Airbnb Case Analysis.docx - Olivia Grabelle Case 2 Airbnb...

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Olivia Grabelle Case 2: Airbnb in 2018 1. Illustrate and compare the business models for Airbnb, large hotel chains such as Marriott and Hilton, and bed & breakfast operators? Airbnb Large Hotel Chains Bed & Breakfasts Customer Value Proposition Enables homeowners to rent to travelers and earn income Provides easy access to travelers who want to rent private spaces at a low cost Provides travelers with listings all over the world Personal ratings/reviews provide travelers with information Hosts can choose who they rent their space out to Larger facilities that accommodate guests with single or multiple rooms Provides amenities like spas, fine-dining, fitness rooms, etc. Provides travelers with a “vacation experience” Widely known and trusted Smaller than Airbnb and Hotels Homeowners provide travelers with rooms in their own homes Located in more rural areas Cozy, home-like environment Establishes a more personal relationship between the host and the traveler Profit Proposition Earns commission from charging hosts 11% fee Lower operating expenses than hotels, motels, and bed and breakfasts Has a revenue-cost-margin structure of an online marketplace High operating costs: wages, property, food, and utilities (59% of industry’s total cost) Subject to licensing fees, regulations, and taxation Also subject to regulations, licensing fees, and taxation Operating costs lower than hotels Prices vary according to location, room size, season, etc. 2. What are the general strengths and weaknesses of a) large, hotel chains such as Marriott and Hilton, b) bed & breakfasts, and c) Airbnb? Explain how you would compare and contrast those businesses. Airbnb Large Hotel Chains Bed & Breakfasts Strengths Cheaper alternative to hotels Customers have the luxury to choose where they want to Recognized across the globe; brand awareness Provide amenities Airbnb and Opening a B&B is relatively easy/cost-effective; most are just converted residential properties
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