AIRBNB: AN E-COMMERCE DISRUPTION IN THE HOSPITALITY INDUSTRY Airbnb is a portal that connects travelers with local hosts that provide lodging. This lodging can include single or shared rooms, suites, or entire apartments/houses. The firm acts as an intermediary and matches travelers with hosts for a fee. Customers enjoy using the service because it is often less expensive than traditional hotels and can provide greater flexibility in the type of lodging being provided. The company was founded in 2008 and has quickly grown to over 190 countries and more than 34,000 cities worldwide (see extjuggernaut.com/blog/airbnb-business-model-canvas-how-airbnbworksrevenue-insights). Many consider Airbnb's growth to be quite significant, with a revenue growth of 113% between 2014 and 2015 (see skift.com/2016/05/03/state-of-travel-2016- airbnb-vs-hotel-rivals-in-6-charts). And while the company is still private, some put its value at up to $30 billion (see bloomberg.com/news/articles/2016-06- 28/airbnb-seeks-new-funding-at-30-billionvaluation). This growth began in the United States, but international expansion has a dwarf rows domestically (see growthhackers.com/growth-studies/airbnb). Currently only 16% of the company's bookings are in the United States. The fastest-growing host cities for Airbnb are primarily in Asia with other strong growth in Europe (Taylor 2016). One major question about this growth is if it is dislodging travelers from traditional hotels and if so how much. It is difficult to evaluate all of the potential impacts on hotel occupancy rates and with it the possible impact of Airbnb. While Airbnb rentals are significant, they are small compared to the annual use of hotels in the United States. Many are analyzing this issue and attempting to determine the effect this may have on the lodging industry as a whole (Salvioni 2016). This growth has not been without challenges. One issue that potential hosts must contend with is the potential for their lodging to be damaged. Because these hosts do not have insurance that is typical of a hotel, these damages may not be covered (see mashable.com/2015/04/30/house-destroyed-airbnb-renters/#ztIl4rFrFiqm). To address these concerns, the company is working on systems to better vet potential renters as well as providing some relief to hosts. Another issue is the legality and regulatory requirements for Airbnb itself. Many localities view Airbnb as they would a traditional hotel or hostel. This may be because the laws currently on the books are not created with this business model in mind. In any case, the company is spending large sums of money and has engaged many employees to work with municipalities to clarify laws and their enforcement as it relates to the company (Taylor 2016). A major issue for Airbnb and similar companies is taxation. For example, in New York City, there is an accommodation tax of 17%. In 2016, Airbnb agreed to collect money from the renters and pay the fees to the city. Questions 1. What factors have allowed Airbnb to grow as rapidly as it has? 2. Will Airbnb disrupt the traditional lodging industry? 3. What can renters and hosts do to protect themselves when using Airbnb?

4. Select a city that you would like to travel to. Compare the cost of a traditional hotel (Travelocity.com) to the cost of an Airbnb host (Airbnb.com).