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Olivia GrabelleCase 2: Airbnb in 20181.Illustrate and compare the business models for Airbnb, large hotel chains such as Marriottand Hilton, and bed & breakfast operators? AirbnbLarge Hotel ChainsBed & BreakfastsCustomer ValuePropositionEnables homeowners to rentto travelers and earn incomeProvides easy access totravelers who want to rentprivate spaces at a low costProvides travelers withlistings all over the worldPersonal ratings/reviewsprovide travelers withinformationHosts can choose who theyrent their space out toLarger facilities thataccommodate guests withsingle or multiple roomsProvides amenities like spas,fine-dining, fitness rooms, etc.Provides travelers with a“vacation experience”Widely known and trustedSmaller than Airbnb andHotelsHomeowners provide travelerswith rooms in their ownhomesLocated in more rural areasCozy, home-like environmentEstablishes a more personalrelationship between the hostand the travelerProfitPropositionEarns commission fromcharging hosts 11% feeLower operating expensesthan hotels, motels, and bedand breakfastsHas a revenue-cost-marginstructure of an onlinemarketplaceHigh operating costs: wages,property, food, and utilities(59% of industry’s total cost)Subject to licensing fees,regulations, and taxationAlso subject to regulations,licensing fees, and taxationOperating costs lower thanhotelsPrices vary according tolocation, 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. AirbnbLarge Hotel ChainsBed & BreakfastsStrengthsCheaper alternative to hotelsCustomers have the luxury tochoose where they want toRecognized across the globe;brand awarenessProvide amenities Airbnb andOpening a B&B is relativelyeasy/cost-effective; most arejust converted residentialproperties