Airbnb, a successful digital platform

There are several categories in the business model, and the digital platform is one of the most prosperous forms in recent days. The further development of modern technologies and sharing economy promotes the emerging of new business models based on digital platforms (Täuscher et al., 2018). Platforms provide a new type of marketplace for producers and buyers where people and organizations can obtain and share information. The mission of Airbnb is to make a world where anyone can belong anyplace, and it pays attention to starting an end-to-end travel platform that will deal with all aspects of your excursion (Airbnb, 2019). Airbnb is a well-known example of a platform business model, which is an effective and inevitable sharing economy stage in the occasion convenience lodging sector.

The financial performance

By 2014 Airbnb has arrived at a figure of more than 11 million appointments. The site presently offers more than 600,000 units in 34,000 urban areas in 192 nations. Other than being helpful for travellers, Airbnb is one of the most smoking innovation new businesses in the U.S. and is esteemed at around 10 billion dollars (Zekanovic-Korona et al., 2014). The great success of Airbnb is based on seizing the opportunity of sharing economy. Hosts share their listings to provide different choices for consumers, and customers look for the room information they need and make decisions according to reviews. Besides, lower price and various listings make Airbnb stand out from typical hotel industry.

The competitive position

Although Airbnb is not a leader in the lodging industry, it is a top contender in traditional hotel models with $35 billion world valuation. What’s more, its yearly deals outperformed Hilton’s in 2018 (Gessner, 2019).

The rise of Airbnb which encourages property owners to share their homes with others through technological platforms has a tremendous negative impact on the traditional hotel industry. From 2013-2018, the market share of significant lodging brands InterContinental Hotels Group (IHG), Hilton, Marriott, Choice Hotels, Wyndham, La Quinta, and Hyatt, has been continuously compressed by Airbnb. Besides, on account of the entry of Airbnb in the ten cities where it has the largest market share, the traditional hotel industry was confronted with 1.3% fewer hotel evening rooms booked and a 1.5% misfortune in hotel profit (Knowledge, 2018). The emerging of Airbnb brings high pressure to the hotel industry, which causes them to make some changes in order to occupy more market shares.

The key to the company to achieve big success is to keep pace with the times. Facing heavy competition from Airbnb, many traditional companies are transforming in terms of sharing economy and digital economy background. In order to face the challenge of Airbnb, Marriott a traditional hotel chain starts to change its operating format. For more information to click the link below.

https://www.forbes.com/sites/jennawang/2018/05/31/marriott-competes-against-airbnb-with-new-home-rental-venture/#699dc4325a80

Competitive advantages of Airbnb

Transparency is one of the strongest competitive advantages between online platforms and traditional service providers in the lodging industry. Consumers can form a holistic insight through the digital platform without actually walking into the accommodation. Consumers can easily pick out the ideal accommodation they want among thousand of listings with the help of comprehensive online reviews.

The second competitive advantage is lower price. Price is often an important factor affecting consumer behavior. There is also a big difference in prices between hotels and airbnb listings in the same area. In my opinion, the main source of price differences is service quality, which includes the 24/7 check-in, housekeeping and toiletries to name a few. However, the target market of Airbnb is travelers and 60% of Airbnb guests are millennial ((Ipropertymanagement, 2020). Those consumers prefer spending their money in visiting touristic places while they travel instead of expensive hotel rooms.

The last competitive advantage is the way that how they create values. For the latter, values are made outside the company and transfer into the inside. It is the external community that creates values for the company with the support of digital platforms. Airbnb built a direct bridge between suppliers and consumers which fix the supply and demand imbalance. Besides, Airbnb helps people to make full use of their under-utilised assets. From the perspective of consumers, compared with the traditional hotel chain, Airbnb brings more choices to consumers, such as flexibility of price and room accessibility for special events or festivals.

Future implementation

Although Airbnb still has an intensive potential capability to grow shortly, some detailed issues need to be tackled for the upcoming problems. In my opinion, the numbers of hosts who registered on Airbnb only focus on income instead of customer satisfaction. They still believe that they aim to provide places or just beds to meet consumer basic needs based on hosts’ spare properties. However, with more and more new entrants coming into the market, it is considerate service instead of vacant rooms that help them stand out from thousands of listings. In other words, the first measure hosts need to take is to improve the service for customers, such as decorating the room environment and making travellers feeling at home. Then, from the perspective of the firm, there are risks in the application of big data. The organization should take precautions for the customer database in light of the fact that once the problem of customer information leakage happening, the entire trust system it built will breakdown and hard to recuperate.

References

• Airbnb. (2019, June 28). Airbnb 2019 Business Update. Retrieved March 5, 2020, from https://news.airbnb.com/airbnb-2019-business-update/
• Gessner, K. (2019, March 25). Ahead of IPO, Airbnb’s consumer sales surpass most hotel brands. Retrieved March 5, 2020, from https://secondmeasure.com/datapoints/airbnb-sales-surpass-most-hotel-brands/
• Ipropertymanagement. (2020, February 26). Airbnb Statistics [2020]: User & Market Growth Data. Retrieved March 5, 2020, from https://ipropertymanagement.com/research/airbnb-statistics
• Knowledge, H. W. (2018, February 27). The Airbnb Effect: Cheaper Rooms For Travelers, Less Revenue For Hotels. Retrieved March 5, 2020, from https://www.forbes.com/sites/hbsworkingknowledge/2018/02/27/the-airbnb-effect-cheaper-rooms-for-travelers-less-revenue-for-hotels/#282581c6d672
• McCarthy, N. (2018, January 23). Is Airbnb Really Cheaper Than A Hotel Room In The World’s Major Cities? [Infographic]. Retrieved March 5, 2020, from https://www.forbes.com/sites/niallmccarthy/2018/01/23/is-airbnb-really-cheaper-than-a-hotel-room-in-the-worlds-major-cities-infographic/#6a02b5d78acb
• Täuscher, K., & Laudien, S. M. (2018). Understanding platform business models: A mixed methods study of marketplaces. European Management Journal, 36(3), 319–329. https://doi.org/10.1016/j.emj.2017.06.005
• Zekanovic-Korona, L., & Grzunov, J. (2014, May). Evaluation of shared digital economy adoption: Case of Airbnb. In 2014 37th International Convention on Information and Communication Technology, Electronics and Microelectronics (MIPRO) (pp. 1574-1579). IEEE.