Questions for Case CH 2 Airbnb Anna Martynova Instructions: Expand the tables so you have enough space for a complete answer… bullet points are fine. 1. Using the example chart in the textbook for business models, illustrate and compare the value proposition for Airbnb, large hotel chains such as Marriot and Hilton and bed & breakfasts. Large Hotels Bed & Breakfasts (Pensionen) Affordable accommodation Customer Value Proposition Extensive amount of value added services Profit Formula Revenues (hotel+spa, restaurant, etc.)-costs of running the facilities Revenues(hotel rooms)costs of running the facility Profit Margin High Medium Airbnb Extensive variety of accommodation options with direct host contact Service fees-costs of running a platform Highest 2. Compare and contrast the general strengths and weaknesses of large, hotel chains such as Marriot and Hilton, bed & breakfasts, and Airbnb. Large Hotels Strengths Variety of value-added services Safe and supervised Large number of rooms Weaknesses High prices can scare people Hard to be flexible with properties Bed & Breakfasts (Pensionen) Personalized atmosphere Cheaper than large hotels Airbnb Limited number of rooms High work load for little staff Regulations Imitators Inconsistency among hosts String brand image No ownership Competitive prices 3. How has the consumer changed and how does Airbnb’s customer value-proposition meet this change? When staying in a hotel turns out to be way too expensive and living in a hostel with other 100 people in a room doesn’t sound pleasant, the third option-Airbnb comes. The fact that a traveler can look at many options and find accommodations which suits him better either it is a bohemian or modern apartment is fascinating. Consumers have started to value direct and easy contact even more in the last years. This is when Airbnb stepped in and offered something that people have been waiting for. 4. What key factors may determine the success of Airbnb? Airbnb was able to win trust with its reviews and feedback systems, gain loyalty with rewards, and increase the user base with referential programs. Also, the sharing economy is one of the keys. They don’t own any actual property and can therefore be flexible. They provide variety of accommodation options at competitive prices. Airbnb is digital and this is the best place where to reach more users. 5. What recommendations would you make to Airbnb to improve its competitiveness in accommodation market while mitigating any current and future risks? My suggestion would be to work with hosts more to make sure there are no accommodations options with too many negative reviews as it might be spoiling the brand’s image. Also securing the travelers and imposing stricter rules for conduct.