Case Study of Airbnb's Technology Strategy

CASE STUDY : AIRBNB

Airbnb: Background

Airbnb is a community marketplace that allows property owners and travelers to connect with each other for the purpose of renting unique vacation spaces around the world. Airbnb provides alternative lodging choices ranging from air beds and shared spaces to a variety of properties, including homes, apartments, private rooms, castles, boats, manors, tree houses, tipis, igloos and even private islands! 

The Airbnb community users’ activities are conducted on the company’s Website and through its iPhone and Android applications. The San Francisco-based Airbnb began operation in 2008 and currently has hundreds of employees across the globe supporting property rentals in nearly 25,000 cities in 192 countries. There are over 1 million listings on the platform, and Airbnb corporate has expanded to 12 offices in different parts of the world. Brian Chesky, Nathan Blecharczyk and Joe Gebbia, the founders of Airbnb, are all in their early 30s, and estimated to have a net worth of $1.5B each.

Airbnb faces competition in the online peer to peer renting space from HomeAway, FlipKey,  Wimdu, 9flats, etc. The revenue model for these competitors has been standard – the renters need to pay an annual subscription fee with an option to pay a fee to ‘upgrade’, for increased visibility. Airbnb entered the market and store share from its competitors by charging nothing upfront, and only pocketing a service fee once the transaction between renters and guests was completed.

Since Airbnb has been a runaway success and its bookings have surpassed those at Hilton group of hotels, the hospitality industry is the real competitor for Airbnb, with many Hotel groups lobbying against Airbnb as it does not pay hotel taxes. New Jersey was the first to legalize Airbnb, which now pays a 6% hotel tax to the county.

Using Airbnb:

Airbnb is extremely easy to use. Initial setup requires users to sign up, either by creating an account of logging in through Facebook or Google+. The different requirements for hosts and guests are:

Hosts: Hosts must add a profile picture. There are also various verification options, which help prove to potential guests that Airbnb has vetted your account and proven your legitimacy. You can verify your phone number via the steps provided on Airbnb's site. You can also verify your ID, which means you've provided Airbnb with a verified email address, phone number, profile picture and ID.

The host has options to list their space on the homepage. It involves uploading pictures of the room/apartment, filling details about the space and amenities, and setting the pricing per night.  The host has complete control over guest approval.

Guests: In some instances, guests may be required to have a verified ID. If you're making a last-minute reservation, you'll have to get verified. Airbnb also randomly samples users and asks them to verify their IDs.

After the initial set up, users log in and are directed to Airbnb’s homepage. They have options to search for the location they are looking for a place to stay. Several filters exist to refine user preferences, such as pricing, number of rooms, dates, etc. Many listings are then shown to the user based on their search preferences. If the user likes any of the listings, there are options to add it to their wish list (save it for later), contact the host and request to book.