AirBnB: Digital Transformation in Hotel

          

      Picture Showing Airbnb App

In today’s life, AirBnB, as an online travel agency, has developed as one of the most important market leaders in hospitality. AirBnB depends on the interconnectivity of the internet and then enables travelers to reach wanted places with convenience and cheap price. Therefore, Airbnb has refreshed traditional perceptions toward hotels and redefined hospitality.

This essay focuses on providing detailed information about Airbnb and then analyze its business models and regulatory debacles. Importantly, the essay continues to explain the challenges and opportunities related to Airbnb’s business model and internet ecology. Finally, the essay discusses Airbnb’s internet transformations and further explores how a sharing ecology makes a great contribution to the sustainable development of Airbnb.

 

Overview of Airbnb

“Belong anywhere” is the slogan of Airbnb, peer-to-peer accommodation rentals, and implies that Airbnb helps to enhance public participation and give a sense of belonging because of the advent of the sharing economy. According to the information published by Statista (2019), 33.9 million persons in the United States have used AirBnB and it is estimated that 45.6 million persons will use AirBnB by 2022. Importantly, over 65,000 cities throughout the world have been covered by AirBnB and guests have access to 1.9 million listings once they want to book hotels (Much Needed, 2020). Since Brian Chesky and Joe Gebbia established an airbed mattress with breakfast in 2007, Airbnb has become a company with more than billions of dollars in today’s life. Airbnb has experienced a complex development and then becomes successful at present. The following image demonstrates how Airbnb develops as a leading platform in hospitality.

                                                 

Timeline of Airbnb

As an outcome of technology innovation, Airbnb provides the opportunity to bring such parties as hosts and guests together rather than isolate them.

 

Business Model of Airbnb

The term business model means sources and structures of an organization that make a great contribution to promoting the operation of an organization and then capture values (Mikhalkina & Cabantou, 2015, p.61). According to the definition made by Mikhalkina & Cabantou, the public realizes that the business model is related to resources and systems that an organization owns to make a big success. Airbnb, as a community-based platform, places a great emphasis on peer to peer engagement within hosts and guests (Guttentag, 2015, p.1193). Unlike traditional business models, Airbnb mostly keeps a dominating position in the digital community market-space and connects individuals who want to make money through renting housing spaces and then provide a space for travelers who require a short break. In the beginning, Airbnb depended on the website. While, as time goes, Airbnb has developed new types of mobile systems, such as ISO and Android apps. As different customers share personal stories and authentic experiences via Airbnb, Airbnb is widely accepted by the public due to mutual trust and public acceptance.

 

The following image shows how Airbnb makes money.

     

Airbnb: Business Model

Image from https://bmtoolbox.net/stories/airbnb/

 

Internet Ecology of Airbnb

Looi (2001) points out that internet ecology is to mirror an organized system where an organization depends on information technology to maintain or improve its operation and competitive advantages. Airbnb, as a leading platform in the sharing economy industry, provides a variety of rooms and spaces to customers. Importantly, Airbnb has faced different competitors and partners in both the travel and hotel industries.

The major competitors are such companies as Tripping, HomeToGo, FlipKey, HomeAway, VRBO, HouseTrip, and VayStay as well as VacayHero. All of them compete for limited market share. At present, they adhere to the business model of Airbnb and compete with low prices and comfortable services so that they easily replace Airbnb and provide more choices to complete their trip. Although they are not enough like Airbnb, they gradually grow up and expand their market share for earning more profits by working out a variety of discounts to distract the attention of Airbnb’s targeted customers. From a long-term perspective, Airbnb is facing fierce competition.

The major partners and suppliers of Airbnb are hotels and individual families. Both hotels and individuals can establish a strategic corporation with Airbnb to offer travelers to have a local experience. At present, Airbnb has a huge global presence among more than 190 countries and over 34000 cities, and importantly, more than 1 million listings are provided to customers so that they will find wanted materials easily (Airbnb, 2020). Hotels have more willingness to establish cooperation with Airbnb so that Airbnb expands its market size easily and achieves a great growth potential throughout the world.

However, potential challenges, such as privacy leakage and individual security, threaten its public image and reputation. As a result, governments and non-profit organizations of various countries, such as the Australian Hotel Association, are key to regulate Airbnb. Telecommunications and airlines, such as Optus and Virgin America, are important to promote its development. Additionally, such partners as American Express and Apple Pay contribute to foster its performance and provide financial supports.

