Airbnb Strategy Analysis- Phase 1. Internet Marketing 455 Professor Reza Rajabi By Lindsey Foster, Amanda Karpacz and Charles Foster

Transcription

1 Airbnb Strategy Analysis- Phase 1 Internet Marketing 455 Professor Reza Rajabi By Lindsey Foster, Amanda Karpacz and Charles Foster

2 EXECUTIVE SUMMARY Airbnb is a user to user platform allowing consumers to both rent and rent out property. Enclosed within are the history and background of Airbnb, a company started in San Francisco and is now a global brand. An analysis of their business model, and how offering a platform for user to user rentals, disrupted and changed the lodging industry. A look at the company and its potential for growth and areas of weakness were conducted through a SWOT analysis. We continue with both analysis of the company website, diving into what is and isn t working and competitor analysis. Specifically, we dissect the way Airbnb changes the traditional lodging industry and created a new segment with alternative lodging. Further, research was done using company released data, trusted news outlets, and industry literature. 1

3 Table of Contents Executive Summary.. 1 Airbnb Background & Events... 3 Business Model SWOT Analysis.. 15 Competitor Analysis Website Analysis Conclusion

4 AIRBNB COMPANY BACKGROUND Airbnb is an online community lodging marketplace, connecting hosts and travellers across the globe. It was founded in August 2008 and is based out of San Francisco, California. The travel site allows hosts to market their available housing space and provides travellers with thousands of unique listings of places to stay in over 65,000 cities. In November of last year, Airbnb debuted an experience service, offering exclusive experiences from local experts, including activities such as, Ride with a Pro on Exclusive Trails, or, Discover a local Tuscan Farm. ( Airbnb ). This decision allowed Airbnb to expand its reach in the tourism industry, moving from being solely a lodging provider toward becoming a one-stop destination for travellers. Airbnb was founded by friends Joe Gebbia, Brian Chesky, and Nathan Blecharczyk, after Gebbia had the simple idea to house designers during a nearby conference to help pay for rent. Roommates Gebbia and Chesky created a simple website and hosted three guests, charging them a small fee for basic amenities. Gebbia and Chesky ended up showing their guests around town, and when reflecting on the experience during an interview, Gebbia said that despite the simplicity of it all, [The guests] loved it. And so did we. ( How Do You, 2016). This experience marked the beginning of a journey that would transform this humble business into one that is now valued at $31 billion (Thomas, 2017). Airbnb operates under a relatively simple business model, providing value to both hosts and travellers, while profiting from both groups. Airbnb s C2C platform allows hosts to collect rental money when a traveller selects their listing, while also showcasing unique and affordable 3

5 listings to travellers all over the world. Airbnb operates as a transaction facilitator between these two groups, and charges guests 6-12% of the booking fee in addition to charging hosts a 3% service charge for each booking ( Airbnb Business Model ). Airbnb is not currently offering stock, but is expected to go public in either quarter four of 2017 or quarter one of 2018 ( What is the Airbnb, 2017). 4

6 AIRBNB BUSINESS MODEL KEY PARTNERS Airbnb s key partners include their Investors in Airbnb, Photographers that take photos of the property, guests who rent rooms and experiences, hosts who rent out their home or rooms, and payment processing services. Lastly, Airbnb has partnered with Facebook and LinkedIn to verify user s identities. KEY ACTIVITIES Key activities include advertising to gain awareness for both hosts and renters. Building a network of loyal hosts and customers to use the C2C product. Controlling quality of services by managing comments and reviews. Using search engines to gain customers who look for different keywords. KEY RESOURCES Key resources include the network and servers that all the data and information from Airbnb s site and app. Their information and data history from users previous interests and purchases is kept in big data. Their hosts in a vast variety of locations that keep the business running is also a key resource. VALUE PROPOSITIONS Airbnb offers a convenient alternative to a hotel that is easy to use and navigate in a variety of locations. They offer lower prices and a different kind of experience when it comes to traveling. Hosts have the opportunity to make money by renting out a room or home on something they already own. 5

7 CUSTOMER RELATIONSHIPS Airbnb offers 24/7 customer support, this is essential when dealing with the travel industry so users can feel secure and confident that Airbnb will help them if they need it. Airbnb offers customized recommendations that are tailored to the user s needs along with discounts and offers for recommending Airbnb to friends and family. Their review system is essential to communicate by leaving reviews and sharing your experiences. CHANNELS Airbnb mainly uses web browsers and their mobile ios and Android app to access consumers. Both of these channels have an advanced user experience to make it convenient for the consumer. CUSTOMER SEGMENTS Segments can be broken up into cost sensitive travelers who are looking for something cheaper than a hotel. Business travelers who want a different experience and better amenities, hosts who are interested in providing rooms for money, and people who want to discover authentic travel experience by immersing themselves in the culture. REVENUE STREAMS Commission from both the hosts and the guests on booking. Airbnb charges guests 6-12% reservation fee and hosts a 3% fee when their room gets booked. Airbnb SWOT ANALYSIS STRENGTHS Unique opportunity for lodging due to the ability to meet locals and receive 6

