I) Airbnb (Global Holiday And Short-Term Proporty Rental)

was founded in 2007 by a group of roommates who rented out beds in their San Francisco loft. In March 2014, they raised US$ 450 million and the company was valued at US$ 10 billion. This is greater than the market capitalisation of Hyatt and Intercontinental hotels groups; around 50% of what Hilton is worth (US$ 21 billion), in a fraction of the time. Yet Airbnb is a hotelier with no hotels; they simply turn rooms lying empty in people's homes into hot commodities.

"...For home and apartment owners, it promises a little money on the side. For those renting, it is the chance to get more than a cramped suite, often at a significantly cheaper price and location outside the synthetic confines of a tourist destination..."

Jacob Greber et al, 2014

Airbnb has around 5% of the US and European business travel market.

Airbnb is a real threat to the traditional hotel chains' business model; they have acquired over 1+ m. rooms in 26,000+ cities and 200+ countries in around 7 years, i.e.

"...that's more rooms than the Intercontinental and Hilton combined and it took those companies 95 years to build that number..."

Rachel Botsman as quoted by James Hutchinson, 2014

It allows people to rent spare rooms, entire homes, or even castles across 34,000 cities allowing them to generate cash from unused space.

Advertising is primarily by word-of-mouth and press.

Airbnb takes a commission on each booking; this is estimated to be up to 12%. Owners of apartments and homes have to conform to 9 key metrics that include responding promptly to queries, ensuring toilet paper is present, etc

Airbnb has not spent any money on hotel construction, staff, beds, etc. The traditional hotelier uses an asset-heavy model while Airbnb has an asset-light model. Also, their philosophyis that people feel at home anywhere in the world. Compare this with a hotel experience where everything is standardised, eg rooms, hallways, lobby, restaurants, etc

Airbnb is expanding to become a virtual concierge to travellers, including provision of local information on the best restaurants and shopping. Also, it is exploring ways to expand in Asia, especially China

Airbnb has agreed to collect and pay hotel taxes in San Francisco and Portland (USA)

 

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