The following image shows Airbnb’s internet ecology:Orange Shapes Simple Website Creation Mind Map (1).png

 

 

 

 

 

 

 

 

 

 

 

Airbnb: A Transformative Disruptive Innovation

The rapid development of the Internet paves the way for persons to get together, and then facilitates interpersonal communication. A peer-to-peer economy or collaborative consumption helps persons to get wanted goods and then enjoy convenient services in today’s life. Importantly, the rise of technological innovations has a close relationship with the term “sharing economy”, which is defined as a peer-to-peer (P2P) based activity of gaining, providing, or sharing access to products or services according to the use of an online or community-based platform (Hamari, Sjöklint & Ukkonen, 2016). At present, collaborative consumption (CC) has developed as a major trend that plays an essential role in dealing with such social issues as hyper-consumption, pollution, and even poverty. Nicholas John (2018, p.70) has mentioned that the sharing economy has developed as an important model that makes a great contribution to increasing the business’s revenue.

Guttentag et. al., (2017) conducted the survey and find that the price is the major motivation for users to choose Airbnb and the majority of persons need to pay for high expenditure caused by hotel accommodation in the United States. Coupled with the fact that more persons embrace the sharing economy, Airbnb is likely to achieve further success and promote the exchange of properties goods, or skills among users according to the wide use of the Internet and social media (Johns, 2017, p. 63). At the same time, Oskam & Boswijk (2016) also stated that the business of news sharing contributes to the promotion of such online platforms as Airbnb and eBay. When guests search for wanted space or accommodations, they prefer reviewing comments from other guests, and then make further decisions after reading comments.

Guest Review & Comments

New generations, especially Millennials, are seen as digital experts and prefer spending much time in front of a screen and would like to use digital communication to interact with each other. Importantly, they hope to have a free environment and independently determine their life. Young generations hope to enjoy a high level of freedom and want to keep their own private space. Under such a circumstance, the advent of Airbnb is suitable for the expectations of new generations. New generations have access to low-cost carriers’ options caused by information and touristic opportunities for technological innovations.

The rise of demands for a short break and cheap trips among the young generation plays an essential role in shaping Airbnb’s development. According to the survey made by Mintel (2017), guests whose age is at 16-34 years old prefer a short break which is a tendency of 1-3 nights, and 46% of guests frequently stay in a city break for a holiday while 42% of vacationers like to reach a beach destination in 2016. Meanwhile, Mintel (2017) found that guests would like to spend more on traveling and the expenditure of traveling increases by 11.5% in 2016. Through learning the survey made by Mintel, the public has an in-depth understanding of particular characteristics of the Millennials. As they are exposed to the Internet and various technological innovations, they gradually have the sense of a global digital community. Finally, they like to use mobile devices to access wanted products or services.

In Airbnb, young generations often find authentic experiences and stories, and then empower them to control their activities and finally have an in-depth understanding of local cultures and communications with local persons. As Airbnb expands the size of the market, Airbnb has become three times more than the second-largest lodging company, Marriott International, and Airbnb accommodation price is lower than average hotel room according to the information published by STR (2019). To satisfy the needs of new generations, Airbnb has made efforts to make sure that accommodations provided by Airbnb satisfy customers’ demands and improve their customer’s experiences, especially young generations. To some degree, Airbnb is a customer-centric platform in which customers, especially the Millennials.

            

 Airbnb & Hotel

Shaughnessy (2016, p.216) stated that a disruptive innovation grows exponentially to undercut industry incumbents. Unlike previous companies, Airbnb does not depend on tangible assets but on online platforms. The cost and staffs are decreased as well. Mobile technology helps to satisfy customer’s needs, and then create appeal to a new consumer group.  Then, through depending on the internet’s instant and low-cost communication, Airbnb creates authentic travel experiences and forces competitors to refresh their business model in the digital era. Airbnb focuses on quick convenience and connectivity of the Internet as well as enhance the internet’s networking and communicative affordances. At the same time, Airbnb empowers guests to feel free to select their accommodation based on their preference. Therefore, Airbnb accommodation creates new jobs and provides gives better utility in relatively flexible jobs (Sundararajan, 2014,p.5). Hosts and guests then share personal comments when they evaluate behaviors and provide rooms.

 

Conclusion

In conclusion, Airbnb is famous for the community marketplace in which hosts and travelers give a book respectively, and guests select wanted accommodations throughout the world based on individual preference. The sharing economy helps to decrease the costs and increase guests’ participation in the community when they enter different cultural backgrounds or nations. Additionally, as Airbnb provides a platform for both hosts and guests to rent wanted space, both of them will gain wanted things and then take advantage of tangible things, like rooms, location and size, and intangible aspects, including fairness, responsiveness, and a sense of belonging. Airbnb is an influential type of internet transformation.