Airbnb Essay Example: The Known and the Unknown

When we hear the phrase Airbnb, most of us instantly think about a fun vacation with your family staying in a beautiful vacation home instead of a generic hotel room. There are many known and unknown issues that plague the successful company of Airbnb. Through my research, I will be providing multiple marketing issues that they are facing and also one particular issue that people have with the company. I will explain my findings as well as recommending multiple resolutions to Airbnb’s troubles

Airbnb was founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharcyk. Originally, the company was called Air Bed and Breakfast because the founders allowed guests to stay at their apartment and sleep on air mattresses. This principle sparked the idea to start a rental company that would allow people to rent out rooms, apartments, and homes. The founders wanted to create “a world where you can belong anywhere and where people can live a place, instead of just traveling to it” ("A Brief History of Airbnb" 2017). By the time the 2008 Democratic National Convention took Place in Denver Colorado, they had an established business plan and a functioning website. The popularity they gained from the convention allowed them to connect with the angel investor Paul Graham, the cofounder of Y combinator. Through Paul's funding, Airbnb has become a billion dollar company with hosts all around the world. New issues would arise while the company continued to see growth. Airbnb’s accommodation marketplace provides access to 6+million unique places to stay in 100,000+ cities and 191 countries and regions (“About Us”). 

Since the hosts were not officially licensed hospitality providers, they were not required to follow state and country regulations. The Chicago tribune referenced Airbnb and said that they are running” illegal hotels” (Marotti, 2019). The article goes on to suggest that some of the Airbnb hosts believe that the city’s regulations are unconstitutional. All Licensed bed and breakfasts have to meet city requirements and Airbnb does not. This allows Airbnb to keep the prices lower, which according to the article, gives them an unfair advantage over the hotel industry. 

If Airbnb addresses the first issue incorrectly, it can cause an even bigger issue. Ubers drivers, much like Airbnb hosts, operate on their own. So if Airbnb forces hosts to comply with local regulations that are not received well by the host, then they may potentially unionize. Uber drivers began “grouping together in some cities to petition for higher wages” (Capizzani, 2015). Unionization is a major risk for Airbnb because it could cost the company revenue if the host were to strike due to pricy regulation licensing. 

Competitors in the Sharing Economy

Another issue that Airbnb could potentially face is the competitors in the “sharing economy” (Capizzani, 2015). There are many similar companies in the home rental industry such as HomeAway, Wimdu, and Booking.com. Though most of the companies have the core business model, they each differ in their own unique way. One example is that HomeAway also owns global brand VacationRentals.com. This allows them to create their own niche in the industry by being able to partner with other big name websites to promote their rental sites all around the world. So Airbnb has to differentiate themselves from the competitors by creating the most value for their customers. 

One problem one would see from the outside looking in is living next to an Airbnb. The people who live next to an Airbnb may feel uneasy because they don’t know exactly who stays at the rental property that night. As Laura woods stated in her article “The strangers leer at us, watch us, creating a perpetual sense of unease in our own home” (Woods, 2018). Tenants have to pass a simple background check to be able to rent the property. Some tenants will blatantly break the rules. The neighbors have no power over who stays in the rental property either. It’s difficult for the neighbors to communicate to the property owner about these issues because most of the time the property owner lives in another state.  

If Airbnb handles the regulation issue correctly, then they won’t have to fear about the host unionizing. They can contact each host in a particular city, state, or country and propose and create regulations. This proposal would then be passed on to the proper individuals who handle the hotel regulations. The key to this proposed solution is communication. If Airbnb can clearly communicate the importance of creating regulations to the host, then the host will be able to provide feedback. The most effective way to obtain this information is through direct contact with the host through phone calls and emails. Through those mediums of communication, I feel that Airbnb can gather enough information for their proposal. If Airbnb were to agree to the regulations without conferring with their host, then the risk of unionization sky rockets. 

To address the issue with Airbnb solidifying themselves in the industry against their competition, they must create more value with their company. If they were to partner with other travel companies, they could see a boost in revenue. One example of this is if they were to partner with a flight booking website. Consumers would be able to obtain their flight information, as well as their accommodations for their trip. Airbnb could also offer discounted rates to those who book flights through their partnered website. Once they truly differentiate themselves from the rest of their competition, they will obtain the competitive advantage in the industry. 

My last proposed solution is to allow the people who live around the Airbnb properties a more direct and reliable medium of communication. Such as a direct line dedicated for people who live near the property, and also a direct number to reach the property manager. Even though nobody is there to monitor the tenant, the neighbors could fill that role. The property manager could also install cameras on the outside of the premises and monitor the tenants too. If they were to do this, they would have to notify all tenants that stay in the property that their activity will be monitored outside the house. 

To support my proposed solutions, I recommend that Airbnb clearly communicate with its host and with the hotel industry. They have to be as transparent as possible in creating regulations so that they don’t start an uproar that could lead to unionization. If they are able to successfully pull of the feat, they will be able to continue to grow and expand the business. 

References

“A Brief History of Airbnb.” Sharing My Home on Airbnb, 15 Dec. 2017, www.sharingmyhome.com/brief-history-airbnb/.

“About Us.” Airbnb Newsroom, press.airbnb.com/about-us/.

Capizzani, Mario, et al. “Airbnb: What's Next? .” Airbnb: What's Next? Prioritizing Opportunities in Southern Europe, Dec. 2015.

Marotti, Ally. “Hotel Industry Group Says Airbnb Hosts Running 'Illegal Hotels'.” Chicagotribune.com, Chicago Tribune, 29 Apr. 2019, www.chicagotribune.com/business/ct-airbnb-hotel-report-0310-biz-20170309-story.html.

Woods, Laura. “The Problem With the Airbnb Next Door.” Medium, Medium, 5 Dec. 2018, medium.com/s/story/heres-what-it-s-like-to-have-an-entire-house-airbnb-rental-as-a neighbor-1c2ffa0f5d45.