Report on Presented E-commerce Business

Airbnb

Submitted By: Group D, Sec A

Priyanka Sah
Imu Regmi
Sigma Ghimire
Anu Phuyal
Rashmi Pokharel

Submitted To:
Mr. Rimesh Rajbhandary
Faculty of E-commerce, Ace Institute of Management

16th February, 2022

Introduction
Airbnb is a company that provides "air bed and breakfast" services. It's an online community
marketplace aimed at connecting vacation rental owners with their guests. It's a program that lets
property owners rent out their spaces to tourists. Private rooms for single guests, shared spaces for
many people, or even the entire house can be rented out. Airbnb is popular because not everyone
can afford to stay in a hotel, and finding a hotel room in a busy area can be challenging. Since the
company's founding in 2008, more than 100 million people have used Airbnb to rent out their
homes. Furthermore, the organization wants its guests to feel at home wherever they go, and they
aim to attract travelers. When traveling, most individuals seek out economical and pleasant
lodging. They recognize the significance of these characteristics and use them as a primary
marketing tool. Airbnb's management team consists of Joe Gebbia, Brain Chesky, and Nathan
Blecharczyk.

Startup story
The narrative of the company's founding is really motivating. It all began in San Francisco in 2008,
when two roommates, Brian Chesky and Joe Gebbia, were in desperate need of a way to pay their
rent. So they brought some air mattresses and established a website called airbedandbreakfast.com
overnight, and they decided to gain attention and sell their new air bed and breakfast company by
becoming tour guides for those who had come to attend one of San Francisco's biggest design
conferences. They realized that all the hotels were full and people were looking for a place to sleep
at the local industrial design conference. They were confident that they could pull it off because it
was clear that those attending the conference would have a tough time finding a place to stay for
the night. Amol, an Indian man, a woman from Boston, and another man from Utah were their first
visitors. Gebbia and Chesky believed they were onto something major after their successful first
night of serving their guests, and that this could be a game-changer for them. So they partnered up
with an old roommate, Nathan Blecharczyk, to transform it into a full-fledged corporation.

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Value proposition of Airbnb
For Hosts:

 Hosts can earn money by renting their space.

 There is ease of transaction between the hosts and guests.
 Airbnb mitigates the risk and offers insurance to house owners.
 Calendar and booking management creates an organized environment.
 The process of getting verified is not a time consuming process.
 Free photo shoots for property listings through photographers.

For Guests:

 Prices are often less compared to hotels.

 Like I said earlier there is ease of transaction between the hosts and guests.
 There is authentic local experience as guests can book a homestay instead of hotel.
 There are lots of options of different varieties to choose from.
 There is 100% transparency as per the ratings so guests need not worry about getting duped.
 Airbnb mitigates the risk and offers insurance to house owners as well as guests.

Revenue Model of Airbnb

As of January 2022, there are 2.9 million Airbnb hosts globally and over 7 million listings in over
200 countries. The service has over 150 million members, with 6 renters checking into an Airbnb-
listed house every second. Airbnb's one-of-a-kind service has propelled the company to triumph
in just a few years.

Airbnb's primary source of revenue is service fees from bookings charged to both guests and hosts.
Guests are obliged to pay a nonrefundable service charge based on the kind of listing, which is
normally less than 14.2 %, depending on the amount of the reservation. Guests benefit from lesser
service costs when they book a more costly reservation.

In addition, hosts are charged a 3% fee with each successful booking to fund the processing of
visitor payments. For Airbnb Plus listings, this cost may be greater. In addition, every time

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someone picks a host's home and makes a payment, Airbnb charges 10% of the payment amount
as a commission.

So, “How much revenue Airbnb has generated till now?” is probably the question that has strike
our minds.

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So, after looking at the bar-diagram and table we can see that there was a rising trend in the
revenue, but because to the covid-19 epidemic, revenue has plummeted by 25.58 % over the last
year, significantly affecting company pausing the company’s consistent year-over-year revenue
growth.

Nonetheless, because to the variety of booking alternatives and its presence in more areas, business
has significant competitive advantages over hotel chains. So, witnessing Airbnb's recovery journey
will be something interesting for all of us to watch.

The table below is a breakdown of Airbnb revenue by region.

When we look at Airbnb income by region, we can see that Airbnb listings in Europe, the Middle
East, Africa, and North America alone took in $2.8 billion (82.35% of total) revenue in 2020. And
remaining $0.6 billion revenue from Asia Pacific and Latin America.

