Activity 4 - Critical Thinking (DOUGLAS)

Silay Institute, Inc.

Entrepreneurial

College Department Mind

Critical Thinking Activity:
How Airbnb's exponential business model works

https://www.businessmodelsinc.com/exponential-business-model/airbnb/
Irrespective of the publication, if disruption is in the title (or even mentioned) in the article, it’s
likely that Airbnb gets first billing as a company – and business model – that is disrupting the
landscape of hospitality (and for better or for worse…even housing in general). The proof is in
the listings. By mid-2017, Airbnb had 4 million listings worldwide, spread throughout 191
countries. At this point, Airbnb has more listings than the “top five major hotel brands
combined.”
What’s perhaps most interesting is just how simple Airbnb’s business model is. As you can see,
Airbnb’s business model is a multi-sided marketplace that connects travelers with host and
experience providers. The company makes money from booking fees that come from stays and
experiences. Simple, right?!
However, if you dive into what REALLY makes Airbnb’s business model special is that it’s
exponential…in almost every way…especially when compared to the business model of a hotel
company, like Marriott, the largest hotel chain in the world. In fact, when you look at them side-
by-side, what you’ll notice is that the big shifts Airbnb has made in the hospitality market, have
enabled it to scale hospitality in a way Marriott can only dream of (i.e. exponentially).
Firstly, Airbnb solves a problem (and addresses ambitions for many people). Plain and simple:
Airbnb’s business model is made for a mass market…and even connects mass markets in a
unique way (travelers, hosts, and experience providers). Via its rating system and ability to tailor
experiences, Airbnb has created communities of fans for all of its customer segments.
What’s more, if you’ve used Airbnb, you probably already know that it employs a totally digital
channel. There are no booking agents or front desk receptionists to call. You find and make
reservations and/or manage listings and experiences via an app and online.
Because it is a marketplace, Airbnb’s core value proposition is essential an information-based
offering. In other words, Airbnb does not own any of the properties nor does it have to worry
about providing value in the form of real assets. Rather, its business model is predicated on
connecting people who have something to offer with others who need what they have. It’s all
information at the core. Additionally, as a marketplace, Airbnb has several revenue streams, all
connected to booking stays and experiences.
On the operational side, Airbnb has built scalability into everything the company does. Whether
it’s working with regulators or developing ads and apps, Airbnb has set up processes that enable
it to move very quickly to new markets in a way that brick and mortar hotels only wish for in
their wildest dreams.
Connecting all of this, are Airbnb’s algorithms, that churn through the millions and millions of
stays, guests, hosts, and experiences, continually matching the right value propositions with the
right people. This is very much a virtuous cycle that feeds back into Airbnb’s customer
relationships, which feeds information back to the algorithm, etc.
Finally, when you visit Airbnb, as BMI did in January, two things you notice right away are 1)
the entire office experience has been designed to be open and collaborative (and to look just like
some of the favorite homes on the platform); and 2) Airbnb employees are empowered to make
decisions that help customers. While Airbnb is not a holacracy, the company definitely provides
people with the ability to work together to solve problems and provide better experiences for its
customers.
When you add all of these things up, Airbnb represents a company that has not only totally
embraced the idea of an exponential business model. Airbnb understands how all of the elements
of its business model are connected and the company continually innovates to make it more
connected and more exponential.
Continuation on next page -

Silay Institute, Inc. Entrepreneurial
College Department Mind
Name: SHEILA MAE L. DOUGALAS Course & Section: BEED II-B
Answer the following questions in not more than 5 sentences each:
Rubric: Content 15 pts Grammar 5 pts Organization 5pts Total 25 pts each
1. How would you explain the business model canvass of AirBnB? Please see the canvass?

- The business model canvas of Airbnb explains the key partners, key activities, key resources,
value propositions, customer relations, channels, and customer segments of Airbnb. Along with
this, the cost structure and revenue streams of Airbnb have also been listed. First, you need a
business or industry where intermediation plays a key role between peers. The sharing economy
is based on peer to peer based activity. With the internet becoming readily accessible in most of
our lives, it has made it easier for asset owners, to seek those who want to use their assets. New
companies have emerged to be a forum for people to ‘share’ their assets with others for extra
cash. The waves of successful startups we’re seeing today are largely based on this model like
Uber and Lyft. However, in the world there were a lot of people with spare room in their
property that wasn’t being used, and a number of people who wanted accommodation but for
cheaper or different to hotels and motels.
2. What makes the AirBnB differentiated? How does the company reflect its uniqueness
in its value proposition? Explain.
- Airbnb is different because you will stay in somebody's house or private room. This means you
get to interact and engage with a local person, which makes for a different experience.
Sometimes Airbnb hosts will even become friends. The advantages are it's often cheaper than
staying at a hotel, you have more choices in terms of neighborhoods (lots of residential
neighborhoods don't have hotels) and you have a local contact who can recommend you places to
go and help you plan your stay. Also, if you rent an entire house, you'll have your own place
including kitchen, living room etc. instead of staying in a hotel room. You'll be able to cook
meals and save on food costs that way. Airbnb needs to get back to its roots of offering unique
and special rental experiences for the guest. Not an old hotel room that was purchased by one
person and is just getting rented out. Horrible! Guests do not want to arrive to a hole in the wall.
They want a home or at least a decent apartment. Some of the places Airbnb agrees to represent
are horrible and Airbnb should be ashamed.

Activity 4 - Critical Thinking (DOUGLAS)

Uploaded by

Copyright:

Available Formats

Activity 4 - Critical Thinking (DOUGLAS)

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Activity 4 - Critical Thinking (DOUGLAS)

Uploaded by

Copyright:

Available Formats

Silay Institute, Inc.

College Department Mind

Critical Thinking Activity:

How Airbnb's exponential business model works

Continuation on next page -

College Department Mind

Name: SHEILA MAE L. DOUGALAS Course & Section: BEED II-B

Answer the following questions in not more than 5 sentences each:

You might also like