Airbnb in the Digital Economy

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When Airbnb first emerged into the digital atmosphere, it started a simple bed and breakfast idea that two friends turned into a website. Little did founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk know that the small idea that they had launched into the digital economy in the form of the website would ten years down the track turn into a multi-billion-dollar worldwide corporation that would become over 2.6 billion dollars in revenue annually (TED, 2016). With commercial Web rapidly rising and large corporations such as Facebook and Google being large web participants there is no doubt that the commercial web will be the way of the future for developing businesses around the world (Jarrett & Wittkower, 2016).

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The emergence of Airbnb in the digital economy has had an extraordinary effect on the corporation and how well know it has become worldwide. With the help of Web 2.0 technologies, Airbnb's innovative business model has been very successful online. The question being asked and analysed in this section of the report is how the emergence of Airbnb in the digital economy has helped with and guided the corporations’ global success? And have changed the economic landscape had any impact on Airbnb within the digital economy? These questions will become the focus area of this segment of the report as we look further into the emergence of Airbnb into the Digital Economy.

 

 

Airbnb Business Model

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Airbnb is a strong example of a successful internet business model. Since the introduction of the web in the 1990s, there have been numerous internet business model developments (Rappa, 2009). Some of the most successful internet businesses include those of eBay, Amazon and Netflix and each of these businesses have been given the opportunity to evolve faster than they would in the offline world thanks to the internet. Airbnb has successfully transformed both the travel industry and the traditional bed and breakfast industry by taking them to an easily accessible online platform.

 

Similarly, to the way that Netflix has dominated the online movie and internet entertainment industry, Airbnb has changed the way in which hosts can rent out their short stay or holiday homes to travellers from all over the world. Airbnb has changed the way that consumers can log on and rent somewhere to stay instantaneously anywhere around the world. Airbnb offers some beautiful facets to consumers. It has revolutionised the short-term-rental industry by providing its consumers with global access to millions of properties at the simple click of a mouse. With the success of business models migrating to the web, the digital business economy is booming and because of this internet businesses are benefiting from the leverage that the network offers.

 

The digital or internet economy is considerably very broad and can be viewed in a variety of different ways. Jarret and Wittkower (2016, p. 4) discuss how “the definition of ‘economy’ can be pluralized, expanding it from the strictly monetary example”, in the case of Airbnb the application and website is more than a financial economy and highlights the cultural and economic life that the internet and digital platforms should offer. There are many advantages and disadvantages to Airbnb being a world-wide web-based business.

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Advantages

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• Allows homeowners to list their properties and earn a rental profit.

• Provides cheap accommodation options for travellers.

• Rating and review system for both hosts and guests.

• User-friendly mobile application and website.

• Provides hosts with damage protection for their properties.

 

 

Disadvantages

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• Misrepresentation of properties listed.

 

There are more advantages to Airbnb than there are disadvantages. However, many of the positions are beneficial to the business model and brand itself rather than the consumers. Airbnb runs off a unique and robust business model that is unlike any other internet and digital based business, Airbnb is also individual in the service that they provide and the audience that they target.

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Customer Segmentation

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Three customer segments divide Airbnb's business model, the hosts, travellers and photographers are the customers that segment Airbnb ("How Airbnb Works Insights into Business & Revenue Model", n.d.). The hosts are those that place their property or room for rent on Airbnb, and they make money from listing their rental on Airbnb. The travellers are those who book the properties or rooms listed by the hosts. Travellers can search for properties by filtering them by location, size or price. The photographers are freelancers who have utilised by Airbnb to take high definition images of listed properties, "the high-quality photographs get more responses, and the freelance photographers are paid by Airbnb directly" ("How Airbnb Works Insights into Business & Revenue Model", n.d.). Airbnb makes its revenues by charging its hosts' booking fees. Essentially the hosts are paying to list their booking on Airbnb's site. The way that Airbnb operates digitally through its website and mobile application is a strong example of both a successful internet business model and a successful internet business in today’s digital economy.

 

Evaluation

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Airbnb utilises the digital economy to create a successful business model and successful digital platforms for their business to run off. Without the leverage of web 2.0 and there would be no way for Airbnb to create a successful internet business that operates digitally worldwide. Airbnb is known for their ease-of-use and user-experience through their mobile application and website, and they rely heavily on these platforms to gain both hosts and travellers. Overall, Airbnb leverage the digital economy and what it offers positive outcomes for both their brand and their consumers, Airbnb is one of many that are taking a digital approach on how to manage a worldwide multi-billion-dollar business and shows that internet is the way of the future for new upcoming and old outstanding brands and companies.