Case 1 Airbnb in 2020 Case study analysis questions

 

 1.     How would you illustrate and compare the business models for Airbnb, large hotel chains such as Marriott and Hilton, and bed & breakfast operators? Use the example chart in the textbook for business models as a guide (Concepts & Connections 1.1)

ASPECT	AIRBNB	LARGE HOTELS	Bed & Breakfast
Value Proposition	Online platform Unique experience	Reliable and consistent Wide range of services	Cozy and homely atmosphere
Customer	More affordable	Diverse customer	Intimate experience
Key activities	Host acquisition, property listing	Reservation systems, property management and customer service	Provides breakfast
Key resources	Online platform and mobile app, social media	Global network	Personal touch, local knowledge and guest reviews
Regulatory considerations	Subject to local regulations	Compliance with hospitality standards and local regulations	Compliance with local zoning and licensing

 

2.     What was Airbnb’s response to the COVID-19 pandemic? Does it appear that the company’s business model is more resilient than that of its hotel chain rivals?

·       Refund and cancellations: Adjusted refunds for reservation policy from March 14 to end of June 2020

·       Cleaning Protocols: Establish cleaning and safety protocols and guidelines for its hosts.

·       Virtual Experience: Virtual guided tours of cities were offered for patrons to book and experience from their own home.

·       Long-term stays: Offers long-term stays targeting remote workers and digital nomads.

·       Superhost Relief fund: Airbnb established a 17-million-dollar Superhost Relief Fund to provide grants to eligible Superhosts who experienced financial difficulties due to COVID related cancellations. Superhosts are hosts who meet criteria and provide exceptional hospitality.

      As to whether Airbnb’s business model is more resilient than that of its hotel chain rivals, the COVID pandemic has impacted the travel and hospitality industries and has affected both businesses. Airbnb’s business model demonstrated some reliance due to its flexibility and ability to adapt to changing travellers’ preferences. Airbnb’s Diverse Inventory caters to different types of travellers, including those seeking secluded or remote properties during the pandemic. Airbnb’s flexible cancellation policies adjustment during the pandemic helped reassure travellers and thus encourage bookings.

3.     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.

	Strengths	Weaknesses
Large Hotel	·       Consistent ·       Global presence ·       Brand recognition ·       Amenities ·       Loyalty programs	·       Higher cost
Bed & Breakfast	·       Personalized service ·       Unique atmosphere ·       Local knowledge	·       Limited ·       Lack of consistency
Air BNB	·       Diverse Inventory ·       Flexible	·       Quality and consistency ·       Regulatory issues (in some countries) ·       Safety concerns ·       Cancellation policies

 

4.     In what ways has the lodging consumer changed, and how does Airbnb’s customer value proposition meet this change?

a.)   Uniqueness: Travelers seek unique experiences in their travels. Airbnb offers a wide range of locally hosted properties, including treehouses, houseboats, and historic homes.

b.)   Flexibility: Travelers seek personalized booking that tailors their holiday. Airbnb has a filter section on its website that targets specific criteria like location, price, property type, and amenities. Guests can also communicate directly with hosts and ask their questions now to the host.

c.)   Reviews and Recommendations: Most travellers based their bookings on peer reviews and recommendations before booking. Airbnb features user reviews and ratings for both hosts and properties. These reviews help travellers make informed choices.

d.)   Budget concerns: Economic uncertainty has made many travellers stingier in choosing their accommodations. Airbnb offers a wide range of price points, from budget-friendly to luxury accommodations.

e.)   Safety and Hygiene: Travelers are more conscious of safety and hygiene through the pandemic. Airbnb introduced enhanced cleaning protocols and COVID safety guidelines for hosts.

5.     What key factors may determine the success or failure of Airbnb?

a.)   Supply and Demand

b.)   Trust and Safety

c.)   User Experience

d.)   Competition

e.)   Regulatory Environment

6.     What recommendations would you make to Airbnb to improve its competitiveness in the accommodation market while mitigating any current and future risks?

·       Travel Packages: Airbnb should explore partnering with airlines and local tourist operators to offer bundled travel packages.

·       Environmental Responsibility: Encourage hosts to adopt an eco-friendly practice.

·       Innovation: Utilize Artificial Intelligence to enhance personalization, recommendation, and user interface, making it easier for guests to find the perfect accommodations.

·       Virtual Reality: Provide VR technology to allow users to explore the property before booking.

·       Loyalty Programs: Improve the loyalty program, offering more incentives, discounts, and benefits for frequent users.

 

Thompson, A. et al (2022) Crafting and Executing Strategy: The Quest for Competitive Advantage, Case Teaching Note pp, 307-317.