GBA-525 Case 1- Airbnb in 2018 - GBA-525 Case 1 Airbnb in 2018 University of Alabama 1 After reading the case it is very apparent the business

GBA-525 Case 1- Airbnb in 2018 - GBA-525 Case 1 Airbnb...

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GBA-525 Case 1: Airbnb in 2018 University of Alabama
1. After reading the case, it is very apparent the business models for Airbnb, large hotel chains such as Marriott and Hilton, and bed & breakfast operators are very unique in their own ways. There are some very obvious examples when looking at the three models. For example, Marriott is one of the largest hotel companies in the world, so they’re able to leverage newly found and existing efficiencies on a much larger scale than an independently ran bed and breakfast. Furthermore, their footprint allows them to garner more respect and trust from the majority of travelers due to the size of the companies themselves. Lastly, hotels offer far more amenities than the other two business models. Since they’re attracting more ‘seasoned’ travelers, their guests are usually traveling for business and appreciate luxuries not normally expected. This includes spas, workout rooms and technology centers, to name a few. Bed and breakfast operators, however, operate in a different type of climate. These operators usually are renting out rooms in a house to those who are staying on a leg of a larger trip. Usually these trips are designated for recreation, thus not having quite the same need for amenities those staying at hotels expect. Travelers staying at bed and breakfasts are expecting a minimal frills experience for a lesser cost and simplified experience. These types of travelers expect to get a nice bed, a hot shower and perhaps a quick breakfast. Overall, those staying at a bed and breakfast seem to come to expect and enjoy a more personalized experience, as opposed to a stay in a chain hotel. While the two methods of hospitality seem very different, their operating expenses are very similar in some ways. For example, according to a 2017 study (below), expenses such as depreciation, marketing, rent and utilities were with a few percentage points of one another. However, miscellaneous expenses and wages drew a larger difference, with hotels having to account for a larger share of their revenue in both areas. When looking at the Airbnb model there’s a lot of grey area, so to speak. Furthermore, this depends on the execution of the business model itself, which we will cover later in the analysis. Expenses such as regulatory taxes and feeds are virtually non-existent for the owner of the dwelling being used for the purpose of hospitality because it’s a habitat that is incurring those fees already by those who own it. In short, nearly all of the fees associated with the property being leveraged in an Airbnb scenario is already exist in a residential tenancy. These fees can include trash services, water usage, property taxes and utility fees, all which are normally expected. Additionally, Airbnb scenarios are left without the fees associated with cleaning or concierge services. On the other hand, hotels and bed and breakfast establishments are subject to these types of fees that regulate how they operate as an actual business, which provides a clear advantage to the Airbnb environment and industry landscape. Since both hotels and bed and breakfasts are

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