Introduction
Airbnb is a hospitality platform that provides accommodation services for its clients. Service providers use the Airbnb business to rent out their residences to travelers. Clients source the accommodation service from service providers through the Airbnb website or application. This Airbnb business is unique since it has provided affordable housing to its clients. It has capitalized on the increasing number of people seeking short-term accommodation in foreign places. Airbnb is a booming business, with an $8.399 billion revenue by the end of 2022. The business’s operation model further guarantees an improved revenue generation trend in the coming years. Airbnb has a tremendous international profile, currently listed in more than 200 countries. This company has also maneuvered through changing industry trends, such as economic challenges during the Coronavirus pandemic. I chose the Airbnb company because of my passion for the hospitality industry. I preferred the company due to its integrated and interactive business model. Airbnb is a promising venture as it provides a timely solution to the rising demand for affordable short-term housing.
Context
Digital economy development has proved fundamental in the efficient operation of online businesses. Airbnb is a benefactor of developing digital technologies such as big data and artificial intelligence. Businesses have significantly developed due to improved digital economies in payment, convenience, and query resolution during business interactions. Airbnb has improved its service delivery through secure online payment (Chua et al., 2019). The current digital economy has upheld customer security against potential cybersecurity activities. Most multinational organizations, such as Alibaba and Yahoo, have encountered data breaches compromising client data. Electronic currency incorporated in Airbnb’s business operation ensures fast payment delivery to service providers, protection of customers from fraud, and usage of numerous currencies. Airbnb enjoys the customer proximity offered by the revolutionized digital economy. The company has developed applications and websites which are easily accessible to customers and service providers through their electronic gadgets. The applications have been developed in the numerous countries of Airbnb’s operation and ease their service provision. Digital economy development through applications and software has ensured Airbnb’s reliability. Airbnb has significantly developed due to its vigorous advertisement strategies. It spent about $100 million on advertisements in 2022 (OECD library.org). The developed digital economy has personalized user advertisements to achieve more audience. Airbnb has achieved vigorous activity through online advertisement. More recently, digital advertisement has been synchronized with the user browser data to deliver specific target display advertisements. Key developments in the digital economy have improved the business operations at Airbnb through user security, efficient advertisement, and improved accessibility.
Figure 1 Airbnb operation model (fourweekmba.com)
Figure 2 Secure online payment methods (Vectorstock.com)
Focus
Airbnb’s business operates on a peer-to-peer business model. A peer-to-peer model enables a client and customer to exchange services with mediation from a third party. The accommodation business is spread worldwide, which creates unique challenges in specific geographical locations. Airbnb has had to deal with various local laws in its areas of operation. The clients can also be unmanageable by vandalizing property or uncontrolled partying, which causes noise to their neighbors. Late cancelations from the clients or inconveniencing cancelations from the host have led to the modification of Airbnb’s business model. These operations challenges affect the company’s turnover. The peer-to-peer model is developed to mediate client and customer expectations. Airbnb’s business model has been challenging to fabricate due to its inception in an underdeveloped market. The business has improved from a trial-and-error learning mechanism through operational challenges.
Figure 3 Vandalism by clients (Wonderful wanderings.com)
Airbnb’s peer-to-peer model has tackled its challenges affecting turnover through value proposition and creation. The accommodation platform’s peer-to-peer model has created value through the link-up of like-minded persons (Novik, 2022). It has synchronized the client’s and service provider’s needs through risk mitigation, safe monetary transactions, and convenience. The booking platform links the accommodation owners to many customers, assuring robust bookings. Airbnb clearly describes the premise to the client, offers a communication channel between the host and client, and lays clear regulations for both parties. The hosts, through the platform, can identify suitable guests. All Airbnb users are verified to assure the host of follow in case of vandalism and other damages (Chua et al., 2019). The peer-to-peer model at Airbnb has favorably evolved to incorporate a P2P curriculum vitae where hosts can verify the history of their prospective clients’ history before accommodation. The peer to peer to peer business model has also effectively handled late cancelations from both sides (Kwang Ho-Le et al., 2019). Airbnb’s regulations incorporate penalties for late cancelations from either party to eliminate inconveniences. This business model also ensures discipline where Airbnb withholds deposits from customers for 24hrs in case of vandalism of the hosts’ property (Tussyadiah et al., 2016). Airbnb has further crafted the peer-to-peer model to solve client and host challenges through third parties. Third parties such as Guesty, Keysafe, and Hostmaker take up the extra services in case of changes in the normal accommodation arrangements. Lastly, the Airbnb business has had to deal with the changing legal landscape in its areas of operation. Airbnb’s peer-to-peer business model has provided a checklist to ensure the hosts comply with the building, municipal, and state regulations.
Conclusion
Airbnb has incorporated the current digital business strategies to revolutionize the accommodation industry. It has solidified its market share through convenient, fast, affordable customer service. Airbnb has utilized digital economy advancements such as secure payment, effective advertisement techniques, and improved accessibility. Encrypted payment methods have assured customer safety from cyber security during payment times. Advanced advertisement techniques such as search engines and email have improved Airbnb’s outreach. Airbnb has ensured its accessibility to all geographical locations through the simplified booking procedures on its website. Its peer-to-peer model has evolved to unify the hosts and clients. Airbnb’s operation model assures clients’ safety, compliance with host regulations to avoid vandalism, and a satisfying experience at the residence. The guest and the host can evaluate each other’s services and compliance through reviews listed by their fellows. Guests obtain reviews onsite from fellow guests, while the hosts obtain equal information about their prospective clients. Airbnb has improved its operation mechanisms through an efficient peer-to-peer business model.
References
Novikov, O. (2022). Peer-to-Peer Business Model: Navigating between Social and Economic Pressures. International Journal of Trade, Economics, and Finance, 13(2). http://www.ijtef.com/vol13/723-UT0037.pdf
OECD library.org. The digital economy, new business models and key features https://www.oecd-ilibrary.org/docserver/9789264218789-7-en.pdf?expires=1679912414&id=id&accname=guest&checksum=90E61097763FFFB8199BBFCE24B3227D
Kwang Ho-le and Dongee Kim (2019). A peer-to-peer (P2P) platform business model: the case of Airbnb. https://www.researchgate.net/publication/331289315_A_peer-to-peer_P2P_platform_business_model_the_case_of_Airbnb
Tussyadiah, I. P., & Pesonen, J. (2016). Impacts of peer-to-peer accommodation use on travel patterns. Journal of travel Research, 55(8), 1022-1040. https://journals.sagepub.com/doi/pdf/10.1177/0047287515608505
Chua, E. L., Chiu, J. L., & Bool, N. C. (2019). Sharing economy: An analysis of Airbnb business model and the factors that influence consumer adoption. Review of Integrative Business and Economics Research, 8, 19. https://buscompress.com/uploads/3/4/9/8/34980536/riber_8-s2_03_h18-019_19-37.pdf
write