Review the case study in chapter 2. ( Answer the questions at the end of the study )

Case Study: Airbnb Most hotel chains build their brand around consistency by offering the same experience at every location. Luxury brands differentiate themselves from budget chains by providing additional services and amenities. This standardized approach is underpinned by a star-rating system that provides some assurance of the quality of the experience. At the same time, standardization and consistency also create sterile experiences that feel impersonal. Traditional hotels are also expensive. Hotels require many employees and real estate in expensive cities where people want to stay. A lack of quality real estate also limits growth and expansion and competition can put enormous pressure on profit margins. A solution to these challenges is to provide accommodation that is not standardized and requires no investment in real estate or workers. Shortly after moving to San Francisco in 2008, Brian Chesky and Joe Gebbia came up with the idea of putting an air mattress in their living room to help them pay the rent for their loft apartment. They put together a website that allowed hosts to offer short-term shared accommodation in their homes. By mid-2012 the number of bookings had reached 10 million nights and by 2018 more than four million properties in 191 countries were listed on the site. Despite owning no hotels, the company now offers more rooms than the largest hotel chains in the world. The company is Airbnb and its success lies in the convergence of innovative technologies that combine reviews, user profiles and identity verification to provide a peer-to-peer service. The platform can be accessed through the companys website or through an app installed on a smartphone. Airbnb is an example of collaborative consumption and sharing. The company operates an online marketplace that connects hosts with guests who want to lease or rent short-term accommodation. More recently, the company has expanded to offer tourism experiences such as walking tours. Airbnb does not own any real estate or conduct tours. The company acts as a broker between hosts and guests and generates revenue by collecting a service fee for every booking made through its platform. Earlier in this chapter we examined the process of disruptive innovation and we illustrated how Airbnb started by focusing on low-value customers. The platform made it possible for guests to sleep in a strangers house for a really low price. Often the accommodation was very basic, sometimes just a couch or an air mattress on the floor! The experience offered none of the frills of a five-star hotel. But over time, the quality of offerings on Airbnb increased and today their listings include apartments, houses, cottages, tree houses, manors and even castles! Many traditional hotels with their high cost structures simply could not compete with this model. Three enablers are needed for a disruptive innovation like Airbnb to emerge: 1. New technologies: Online booking systems, social media, identity verification and review platforms all converged to create the Airbnb peer-to-peer service platform. 2. New business models: Airbnb created a low-cost business model that provides accommodation without the need for the company to own any real estate. 3. New value chains: The peer-to-peer platform used by Airbnb disrupts the traditional corporate supply chain and delivers a better value proposition for the customer. This value proposition is precisely why an Airbnb room right in the middle of Paris can be considerably cheaper than a hotel room. The presence of Airbnb has created some challenges around taxation, workers rights, regulation, zoning, resident satisfaction and exploitation and these challenges highlight why a field like tourism and IT needs researchers from many different disciplines to come up with new answers and solutions. However, because destinations consist of an amalgam of different experiences, the presence of a disruptor also creates new opportunities to service the needs of new markets. (Source: airbnb.com, 2018.) Study questions 1. Visit the Airbnb website and explore some of the products, listings and reviews. Use your observations to analyze the key technologies that you think made the platform so successful. 2. How does the Airbnb platform use technology to reduce the risks associated with bad hosts and guests? 3. If you were a hotel manager, how would you respond to the disruption created by Airbnb?