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Marketing Strategies of Airbnb
The founders of Airbnb did not pitch their business as a less expensive alternative to hotels.
Instead, they centered everything on the one-of-a-kind experience of learning to live like a
locals — even when you're not at home. They were able to catch the sentiments of their potential
clients in this manner. So, Airbnb's many marketing methods includes:

1. Marketing Mix:
The essential idea behind the marketing mix model is to release a product or service in the
right manner, with the right price, and at just the right place by using the right promotion
tools. Thus, the various tools that Airbnb used are:
 Product: Airbnb invested extensively in digital marketing with an astounding yearly
marketing spend of about $1 billion. The goal of its product strategy is to link
travelers with hosts who offer lodging via its internet platform.
 Price: Airbnb began with a straightforward pricing strategy: price your products
below the market average in order to undercut hotels and make your home stand
out. They realized that consumers were prepared to spend more for hotel rooms, so
they competed on hospitality rather than pricing.
 Place: When discussing the hospitality sector, the place component is always
important since it is always about the location of the facility. Now, due to Airbnb,
visitors have the option to select the location that best suits their needs and budget.
 Promotion: Airbnb's promotions are mostly aimed at local clients in order to raise
their awareness of the company through city guides and unique experiences
available on its website. Many promotions are also carried out in order to generate
social buzz about the Airbnb brand via social media accounts and word-of-mouth.

2. Content Marketing:
The website of Airbnb is an outstanding example of a service-based firm utilizing content
marketing. Airbnb, being a service-based company, does not focus on marketing its
services, but rather on exhibiting and selling the unique experiences that consumers have
had while using Airbnb through blogs and video material.

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 3. Influencer Marketing:
It won’t be wrong to say that Airbnb's influencer marketing plan is one of the most well-
thought-out marketing initiatives. It works with high-profile celebrities to attract new
audiences through substantial advertising. In these collaborations, celebrities typically
publish photos of their lavish Airbnb stays on major social media channels, particularly
Instagram.

4. Referral Program:
One of Airbnb's most effective strategies for creating new friends and boosting word-of-
mouth recommendations is its referral program. It is a comprehensive referral program that
compensates community members for referring new users to the site. Assume that if you
notify or sign up a friend on Airbnb, the firm will give you and your buddy a discount on
your next booking.

Besides these major marketing strategies there are some interesting strategies that Airbnb adopted
which are as follows:

1. Airbnb Cross-selling – 'Airbnb Experience' Marketing:

In 2016, Airbnb expanded beyond its core product offering of lodging rental booking to
develop 'Airbnb Experiences.' The service provided customers with one-of-a-kind
activities, such as tours and workshops, led by local experts. Over 50,000 Experiences are
now accessible in over 1,000 places across the world. During the Covid-19 pandemic,
Airbnb also organized virtual activities including as cooking and dancing workshops, city
tours through photography, guided meditation, and much more w ith the slogan "Fun
without Leaving Your House."

2. Ad creativity and campaigns:

Airbnb’s marketing highlights that rentals are homes, not simply lodgings. The "Don't Go
There, Live There" campaign is a great illustration of how visitors connect with their
environment. Airbnb launched one of its most effective marketing initiatives till date,
which is "We Accept", in 2017. The campaign presented Airbnb's basic principles to

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 audiences, emphasizing the company's dedication to diversity and combating prejudice and
discrimination.

3. Guidebooks and Neighborhood guides:

Guidebooks are resources that hosts may attach to listings that outline restaurants, parks,
swimming pools and other local attractions that guests may find interesting.
Similarly, Neighborhood guides, on the other hand, is a service in which Airbnb curates
destinations from guidebooks to generate lists of attractions that any user may explore.

Conclusion
If we have to summarize, Airbnb is an online marketplace that connects people who want to
rent out their homes with people who are looking for accommodations in specific locations.

Airbnb have also created their own digital travel guide that the guests find extremely helpful
during travel. Airbnb is also a platform that connects people from around the world to
incredible places to stay and interesting things to do. Whether an apartment for a night, a
castle for a week, or salsa lessons in Havana to help you truly live there. Hence this
community aims to create a world where all 7.5 billion people can belong anywhere.

Airbnb also is well known because of an inspiring act by one of the hosts that led into a
bigger movement. After Hurricane Sandy struck in 2012 in the eastern region of United
States, Shell sprang into action, shared her home with a family forced to evacuate theirs. Her
generosity inspired thousands of other hosts to do the same, and since then, over 75,000
people in 104 countries have been housed during emergencies. These efforts are now
formalized with the creation of Airbnb.org, an independent, nonprofit organization that
works in partnership with global NGOs and relief organizations to provide emergency stays
for people when they need it most. Airbnb has been successful in not just connecting people
but inspiring humanity.

“THANK YOU”

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