Airbnb was founded in San Francisco by Brian Chesky and Joe Gebbia. It is a community marketplace that allows property owners and travellers to connect with one another, via website or mobile applications, to rent out and stay in properties, respectively. The company began in late 2007 when its founders, struggling to pay for their shared apartment in San Francisco, decided to rent out airbeds to conference attendees. Cleverly, they provided breakfast cereals that were custom-branded to suit the convention their guests were attending, such as ‘Obama Os’ for the Obama convention. They quickly recruited other accommodation providers and started a basic website. Their entrepreneurial spirit captured a lot of attention and resulted in their securing significant investment from venture capitalists such as movie star Ashton Kutcher and music manager Guy Oseary. This investment enabled the company to process customer rental payments, and by 2012 the website had processed more than 10 million bookings.

Today, Airbnb provides a flexible and cost-effective form of accommodation for millions of leisure and business travellers around the world. Airbnb’s business model is simple: it earns revenue by charging service fees to both guests and hosts. The cost to the renter of Airbnb lodgings is determined by the property owner. By not directly owning physical locations, Airbnb has been able to quickly scale its business to accommodate growing demand. In 2022, the company offered more than 7 million listings in 100,000-plus cities across 220 countries. Airbnb surpassed competitors such as Booking.com, Hotels.com and Marriott International in web traffic and is valued at $38 billion worldwide–a similar amount to the Marriott hotel group, even though it does not own any of its properties (Deane 2022). Although the global Covid-19 pandemic had a serious impact on businesses around the world, in 2022 Airbnb’s net revenue was projected to be as much as $8.5 billion (Macrotrends 2022). The rise of Airbnb can be attributed in part to its innovative direct marketing communications. 

Airbnb has always defined its core audience, ‘head-first explorers’ (younger millennials), as a psychographic consumer segment that drives its business. Millennials account for approximately 60 per cent of all guests. This market segment consists of travellers looking for a spacious and comfortable place to stay that is also affordable and functional. In Europe and the US, Airbnb is typically 8–17 per cent cheaper than a regional hotel’s average daily rate. The fastest-growing Airbnb host demographic is seniors, with more than 200,000 senior hosts (senior women are also consistently rated as the best hosts on Airbnb). Although Airbnb traditionally has mostly leisure travellers, who account for 90 per cent of its bookings, the company is now anxious to breach that ceiling and acquire more business travellers. Additionally, the company wants to expand its market reach to connect with groups outside its usual millennial demographic, such as young families and LGBT couples.....

Questions

1. Discuss the potential benefits and limitations of direct marketing communications for Airbnb. 

2. Discuss direct marketing techniques, other than the ones presented in this case study, that Airbnb could use as part of its future campaigns. 

3. Select a major event where there could be significant demand for accommodation, for example the Oscars in the US or the FIFA World Cup. Discuss how you would manage a direct mail campaign for Airbnb for your chosen event. 

4. Discuss the importance and value of enabling and leveraging user-generated content (UGC) as part of a direct marketing strategy