Airbnb is a community-based online platform that involves recording and renting houses. It is associated with the connection of the travellers and the homes and the facilitation of the renting process without owning any rooms (Chua et al., 2018). Airbnb started back in 2008 with the pioneers facing many challenges, but now it has attained over 1500000 listings in various countries. Individuals can now make bookings online and through mobile devices, and the company’s worth now risen. The company utilized its business model to succeed in the competitive market. It has the capability of pooling together both buyers and sellers through online services. By doing so, Airbnb has significantly increased the customer’s confidence compared to other accommodation offering companies. The advantages that customers can secure in Airbnb involve; a balanced relationship between buyers and sellers, low rates of commission, the flexibility of sellers and buyers, and the opportunity to get a better relationship between accommodation characteristics and the traveller’s wants (Chang, 2020).
According to Gerwe, 2021 Airbnb through online platforms provide a connection for buyers and sellers without physical interactions. The sellers can showcase their accommodation services online, and buyers get to choose from them. Airbnb provides collaborative consumption. It is a business model that gives an individual the ability to coordinate the purchase and supply of a product at a fee in a place where the interaction is supported by technology.
However, the company has faced challenges, such as competition and scalability (Bang et al., 2021). As a global phenomenon, Airbnb is facing regulation challenges. Many tourism destinations, more so those with significant and regular increasing demand, will always encounter problems due to online peer to peer accommodation business services. They are discussed below;
The presence of peer-to-peer accommodation brings important structural changes to tourist destinations. This is because Airbnb transforms how visitors are distributed in the destination. The tourists always use residential areas with poor infrastructure, and the residents impact a lot of pressure on the regulators of urban centres and therefore restricting the presence of the tourists. The regulators ran short of finances for such feedback because sometimes, back peer to peer accommodation was not paying equal taxes and charges as professional and licensed tourists accommodation givers (lee, k and Kim, 2019).
According to krouk and Almeida, 2021 due to the unavailability of safety regulations for the peer-to-peer accommodation records, personally traded areas can increase dangers for tourists. Professional accommodation providers always work in line with the legal requirements, including making modifications to cater to more health and stringent standards. The moment peer to peer accommodation was made available to the masses, and such rules didn’t apply to Airbnb. Many people insisted that living in areas recorded on peer-to-peer accommodation network businesses was risky for guests. The tourists with special needs were also affected. The regulators in many nations need professional accommodation providers to have a certain number of rooms that can not be accessed. These rooms can be set aside to accommodate people with special needs like them that need wheelchairs or brail labelling (Foss and Saebi, 2018). Many peer-to-peer accommodations have not provided for these requirements though Airbnb has tried to give more information on the availability of such spaces for people with special needs.
The rentals that the company advertises on its site fall foul of the local housing and laws and regulations. For instance, some individuals cannot rent out their house for short periods unless they stay in the property. There are also taxes issues where those individuals who are renting the apartments are expected to pay tourist tax. Unsurprisingly, Airbnb makes it easy for tourists to access cheap accommodation in their desired locations which massively minimizes the prices charged by hotels and B&Bs.
When the tourists use spaces secluded for residents, this can significantly cause a burden to the parking areas. The town planners do not provide for such additional demands for space in the case of tourists, causing inadequacy (Chua et al., 2019). The availability of guests can also transform the way space is being consumed, negatively affecting the standards of life of the area residents. Additional noise is also another challenge affecting the residents because the guests do not have a sense of care for the area’s residents.
Regulatory responses need to account for the mentioned challenges at a given station. Such responses will be discussed below;
A mandatory registration system was introduced to link the hosts to the national identification number. The short-term accommodation was also limited to, for example, 50 days per property for hosts without a permit. Furthermore, Airbnb began to promote its new neighbourhood tool, which the locals could use to share various issues concerning listing or noise complaints. The negotiated agreement involved tools that restricted illegal hosts from conducting business on platforms. The rules were campaigned to promote local rules, effective home-sharing and the ways of being a decent tourist (Krouk and Almeida, 2021).
Hosts could have a maximum of five rooms located at their main residence without a permit. Hosts could also register with a minimum fee and announce that the spaces recorded are in line with the safety and health requirements.