8 recommendations from them Clear revenue sources (charges a fee from both travellers and hosts) Brand is well recognized and well known Brand is associated with open-minded, trendy travellers (positive association) Prices are very competitive as compared to most hotels Huge user base: 150 million users, 4 million Airbnb listings (Smith 2017) Global company: active in 65,000 cities and 191 countries (Smith 2017) Dual rating system for hosts and travellers results in people trusting Airbnb Respected for its innovation in the hospitality market through the creation of a shared economy Network Effect, the more people use Airbnb the more value it gains through reviews and word of mouth. WEAKNESSES Airbnb operates in a fiercely competitive market due to the vast number of options for travel lodging Airbnb has to cope with disagreements between hosts and guests and this 7

9 responsibility demands time and money Airbnb runs the risk that hosts may act unprofessionally or even illegally, thus risking their reputation OPPORTUNITIES There has been a recent push for educated travelling and Airbnb could be a leading company in this trend as it offers the opportunity to both meet locals and learn from them through its experiences service Customers dissatisfied with hotels pricing and overall experience may turn to Airbnb as an alternative Airbnb still has many cities that they can expand to, furthering growing their reach Potential to partner with other travel related services in the future (i.e., rental cars, airlines, city tours, excursions etc.) Potential to grow in popularity amongst older age groups as the idea of the sharing economy becomes more popular and accepted and Growing number of travellers who want a more exciting, unique experience as compared to a hotel Potential to convince more celebrities to put their mansions/vacation homes on Airbnb, 8

10 increasing press and resulting in more people talking about Airbnb; celebrities including Mickey Rooney, Elixabeth Taylor and more have already done so in the past (Bukszpan 2015) THREATS Hotel associations are lobbying for laws to be passed to regulate and limit Airbnb on the grounds that Airbnb hosts should have to follow the same rules and regulations placed on hotels (Benner 2017) Growing competitors such as 9flats.com Illegal activities on the hosts parts could damage reputation and lead to more and more costly lawsuits Possibility of another disruptive lodging company to reduce Airbnb s market share in the future Growing number of high quality hostels, and growing popularity of hostels amongst millenials, one of Airbnb s most successful markets (Mohn 2016) 9

11 Competitive Analysis Airbnb occupies the vast majority of consumers minds when it comes to user to user rental. Yet, that does not mean they are without competition. Airbnb has been a disruptive force in the lodging industry, competing with not only hotels, but new competitors looking to copy the Airbnb model of alternative, in home lodging. In the lodging industry only Marriott has a higher valuation than Airbnb s $31 billion, at $39 billion (CNBC). In the alternative lodging sector, booking.com, a subsidiary of Priceline with a much larger company valuation of $89 billion, have been rapidly expanding their offerings on alternative lodging, offering more than 650,000 properties for rent. That is an increase of more than 50% year over year for the company (CNBC). Though a large increase, this doesn t match Airbnb s more than one million instantly available locations worldwide (Airbnb). Looking at the traditional hotel market, the lodging industry is attempting to limit Airbnb s impact in major metropolitan markets throughout the country with lobbying through the American Hotel and Lodging Association, which operates a $5.6 million budget (NY Times). The hotel industry recognizes that Airbnb s rapid growth and cheaper, more personal options are a threat, one with more properties available to book than any other company. Emerging competitors such as HomeAway offer a substantially larger threat to Airbnb, as they can match the pricing and locations as an alternative lodging company. Being able to keep the platform user to user means lower upkeep costs for brick and mortar buildings, and more savings for the customer. To stay ahead of the competition Airbnb is rolling out experiences and restaurant bookings, something not offered but any other alternative lodging sites, and moving even further into a service traditionally controlled by hotels 10

