EssaysForStudent.com - Free Essays, Term Papers & Book Notes
Search

Competing Against Airbnb, a Lost Battle?

Page 1 of 10

[pic 1]

Competing against Airbnb, a lost battle?

Hôtellerie, Tourisme, Loisirs

Professor Frederic Jallat

[pic 2]

[pic 3][pic 4]

GROUP 2

Jennifer Clausse

Jacques Lavie

Marta Perovani Vicari

Massimo Rocchietti

Valentina Ungaro 


Executive Summary

Due to the global financial crisis in 2007-2008, that has produced negative impacts in terms of unemployment, instability and general demoralization, the consumer behaviour has changed radically.

Workers are forced to look more closely at their wages with the consequence of a decrease in consumption. Moreover, new budgetary restrictions have pushed people to consume differently, in a more collaborative way, rather than buying as it always happened until that moment, giving birth to the Sharing Economy. Owners started to rent out underused assets, such as cars, houses or bicycles, to strangers in order to earn some extra money. Moreover, people who were trying to find better deals stopped buying in favour of renting (for a better price) thanks to the rising peer-to-peer community-based services. The new players are usually online platforms that enable consumers with different needs to meet. This development is a global consumption movement nowadays titled as “the uberisation of the economy”.

The Sharing Economy has not only changed the way of consuming, but can also be considered as a proper revolution. In France for example, one out of two people are today adepts of the collaborative consumption.

Plus, according to PwC, Sharing economy’s revenues are estimated to hit $335 billions globally by 2025, up from just $15 billion in 2013. This trend may influence even more the world of employment, giving birth to new job positions and helping to recover from the crisis.

The vacation rental business is one of the fastest growing within the sharing-economy: Evercore estimates the global addressable vacation rental to be around $100 billions in early 2015. With over one million listings, Airbnb is the first player of this market.

This revolution in housing does have a relevant impact on the hostel industry: according to the hotel association of NY city, it was affected by Airbnb for around 1.5 billion over the twelve-month period from September 2014 through August 2015, with the greatest levels of impact generated by loss of over $450 million in direct revenues and roughly $1 billion in potential new development investments.

Knowing these new trends, we better understand what established hotel companies had to face in the past few years. In order to survive and stay profitable, they had to modify and adapt to maintain their positioning within a competitive environment.

The authors will focus on the hospitality industry and will analyse how Airbnb affected traditional hotels’ business. Firstly, they will introduce Airbnb explaining its unique characteristics; subsequently they will stress the differences between Airbnb and the hotel business in order to recommend improvements for hotels.

Airbnb – Company Overview

Founded in August 2008 and based in San Francisco, Airbnb is a trusted community marketplace for people to list, discover and book accommodations around the world. Currently present in more than 190 countries and 34 000 cities, Airbnb makes it easy for people to monetise their extra space.

Although it was founded less than ten years ago, it counts over 1.5 million listings in almost every country by 2015. Besides, within a few years from its creation and without owning any asset, Airbnb stock exchange value was worth twice as much the Accor Hotels one. The company valuation is soaring: at the end of May 2015, it was worth $13 billions and it reached an all time high in July 2015, $25.5 billions. In the hosting market for tourism, it is positioned between the Hilton Worldwide Holdings, Inc. ($27.6 billions) and the Marriott International, Inc. ($20.9 billions), two historical cornerstones of the hospitality industry.

Download as (for upgraded members)  txt (16.5 Kb)   pdf (327.7 Kb)   docx (1.3 Mb)  
Continue for 9 more pages »