The covid 19 pandemic contributed to a significant negative effect on Airbnb’s global supply. The pandemic affected various departments of the Airbnb business model as discussed below;
From January to August 2020, Airbnb made $2.5billion in income, resulting in a loss of USD 696.9milliom. The revenue decreased by 32% compared to January to September of 2019 (Gerwe, 2021). Due to the impact, Airbnb had to forsake a quarter of its staff to raise immediate finances close to USD 2billion to support its operations. The most reporting in Airbnb amidst the covid 19 is based on the demand side, the fall in bookings. Airbnb co-hosts and hosts were already amazed by the increased number of returns and the increasing Airbnb market shortly before they were shocked by covid 19, which so they watched their bookings being cancelled one after the other. One host, for example, reported, “we are shocked to say that hundreds of bookings have been cancelled. I have not calculated the number now, but for example, we had a full week of arrivals this week, and now tomorrow there’s no one coming.”
According to Bang et al., 2021, Covid 19 disrupted the tourism industry and improvement patterns. The number of international tourism arrivals in slovania in 2020 decreased by 70% compared to the previous year, 2019. The desire for short-term rentals for tourists also decreased dramatically—a small fraction of accommodation facilities’ owners resolved to sell their property and invest in other areas. Many property owners still believed that tourism would bounce back immediately after the pandemic. During the covid 19, property owners realized a great potential in the short-term rental market. Many therefore decided to pull out of their long-term rental market, which was being used by locals and began to offer them to the guests. Because the governments had not put any regulations in that matter, the residents were affected, thereby being pushed out of the city centre and finding it difficult to look for long-term rentals. The rental prices also increased with the increase in property sale prices.
One of the most important requirements for tourism is mobility. Unfortunately, covid 19 put a stop to mobility. People with disabilities were equally affected as the people without disabilities. During the covid 19, movements were minimized and also interactions. People with disabilities who need personal assistance were ignored due to the distancing rule of covid 19. Overall, their movements were reduced to a slightly lower percentage (Krouk and Almeida, 2021).
The covidv19 had a significant effect on events. Event is defined as anything unusual that is happening. It must have been planned many or a few days before. Events include; games, conferences or meetings. In March, when coronavirus was declared a pandemic, the event industry was seriously affected. This led to the postponement and cancellation of events. The pandemic affected both local, regional, national and global events. One of the most notable events postponed was the Tokyo 2020 Olympic games. The pandemic also made Airbnb ban hosting parties or events at their premises. The bans prohibited all gatherings exceeding 16 people. Airbnb went further and cancelled all the existing bookings and stopped the possibility of any new bookings. The bans led to a notable drop in the company’s returns in 2020 and 2021 (Gerwe, 2021).
Due to the effects of the pandemic, home rentals have overperformed hotel accommodations in the global market. It’s evident that people no longer want to travel; they don’t want to rent in major cities or crowded hotels. There is no change in tourists’ desire and unless these changes are factored in accommodation companies will not rise again.
Airbnb has focused on ensuring that guests have their kitchen to safeguard lives amidst the deadly disease. New cleaning guidelines are also a requirement. Airbnb should focus on a living mentality and not a travelling mentality. Nowadays, people are working from home, so getting a living room will be the best for them.
The Airbnb host community is large and diversified, with over 5 million spaces to rent around the world. Airbnb has been using shared space, private rooms and the entire home as the only property. The company should now add new property types like a vacation home, unique space, B&B and Boutique.
Conclusion
Airbnb has been in existence for a very long period. Everybody is aware of the Airbnb model, and many people know of the negative effects created by the presence of many properties in areas with a higher demand for tourists. Airbnb has been gaining a competitive advantage in the market. The effects of covid 19 are also feasible in the company’s operations. Many strategies have been laid out to ensure that the company returns to its normal state. It can then be concluded that Airbnb is only the large scale trading of short term rentals globally, and despite the challenges, it has its roots deep.
References
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.
Chang, H. H. (2020). Does the room-sharing business model disrupt housing markets? Empirical evidence of Airbnb in Taiwan. Journal of Housing Economics, 49, 101706.
Lee, K. H., & Kim, D. (2019). A peer-to-peer (P2P) platform business model: The case of Airbnb. Service Business, 13(4), 647-669.
Foss, N. J., & Saebi, T. (2018). Business models and business model innovation: Between wicked and paradigmatic problems. Long-range planning, 51(1), 9-21.
Krouk, R., & Almeida, F. (2021). Exploring the Impact of COVID-19 in the Sustainability of Airbnb Business Model. arXiv preprint arXiv:2101.00281.
Bang Nong, N., & Ha, V. H. T. (2021). Impact of Covid-19 on Airbnb: evidence from Vietnam. Journal of Sustainable Finance & Investment, 1-14.
Gerwe, O. (2021). The Covid-19 pandemic and the accommodation sharing sector: Effects and prospects for recovery. Technological Forecasting and Social Change, 167, 120733.
write