12 WEBSITE ANALYSIS Item # Title Results of Analysis Interpretation 2-1 Opening websites in different browsers Airbnb works on all browsers with no problem Chrome, Safari, Firefox, Smartphone, Tablet, and Microsoft Edge. Format is usable and clear on all browsers Airbnb is making their website usable for all browsers so it is easy for anyone to use. 2-2 Response Time Airbnb received a B in response time, with a grade of 80. It took 3.41 seconds for the page to load, which is faster than 47% of other websites. Compared to its biggest competitor, tripping.com, received a grade of 74 taking 4.32 seconds to load. 2-3 Conversion Path 3 Goals: Get customers to book a room, create an account and putting up a room to have customers rent out Rental- Varies > 123 Seconds, 6 clicks Homepage > Fill in Travel Details > Search > Click on Rental > Compare Rentals > Book (or contact host and then book) Account Creation - 45 Seconds, 5 clicks Airbnb has a fast response time so people will follow through with their actions of browsing the web page and potentially booking a room or experience. Airbnb works to make it quick and easy for customers to follow these conversions paths. Making an account is important to maintain customer loyalty and acquire customers. Booking a room is essential to gaining revenue and keeping the business succeeding. Lastly, they try to make it as simple as possible to rent out rooms since it is a C2C business. They still need to follow security steps to keep it safe yet, they work to simplify it as much as possible so people are inclined to rent out rooms. 11

13 Homepage > Click Sign-Up > Enter User Details > Confirm Sign-Up Renting Your Property- 576 Seconds, clicks too many about 45+ Homepage > Become a Host > Host a Home (or Host an Experience) > Input info about room > Get Started > Login etc. 2-4 Essential Sections Airbnb has: About Us, Sign up/sign in, Search bar, Logo, Help, Become a Host how to, trust & safety, travel credit. 2-5 Principles of UI Follows the principles of UI through the use of colors and design. Airbnb has all the essential sections to make the experience transparent and easy to navigate. The Search bar is near the top because the whole experience is about searching for rooms or experiences. They have a trust and safety button because the business concept is different because people are putting their lives in the hands of strangers. It is important to be transparent in this business and it shows that the company cares about the consumer and wants to help them through the whole booking and host process. The Airbnb website strongly follows the principles of UI. Each website page is well organized and instinctually easy to use and follow. The search bar is located at the top, while the search results are structured in block format with compelling images to represent each home or experience. The website breaks up the different options of finding a rental, an experience, or a restaurant. This organization is essential to separate the different choices you can choose with Airbnb. The colors are consistent follow a white background, grey text, salmon buttons/logo, and the seafoam green images and shapes. These colors are very consistent when buttons represent 12

14 different actions. All the titles and text are a dark clear grey that all match the same font but varying in styles of the font. The salmon color that is used in the logo is correlated with buttons related to booking rooms and making purchases. The seafoam green is used with customer reviews and seeing more options on details and descriptions of rooms. 2-6 Color Consistency Highly consistent The salmon color of the logo is present throughout, especially with booking and rentals. Blue is a secondary color used for help and other services. 2-7 Website Banners There is a small, concise banner at the top of the website, it features 2 lines, top line being search, sign up, and help and the lower being experiences, restaurants, and rentals. 2-8 Social Media Links Bottom right corner of webpage has social media links. After you click on an experience for more info, they have social media links under the experience photo so that you can share it on social media. There is a share button to share a room before and/or after you book a room Airbnb wants to help customers navigate and travel the site. Focusing on keeping the banner small and and in a singular location will help do that. Noticeable when needed but out of the way so the site can be the main focus. Social media isn t as big for different areas of the site. Their social media platforms create awareness of their rooms and experiences. They seem more like advertisements rather than a different method to gain followers. 2-9 Ease of Sharing via Social Media Sharing allows you to show the landing page for different experiences or brings you to airbnbs social Airbnb made it easy to share their pages so that people will promote their site and spread the word online. 13

15 media pages. It is simple, as there are links to share URL patterns URL remains consistent throughout the site. Different areas all break down with the same groupings, airbnb.com/ and then airbnb.com/experiences/ or /restaurants etc 2-12 Basic Site Design -Font size: 3 sizes, headings are largest (around 20 pt.), secondary headings (around 14 pt), and body text (around 12 points) -Positions of words in the webpage: Most text is aligned left, except for the menu options which are located on the right side of the banner -Webpage title: Explore Airbnb, aligned left and is the regular heading size (around 20 pt) Airbnb s code is organized, clean, and precise. The site is organized, and not overly flashy. The images of the activities/rentals are the center focus---not the headings or text. This is likely to draw the reader to the content which will lead to a sale and not to distract them with other information, especially on the home page. 3-1 Android and IOS Apps -Airbnb has both Android and IOS apps -Air BnB app description: Unforgettable trips start with Airbnb. Find adventures in faraway places or your hometown, and access unique homes, experiences, and places around the world. Book everything your trip needs, or start earning money as a Airbnb is highly available through the two biggest app platforms. This give customers maximum accessibility. 14

