnb offers a "world-class" customer experience while also allowing hosts to monetize their vacant spaces.
Contents
About Airbnb
History/Founder
Airbnb was founded by Brian Chesky and Joe Gabbia who initially conceptualized the idea at an Industrial Design Conference, where they imagined a service which provided last-minute accommodations and breakfast to travelers unable to secure a hotel booking. Using the event as an inspiration, Chesky and Gabbia focused initially on targeting locations where big events were happening to ensure there would be travelers looking for last minute accommodations. Eager to get the company growing, they were creative in collecting funding--they came up with unique products and sold them, raising $30,000 as initial capital [1]. As a stereotypical Bay Area startup, Airbnb worked out out of the founders' home in San Francisco until they were able to pitch their website and idea to investors, raise additional capital, and move to an office space. By 2010, the company had booked over 700,000 rooms, and by 2013, they were celebrating over 9 million guests.
Funding & Growth
Chesky and Gabbia wanted to launch Airbnb as soon as possible. As a way to pilot their idea, they launched during the Democratic National Convention and secured guests due to the hotel shortage in the area. After successfully realizing the potential demand of their idea, they pitched the idea to Sequoia Capital and Y Ventures and raised $600,000 in seed money.
Company expansion/Locations
Airbnb is established in over 190 countries and over 65,000 cities[2].To cater to growing demand and locations, Airbnb created offices all over the globe to maintain good customer service relationships. Currently, Airbnb has 19 offices[2] spread across Amsterdam, Barcelona, Berlin, Beijing, Copenhagen, Dublin, London, Miami, Milan, Moscow, New Delhi, Paris, Portland, San Francisco, Sau Paulo, Seoul, Singapore, Sydney, Tokyo and Toronto.
Company culture
Airbnb has a very distinct company culture because according to the company founders, the stronger the culture is, the less corporate process a company will need[3]. They treat each challenge as a problem to be solved as a team, encouraging employees to lookout for each other and for upper management to trust their employees. As said by Brian Chesky, "Culture is a thousand things, a thousand times. It is living the core values when you hire; when you write an email; when you are working on a project; when you are walking in the hall. We have the power, by living the values, to build the culture".
Products and Services
Home/Apartment Rental
Airbnb operates through their website and mobile app through which travelers can search available accommodations. Travelers enter the duration of stay, price range, and style of accommodation they are seeking--for example, if they are looking for just one room or an entire home or apartment. They are then able to look through the available listings and contact the host to formally book their stay.[4] Airbnb does not formally own any rooms itself, and therefore building and maintaining quality relationships with their vendors is crucial for their success.
Experiences
Recently, Airbnb has started providing experiences by select hosts to enrich a travelers experience through a specific immersion or activity. The service allows hosts to create experience such as a quick workshop or a walk through a neighborhood in their city, or longer experiences over a couple of days that give guests an in-depth view into the local culture. Hosts have to write proposals for experiences which then have to be approved by an Airbnb team, and after approval, hosts are free to alter the size of the group and price for the experience. Types of experiences include social impact, art & design, food & drink, sports experiences, and history experiences, among many more [5].
Revenue
Since Airbnb does not own any physical accommodations, they generate revenue through fees charged on bookings. On each booking, Airbnb charges a 6%-12% service fee for "guest services" and also charges the host a 3% service fee. To minimize liability issues, Airbnb introduced a $50,000 physical property guarantee, voice-and-video verification systems, and a 24-hour customer support hotline[3]. They also have built a database of 3,000 professional photographers that Airbnb hosts can utilize to have their properties professionally photographed. In 2015, Airbnb generated approximately $900 million[4] in revenue.
Competition
Airbnb developed an attractive and easy to use business model for homesharing, however they are not the only players in the market. Airbnb has numerous competitors, namely Homeaway[5], Tripping.com[6], and FlipKey[7]. These three competitors also service as an online marketplace for travelers to connect with hosts who are advertising their space for short term and long term stay. In the accommodation industry itself, Airbnb also faces competition from hotels. With convenient home sharing options such as Airbnb, hotels are losing customers to cheaper options.
Ethical Considerations
Privacy Issues
One of the obvious concerns of Airbnb is the topic of privacy, both for the homeowner and the guest. For the homeowner, there are issues regarding stolen or damaged property caused by the guests. These incidents may not be common, but does happen as exemplified when Airbnb received "negative press when a few consumers went public with stories of their homes being robbed or damaged by renters found through the site" [8]. The premise of Airbnb's existence can be partially based on the moral good in people, allowing homeowners to trust strangers to enter their homes. However, there are people that will break that social norm, causing incidents revolving property damage and loss. While Airbnb has responded to such reports by covering loss or damage from guests up to $50,000, it ultimately depends on the fundamental good nature of their users. Thus, one issue with the sharing economy is that it frequently bypasses most security checks in place of blind faith in people's goodness.
Another incident regarding privacy, but for guests, happened when a woman alleged that the apartment she rented from was equipped with a remote-controlled spy camera. [9] It is suspected that the camera had taken explicit pictures of the woman and her partner. Even though Airbnb takes its privacy issues very seriously, it can't stop the person in possession of the pictures from uploading them on the Internet. As a result, homeowners and guests must take their own precautions to ensure privacy because Airbnb can only ensure it up to some point.
Consequences of the Sharing Economy
The sharing economy business model, which includes companies like Airbnb, Uber, and Lyft, connects providers and consumers to share resources and services through online application-based platforms or business transactions.Becasue of Airbnb's sharing economy business model, the service competes against the hotel industry, which has seen revenues fall since Airbnb's introduction to the market. Airbnb's success has resulted in increased city regulations regarding sharing economies.[6]
One argument of the sharing economy is whether it is bringing in more opportunities and creating salaried workers, or whether the net effect of displacing the workers involved in the traditional economic model is forcing them to move to lower salary part-time jobs. [7].
Competition/Regulation
References
- [2] https://techcrunch.com/gallery/a-brief-history-of-airbnb/
- [3] https://en.wikipedia.org/wiki/Airbnb#Corporate_information
- [4] https://inside.6q.io/the-importance-of-company-culture-at-airbnb/
- [5] http://bmtoolbox.net/stories/airbnb/
- [6] https://www.airbnb.com/host/experiences
- [7] http://fortune.com/2012/05/03/airbnb-more-than-a-place-to-crash/
- [8] http://expandedramblings.com/index.php/airbnb-statistics/2/
- [9] http://homeaway.com
- [10] http://tripping.com
- [11] http://flipkey.com
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