C45-Airbnb-case.docx - 4 What key factors may determine the success of Airbnb Being successful in the sharing economy means building a business model

C45-Airbnb-case.docx - 4 What key factors may determine the...

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4. What key factors may determine the success of Airbnb?Being successful in the sharing economy means building a business model that’s based on trust, authenticity and transparency with your customers. Airbnb has been successful in the Sharing Economy by many key factors. To start off with, Airbnb opened a new kind of accommodation by allowing hosts to offer spare rooms or entire homes to potential guests, in a peer-reviewed digital marketplace. Their business is growing at an impressive rate and was recently valued at $31 billion which makes them currently the World’s largest hotel group without owninga single hotel. By leveraging the ubiquitous usage of smartphone and the continual decrease in technology costs, Airbnb provided a platform for individuals to instantly share a number of resources. Thus a homeowner with a spare room could offer it for rent. The individual can simply signed up through the platform and began to offer the service. Users want to rent Next, Airbnb is the middle man between hosts and guests. This is from where the company earns its share of revenue from 2 different sources. Airbnb charges flat 10% commission from hosts upon every booking done through the platform and 3% of the booking amount as transaction charges from traveler upon every confirmed booking. They also decouple revenues from the considerable operating expenses of traditional lodging establishments and provided it with significantly smaller operating cost than hotels, motels and bed and breakfasts. Rather than expenses related to owning and operating real estate properties, Airbnb’s expenses were that of a technology company. Moreover, Airbnb made a change in the consumer experience. They believed Airbnb guests desired a community and a closer relationship with the host. If the hosts help theguests live like a local and help them to explore lesser known secret places, Guests feelwelcome and at home. This is one of the areas where Airbnb blows away competitors with their expressive content. Visiting the stories section in the website will enable users to get an insight into the world of hosts and guests as they share their stories and experiences. These stories are meant to engage and forge an emotional attachment withthe readers.
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