16 host. Same of IOS and Droid 3-2 App s UI Their app s user interface is well created the apps function well on both androids and ios devices. 3-3 App Functionality With a 4.8 IOS rating and 4.3 Droid rating, the app is known for stability and ease of accessibility as seen in reviews 4-1 Domain Rank Global Rank 332 US Rank 121 Travel & Accom. Rank 2 Homeaway.com Tripping.com Their app is essential to the experience of Airbnb. They need to have it functioning well for users to continue to use it. The app performs all functions you would expect and need. The app is both reliable and easy to use. The biggest complaint is on Android, certain user face login issues. Though only affecting a small portion of customers it's important to continue to work on and update the app. Airbnb is a well traffic, globally used website. It is one of the first sites user go to for accommodations, and shows the brand Airbnb has built. Airbnb competitors are not ranked on websites for their domain. They have minimal traffic and people do not go to this site over Airbnb. 4-2 Daily Time on Site 4:00 minutes 4 minutes is definitely enough time for a user who knows what they are looking for to log on, compare a few rental options and book so this time is not bad for Airbnb. It takes less than a minute to create an account or book a room. This gives people the opportunity to search and browse for rooms or experiences as well. It is likely that people who do make purchases spend a longer time on the site but this average is probably lowered by people who go to the site and leave soon after. 4-3 Daily Pageviews per visitor 5.62 This statistic is OK for Airbnb if a user is coming on the site simply to book a rental and they know what they are looking for because this process can be completed in 5 clicks. If they are looking to become a host this will take far more than 5 clicks. 4-4 Bounce Rate 31.00% Airbnb s bounce rate is pretty typical for similar companies. Expedia, a major 15

17 competitor, has a bounce rate of 29.3% which isn t far off. 4-5 Search Traffic 22.4% Roughly a quarter of traffic is search traffic, and when combined with performance in other traffi've sources, you can see people are effectively finding Airbnb when looking for the type of service Airbnb provides. 4-6 Top Search Engine Keywords 1. Airbnb (38.69%) 2. air bnb (1.15%) 3. Air (0.24%) 4. airbnb seattle (0.21%) 5. airbnb chicago (0.20%) Although 30.12% of Airbnb s traffic is from search sources, the 5 top keywords are still airbnb, air bnb, airbnb.com etc. This shows that people are aware of the company s name and are trying to reach the website directly, they just may not know the exact URL to reach the website. 4-7 Upstream Sites 1. Google.com (29.5%) 2. Facebook.com (5.4%) 3. goeuro.com (2.5%) 4. Booking.com (2.1%) 5. Youtube.com (1.6%) Most users come from Google, showing effective placing ads and well used keywords. Facebook and Youtube show that users are coming to the site from social media. People are seeing trips and ideas for adventure and turn to Airbnb to make it happen. 4-8 Number of Apps Downloaded 4-9 Number of Social Media Followers 4-10 Estimation of daily/monthly/unique visitors Google Play: million Apple:??? Facebook: 9.3 million Instagram: 2.4 million Twitter: 626 thousand 1,005,000 daily ~30,000,000 monthly App data is becoming more restricted, companies don't offer much information, and neither do 3rd party analytics sites. Airbnb is a top rated app for travel and The number of followers Airbnb has on each of the social media sites correlates with each of the sites popularity. Airbnb uses its social media to promote its Airbnb magazine, and feature top hosts/experiences/rentals to keep its community excited about travel opportunities. Airbnb s facebook is also very responsive to messages; according to its Facebook pages 616 people messaged the page this week (10.24) Airbnb has consistent traffic, with ebbs and flows during holidays and other large events. 16

18 4-11 Traffic Sources Direct % Referrals % Search Social- 3.50% Mail- 5.45% Display-.44% Almost half of Air BnB s traffic comes from direct traffic. Direct traffic can range from bookmarked pages to direct URLS. This traffic is likely caused by users who send links to others to view certain Air BnB s listings or just the website in general. People may bookmark and save certain listings that add direct traffic. Air BnB s mobile app drives direct traffic, they have a superior design and user experience on their app. It is a well recognized brand, it is the first link to come up compared to its competitors. Although 30.12% of their traffic is from search sources, the 5 top keywords are still airbnb, air bnb, airbnb.com etc. This shows that people are still aware of the name and are trying to reach the website directly, they just may not know the exact URL to reach the website Blog? Yes. Airbnb s blog features a variety of resources for both hosts and travelers. Posts include topics such as, Answers to your top search questions, Link your Airbnb calendars, Faster Access to Customer Support etc Pop-ups None Airbnb does not use pop ups on their site, instead leaving the user to navigate and explore on their own Referral Links Top referrals are through sites aggregating different rental websites, this is unpaid referral, airbnb also offers incentives to current users when they refer others to the site. These would be paid referral. One of the companies PrimeWire is a movie streaming site, likely paid for referrals Tag Analysis Unforgettable trips start with Airbnb. Find adventures nearby or in faraway places and access unique homes, experiences, Airbnb works to create an unforgettable experience anywhere you choose to stay. They work to transform the room stay at in any culture. 17

