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Air B N B Memo

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  Introduction This report discusses the business analysis of the company Airbnb that is facing few challenges. The purpose is to critically analyze those challenges in light of the company’s strength along with the recommendations based on the analysis carried out. Major Problems & Issues The business model of Airbnb is based on the domestic properties allowing people to use their idle and spare space to earn some money. It enables customers to have more options based on the available budget. So Airbnb has bigger but domestic market that at times may offer limited sales and available rooms. Some customer might find services as limited and privacy issue is the serious concern in most cases. While on the other hand established hotel properties have a repo and customers know the range of services they will get. Most of the customers opt because of the reputation and goodwill of the property in the industry and market. Such established chains can have diversified product folios with a large global network having dedicated services and availability of the rooms. Innovation to meet customer’s changing demands and budget levels is the main area of concern through re venue management. So a continuous improvement in products, facilities and services take place so that customers’ can enjoy a different experience every time. However the biggest idea of Airbnb is to connect hosts with customers via digital platform. It helps the domestic users to earn by facilitating such customers even without any huge capital investment or having to own a big commercial property. Based on this idea the transaction costs are comparative low as compared to other commercial properties. But despite all of these issues Airbnb has difficulty in having customers’ loyalty and can have a low number of repeated customers. Major hotel chains have huge operating costs and it might not be possible for them to compete Airbnb on rates being offered. Moreover, despite having lower operating costs, set ups like Airbnb can also vail tax advantage as a sole proprietor. Analysis Following is the comparison of Airbnb with other hotel chains and other operators offering similar sort of services:- Airbnb Hotel Chains B & B operators  Customers’  prospective    Based on the feedback of the old customers and visitors    Can offers facilities for the large facilities    Local sight seeing    Provide value for money services    Have a history of  providing such services and at times at an international level    Huge product lines for alternate income    Different categories of rooms/suites/cottages    Purpose built  properties to facilitate customers    People admire the setups and enjoy being in home feelings    Simple model of services offering stay and  breakfast only Profit generation    It has low operational costs and tax  benefits so can derive more profit margins    Expensive due to  business model dedicated for commercial use offering expensive facilities    Prices can vary based on the demands by the customers
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