Businessmodel of Airbnb

Customer Segments

Airbnb’s customer segments are divided into two interdependent groups: guests and hosts.

The guests are travelers who are looking for a new way to travel. The guests may be budget travelers, families looking for alternative accommodation, business travelers looking for long term rentals, or adventure seekers looking for accommodation out with the traditional hospitality sector.

Airbnb’s hosts are typically residential homeowners looking to rent out space in return for currency. They may also be small business owners who rent out accommodation to travelers in return for currency. These small businesses may be bed and breakfast owners or short term leasing agents.

Airbnb’s business model requires each group to be present because a multi-sided platform is only successful for travelers if there are owners willing to lease their rooms and vice versa.

Channels

During their most recent phase, Airbnb has used three main channels to grow their customer base. They use a combination of online advertising, worth of mouth referrals and public relations mastery to market their platform.

Airbnb’s online advertising is very visible, and they use a large network of affiliates and other paid advertising to raise and maintain visibility. They chose this approach over traditional SEO methods because they realized that they were nearly a decade behind their competitors. It was unlikely that they would ever be prioritized over companies like TripAdvisor in the search rankings.

Customer Relationships

Airbnb works hard to develop relationships with their hosts by creating both online events and offline opportunities for their hosts.

Airbnb also has to focus on maintaining positive relationships with their renters. They are keenly aware that their customers have many options when choosing to travel.

Value Proposition

Airbnb’s value proposition is diverse because of its multi-sided platform for customer segments.

For travelers, the value proposition mainly includes:

• The ability to book unique properties
• The ability to fully customize a search by room, price, size and amenities
• A personal service based on the customer culture of valuing cultural exchange

• The reliability of an independent platform containing properties that have been reviewed by other customers For hosts, the value proposition includes:

• The ability to create income from renting his apartment
• Success based service fees that only occur if the apartment is rented
• Trustworthy travelers as both travelers and renters are reviewed ### Key Activities

Airbnb’s key activities are mostly devoted to the development and maintenance of its platform. When Airbnb is developing its platform, it is looking for technological developments as well as the development of their online community. Product development is key for Airbnb. They are known for having some of the best developers and designers to work on their website.

When Airbnb are developing their community, they are simultaneously contributing to their product. The community management side of the business requires online and offline interaction. Airbnb has employed several country managers across the world to nurture their communities in key markets. They are able to both recruit more key customers as well as take valuable feedback from their community. This feedback can then be sent back to their platform development team.

Key Resources

Airbnb received impressive amounts of capital from some of the most well-known hedge funds and venture capitalists. The money allows growing the business by covering operating costs.

It also attracts some of the most talented people in technology to come and work on the team. The major ingredient to success for Airbnb is its talented people.

Key Partners

Airbnb has to ensure that it makes tourism boards and local governments their key partners.

Airbnb often operates in a legal gray area in many countries. This is not because they do something illegal, it is because it is an innovation that local governments haven’t decided how to regulate yet.

Cost Structure

Airbnb has three main costs: marketing, technology and sales. The technology costs include server space as well as programming and maintenance.

Marketing is one of Airbnb’s biggest cost drivers because they are voracious spenders on online advertising. Their sales costs include the salaries and operating expenses of country managers in key markets.

Revenue Streams

Airbnb takes most of its revenue from the commission charged to the renter and the property owner. They make their commission clear and refrain from raising it when possible.

The biggest issue with the revenue model is that it is technically very easy for hosts to list their property for free and then make bookings and take payments offline. Airbnb screens messages to ensure that neither party is exchanging contact information before the booking has been paid for through the Airbnb platform.