19 5-1 Google Ads (Airbnb vs. competitors) and places around the world. Airbnb as well as all of its major competitors use Google ads. Though the competition varies, Airbnb has good traffic from Google ads, and use clear, related meta-data tags and descriptions relating to product or experience. 5-2 Website keywords Hosts to rent home- Airbnb, how to make money, easy cash, easy money, ways to make quick cash, renting out room, renting out home, becoming a renter, bed and breakfast, spare room uses, fast cash, how to generate business, side jobs, make money outside job, gain consumers, how to gain vacation guests, b and b, renting property, become a host, generate traffic, become a top airbnb host, experience, relaxing home, vacancy, empty rooms. Keywords Vacationer- Airbnb, beach, ocean, city, travel, Europe, destination, Asia, Middle East, Australia, South-Pacific, tropical, pool, relaxing, getaway, inn, bed & breakfast, hotel, accommodation, rental, scenic, remote, resort, ocean-view, private room, unforgettable Price-Limited - Airbnb, inexpensive stay, discounted rental, cheap room, underpriced experience, discounted week-stay, cheaper than hotel options, discounted vacation, on-sale opportunity, cheap vacation, sign-up discount, cheap rental, tropical sale, beach getaway sale, affordable vacation, secret trip ideas, best-deal trips, inexpensive vacation, worth your money, vacation steals, inexpensive rental, discounted prices, cheap vacation, low-price trips. Experiences- Once in a lifetime, world, fun, local events, undercover experience, hidden experience, unique, travel, explore, embrace, sail, swim, boat, rent, wine tasting, travel, pictures, rare, local, bike, city, hike, tour, unbelievable, custom, enjoy, immersive, concert, unforgettable, visit, unwind, learn. 18

20 SUMMARY Airbnb is a global company, partnered with some of the biggest companies in world like Facebook, LinkedIn, and Twitter to ensure the safety and security of guests. They operate as a platform for users to connect, experience, and live all over the world. By putting customers in contact with one another and offering excellent customer services Airbnb can give those looking for something different in their travel and accommodation just that. Airbnb has been able to change the way people stay. Airbnb has many opportunities to expand and grow the core of their business. Experiences and restaurant reservations are just a few ways Airbnb is moving beyond lodging. New threats appear every day though, as more sites like Home Away and 9Flat move into and expand in the alternative lodging market. Traditional hotels continue to update to match Airbnb and offer new more millennial focused hotels. They work to produce new legislation to stem illegal Airbnb use. Yet, airbnb continues to grow and with their superb apps and connected and loyal customer base are positioned to continue to do so. As long as a consistent, easy to use, and affordable stay is what Airbnb provides, the brand will continue to draw people and the service will bring them back. Feel at home anywhere in the world with Airbnb. Find unique places to stay, learn from talented hosts, and live as the locals do wherever you choose to travel. 19

21 SOURCES Airbnb Business Model. Business Model Toolbox, bmtoolbox.net/. Airbnb. Vacation Rentals, Homes, Experiences, and Places, Airbnb, Inc. Benner, Katie. Inside the Hotel Industry s Plan to Combat Airbnb. The New York Times, The New York Times, 16 Apr Bukszpan, Daniel. Celebrity Homes on Airbnb Money. Time, Time, 16 Dec How Do You Design Trust Between Strangers? TED Radio Hour, NPR, 20 May Mohn, Tanya. Hostels Are More Popular. Forbes, Forbes Magazine, 17 May Smith, Craig. 100 Amazing Airbnb Statistics. DMR, 4 Oct Thomas, Lauren. Airbnb. CNBC, 9 Mar What Is the Airbnb Stock Symbol? Money Morning, Money Morning, 15 June 2017, moneymorning.com Benner, Katie. Inside the Hotel Industry s Plan to Combat Airbnb. The New York Times, The New York Times, 16 Apr. 2017, l. 20