Whether a famous investment company filed a case against Airbnb?
Airbnb is popularly known to be a provider of travel accommodation and a pioneer of sharing economy. Since 2008, the company has served over fifty million guests and a market capitalization mounting around thirty billion dollars. It serves as a substitute for certain hotel stays thereby impacting hotel revenue, which is totally a differentiated one by geographic region, season etc. The Airbnb has reported that in most of the cities over seventy percent of Airbnb properties are outside the main hotel districts suggesting complementarily of their offerings.
Who are the Customers?
Airbnb has two types of customers; the travelers who are in need of accommodation and the landlords who are willing to rent out their place for a shorter period of time. The company Website creates value for its both customers in different ways. On the view for the guests, it gives the travelers the option of cheaper accommodation, which is especially important in most of the major cities with the low availability of budget accommodation options. Also, it allows the travelers to experience their destination less like a tourist and more like a local by staying at nearer places rather than standardized hotels, which has more special experience during the traveling.
The primary benefit of the house owners is the ability to receive additional revenue by short-term renting out of their homes. It is also argued that Airbnb has created social value and also it brings tourist money to less visited neighborhoods and it serves a complementary to hotels casperon allowing for the overflow when hotel capacity is stretched.
Airbnb’s website provides a search engine, which matches the customers to properties, set prices, solves the problems etc. The company takes a number of important measures which enable establishing trust between the two transacting parties, such as identity verification. To use Airbnb, the site visitors search for the information details in their destination city. Once they found a place, they can send a message to the host with any queries about the room or its location. Then they pay for the stay using a credit card or PayPal.
Airbnb holds the amount until a day after the guests check in, ensuring that they are not deceived out of their cash and that the guests are treated well. The house owners list their properties on Airbnb’s website. The company also encourages the house owners to provide detailed information about themselves and the property as possible and offers them a professional photographer for their property. The owners with good reputations get more business. Though Airbnb, guests and the hosts can verify each other’s driver’s license or passport, contact number and email address etc and also connect Facebook profiles.
The guests and the owners agree on the convenient method of exchanging the keys. Finally, the guests and the house owners rate each other online, so there is a huge incentive to deliver a good experience because the bad reviews mean less ability to participate in the market in future for both the hosts and guests. The company also automatically provides one million dollars in insurance against the damage or theft to nearly all of its hosts and only rarely gets claims.
Problems Facing Airbnb
Developing a Sustainable Competitive Advantage
Airbnb offers many competitive advantages in its brand recognition, ease of use, network effects etc. The peer-to-peer rental marketplace is a new advent and as such is not a defined market and can be shaped with the relative ease. Due to relatively low obstacles to enter the emerging market, Airbnb’s adversaries can almost perfectly clone its business model, which makes a challengeable one.
Establishing Customer’s Trust
A major barrier to the continued consumption of Airbnb services is establishing customer’s trust. The Airbnb constantly faces lots of challenges, and it also continues to expand. While Airbnb insurance policies in place solve the issues of violence or theft, the true cost of these incidents lies with the probable damage to Airbnb’s reputation. As Airbnb continues to expand, various procedures of establishing consumer trust made be adapted globally and designed to respect the civilization norms.
Airbnb faces a lot of legitimacy issues in the present emerging market. There is a bundle of cases with the Airbnb’s services and it is not quite clear whether its rental services violate the rules and regulations. This may vary from state-to-state and country-to-country. So the company must be cautious of its expansion to minimize the risks and increased pressure from the industry side. Renting accommodations for less than thirty days is technically legally in certain states, so the company must deal with these issues or the risk losing its business. Airbnb may need to fix these issues before the folks starts to implement the new services.
Since the peer-to-peer market is still relatively unknown to most of the people, aggressively advertising the Airbnb’s business could gradually increase the domestic customers waiting to lend or rent new accommodations. The resources can be directed towards developing technology or the strategies to differentiate Airbnb from its adversaries. Airbnb has no sustainable advantage so developing any edge is an essential one. The company can either focus on addressing its domestic legal issues or mislead the problem by avoiding the states that outlaw the associated accommodation rentals.
Integrate Airbnb’s platforms with other outlets
The associate rental market is similar to that of the hotel rental industry, so Airbnb can adopt similar partnerships with the third party companies to gather goods together. If the partnerships are formed, both the outside providers and Airbnb will benefit from the increased usage, promoted traffic and growth in revenues. Partnerships with car rental services, review services, and airline agencies are all feasible options when choosing the selections for the accommodation providers. Moving a step forward, the collaborative consumption industry also represents promising partnerships. The consumers can rent the goods from the same lenders. The usage of services can be promoted through integrating the processes together and collectively pushing the savings potential of the collaborative consumption model.
AIMCO bought legal changes against Airbnb
A major nationwide owner of the apartment buildings has filed a case against the Airbnb for enabling the tenants to violate the lease conditions. AIMCO (Apartment Investment and Management Company) is seeking the civil compensation for the property damage and lost revenue, and also seeks a ruling that would prevent Airbnb from continuing to list its properties. The real estate experts exclaim about the platform’s ongoing regulatory and the legal struggles.
Recently, Airbnb has primarily clashed with the city leaders imposing the restrictions on the short-term rentals. The cities have argued that Airbnb raises the residential rental prices in the overcrowded cities. AIMCO is now further claiming that Airbnb encourages its tenants to break the lease conditions which prohibit the renters from offering the short-term leases.
The opponent company also claimed that Airbnb guests have caused property damage to the buildings. If the AIMCO suit is a successful one if could encourage the other landlords to follow the suit since the majority of leases agreements whether the owners are the corporate one or the small owners include the prohibitions against the leasing. AIMCO operates in twenty-three states and houses nearly three lakh residents.