Case Study Air Bnb

S T R A T E G Y  M A N A G E M E N T

Pr. Nathalie Garson

UCLA case study: AIR BNB

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Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it receives percentage service fees from both guests and hosts in conjunction with every booking. It has over 3M lodging listings in 65,000 cities and 191 countries, and the cost of lodging is set by the host.

However, Airbnb may have the control over the rental holiday market but it appears in a red shark market where competition is high. Who are the competitors and are they a threat for Airbnb?

The rental market is comparable is a red ocean:

Airbnb enter in 2008 in a market where high competition was on point but not a big problem. It soon began to become a precursor and main actor in the rental market: the “peer to peer market” has revolutionized the economy: you can rent anything for a lower price than the actual market. Its competitors are doing quite the same thing but with different aspect, it remains direct competition.

Airbnb main competitors are:

- Wimdu

- Roomorama (crashed in July 2017)

- 9flats.com

- Couchsurfing

We can also mention all of its indirect competitors on the market that are all the hotels, the chains and so.

Our case study mention how competitors are « very similar ». However, Airbnb knew how to make a difference in the market because the company added a value proposition to its service so customers are more into it.

Analyzing the different competitors, we realize they may have good point. For instance, Wimdu taking only 3% commission whether Airbnb takes 12 (!), they all propose a lot of locations all over the world and so.

The only difference and added value that Airbnb brings is trust:

While it main competitors are rated with 2/5 or 1/5 in the “trust” category, Airbnb obtain a major 4/5.

It shows us how much people believe in it. Airbnb is the only one which has verified ID process: guests and hosts verify their identity by connecting their Airbnb profile to their social networks and scanning their official ID or confirming personal details, things that it is the only one to do. The company improved customer verification, million-dollar damage insurance, authentic guest reviews, and social of these factors helped Airbnb create a highly scalable business model. Customers (hosts and renters) are both convince with Airbnb, more than with other website such as Wimdu who propose the exact same thing but with way less security. And customers feel it: the amount of negatives comments and bad experiences they got made them bankrupt.