Global Marketing Plan for Airbnb

Global Marketing Plan for Airbnb

BUS 622

Global Marketing

Global Marketing Plan for Airbnb

The family vacation is an excellent thing if you can find a place to stay that accommodates the entire family. If only there were a way to rent a home for a week. Gone are the days of the timeshare scam. The property that you pay for monthly but can never use when you want it—the days of cramming a four-person family into a double queen room. Alternatively, purchasing several adjoining rooms in an attempt to create one space, the entire family can share. Along comes a great idea, rent a home away from home for a few days up to a few weeks at a nominal fee compared to a hotel suite that will allow your entire family the space they need to enjoy their vacation, Airbnb. Airbnb is so popular that there are properties being built for the sole purpose of using them as vacation om rentals. They are called PUDTels Planned Unit Development for use as hotels. They are the new spin of timeshares. The entire community is rentals; there are no permanent residences on site.

History

Airbnb was born as a result of desperation and creativity. In 2007 two roommates from San Francisco were on the verge of being evicted from their beautiful apartment. When they came up with the idea of putting an air mattress on their living room floor and charging people to sleep on it and providing them breakfast in the morning. This single act of genius and desperation brought us “air bed and breakfast.” By 2008 These two opportunists brought on a third person, Chesky’s former roommate Nathan Blecharczyk, joined the venture as the Chief Technology Officer and co-founder of their new brainchild “AirBed & Breakfast.” They designed a website for their new short-term living quarters rental, which included breakfast. This unique business network offers individuals who were unable to book a hotel with another option. August 11, 2008, The site Airbedandbreakfast.com officially launched and had its first customers that summer thanks to the Industrial Design Conference. Many of the attendees from that conference were having a hard time finding rooms in the city.

Economic Success

As a result of the ever-changing economy, companies live or die based on their plan of action. Airbnb headquarters has its home base in San Francisco. A case study in 2012 found that Airbnb supports 430 jobs & generated $56 million in revenue for San Francisco. Moreover, $12.7 million of that goes directly to Airbnb hosting households. This almost $8,000 in extra income allows many homeowners the ability to offset their living expenditures.

Regulatory, Legal, Political

Many state housing laws and regulations conflict with this business model; for example, in various locations, the individuals renting their property must do so when they are not living there. So purchasing residents for the sole purpose of renting out is not an option. Lenders often also have a problem with lending on these types of properties as well. They will often reduce the percentage of the loan amount they are willing to provide; an example you qualify for 80% Loan to value, but because of your property type, they will only go up to 70% LTV. Because Airbnb is itself is limited to its liability when it comes to its clients. Most laws and regulations will not hamper their business. Airbnb protects itself by establishing a set of rules that both lessors and leasees must adhere to to use their service. They absolve themselves of most liability. Airbnb terms and conditions state that Airbnb, as a company, is acting as only an agent. Meaning they are only a third party that connects renters and possible rentees with one another. Much like a dating site. You meet someone at your peril. Airbnb does some basic good-faith research like background check, watchlist checks, preparedness, secure payments, scam prevention, and risk scoring. For this, Airbnb receives a commission as well as for allowing users to use their site for booking, secure payments, and occupants. Airbnb does not own or have a stake in the properties on its site. If the property is damaged, the owner of the property seeks damages from the tenant, not the agent (Farooq, U. April 2018). Airbnb requires that the properties have insurance protection for both them and possible tenants.

Social and Cultural Growth

Airbnb, as birthed many copycat services like VRBO, Homeaway, Flipkey (Powered by TripAdvisor), and owners direct, just to name a few. However, with more than 10 million downloads Airbnb App is by far the most popular app & service as it is the originator of this product. Many people list their property with multiple sites to help facilitate the maximum number of rental opportunities. The app allows the guest to choose their location, by sometimes viewing hundreds of available properties in the location they wish to stay. They are allowed to filter through these properties by providing essential information, like cities, areas within a city, type of property, bed & bath count, feature (Full kitchen, washer dryer, pool, etc.), They can tour the property through video or photos. They can also read reviews left by previous renters; Once they located the perfect property, they can then contact the owner with questions, or just book and pay online.

Airbnb’s popularity is starting to cross the pond, so to speak. Internally they are growing in leap and bounds in places like Latin America and Japan. Over 250,000 properties are listed in Japan alone. In 2018, listings increased by over 53% in Mexico. The increase has started to affect the hotel industry. They use to have a monopoly on providing accommodations to anyone that travels. However, Airbnb has taken a big bite out of that apple. So much so that hotel chains are starting to develop and purchase properties to compete with the market share that Airbnb has carved out. With things like pudtels, they may be able to save their business plans.

(Citadel, 2020)

Conclusion

A hotel though conventional, has its pluses. Most senior travelers prefer what they know; Hotels. They are used to having a maid come clean their rooms daily, ordering room service, hailing a cab for them, arranging sightseeing adventures or dinners, and the best local eateries. However, the younger traveler is open to discover and may just need a place to sleep after painting the town red. They could have visited the location frequently and know their way around but not have friends or family locally they can crash with. Alternatively, they may not plan on being at the residence for much more than sleeping. Then why pay for a fancy hotel that you are not there to enjoy. At the same time, people find safety in a hotel. They have come to expect a certain level of security. With an Airbnb, you never know who has a key to their location. You do not know if the owner or even a former resident has access to the property, and therefore you belong or even you. However, one fact that most people do not consider is that Hotels have never been large family vacation friendly. However, with Airbnb, you can now rent an entire home with a kitchen so you have the option of cooking things the kids will eat or space for the entire family to gather for a wedding or birthday celebration. The truth is no matter what, or why you choose either, there will always be a space in the market for both hotels and private rentals, as long as people need and want different things for their vacations.

References

Citadel Servicing, (2020), https://www.citadelservicing.com/pudtels

Farooq, Umar (2018) Pestle Analysis of Airbnb

Keegan, W. J., & Green, M. C. (2020). Global Marketing (10th ed.)

PR Newswire. (2019, August 1) New Study Shows Why Airbnb is Disrupting the Hotel Business in Mexico www.culturiest.com