Explain the four characteristics of services for Airbnb. How does (or should) Airbnb deal with each characteristic (i.e. challenges of managing a service company)?

Airbnb Case any looping properties It just brings buyers and sellers together through Airbnb, so money changes hands only through and facilitates transactions between them, But Airbnb's promise of interface. When guests arrive at the chosen property, ta other greets them or arranges for entry. value is what realy sets it apart from the hospitality world's status quo, The new-to-the game lodging provider pitches an authentic As the founders were getting Airbnb off the ground to experience -a true sense of what lite is like in the place you visit. constantly faced a big challenge. Many people -invest Whereas the hotel industry has spent decades sculpting its duded-were skeptical. In fact, during Airbnb's frames standardized offering, in just eight years Airbnb has built a global founders were turned down by every venture capitalas they network of more than 2 million listings and 60 million guests proached. "When we started this company, people thought throughout 34,000 cities in 191 countries. It has also built a were crazy." said Chesky, "They said strangers would news market value of more than $25 billion. Although these numbers with strangers, and horrible things are going to happen . To may sound impressive on their own, in it brief existence Airbnb also had a hard time convincing quests; few people were ly has managed to exceed the accomplishments of the largest to risk staying with someone they'd never met. hotel chain in the world-100-year-old Hilton Worldwide with But Airbnb overcame these concerns through various me its 765,000 rooms, 4,660 properties, and a market value of First, it set up a standard rating system for both hosts $22 billion. guests, alowing each side to assess the other and revel How did Airbnb pull of this amazing feat? According to Brian what others have said about prior experiences, A "super" Chesky and Joe Gebbia- the start-up's founders-Airbnb sim- status gives an assurance of extensive booking experience and ply recognized that the travel industry had lost touch with its high-quality service. A "business travel mandy" badge notes me customers by offering only one cookie cutter option-ticky-tack the host provides specific amenities like WI-FI, a desk, and the rooms in antiseptic hotels and resorts. This standardized model toiletries, Airbob also puts quest and host minds at ease west seemed to dictate an unintended goal for the entire hotel indun- wrification process. tips for safe and satisfactory bookings, are try-to ensure that nothing remotely interesting happens. Once a 24-hour Trust and Safety hotline. Hoats are further protecting Chesky and Gebbin recognized this, they get out a strategy to by an included insurance policy that protects their property tom bring authenticity back into the hospitality industry. damages of up to $1 million. Airbnb admits that although trex measures do not guarantee that nothing bad will ever happen Two Million Rooms-No Two Alike the likelihood of a negative outcome is no greater than it is to It all started when the founders had a hair-brained thought on staying at a chain hotel. how to generate some extra income to help pay the rent on their modest San Francisco loft apartment. During a major conven tion that had every hotel room in the city booked, they rented Seeing the World as the Locals Do out three air mattresses on the floor of their apartment for $40 From the beginning, Airbnb primarily served budget-minded cus a night each. In the process, they discovered that the people tomers with prices for listings lower than those of comparat who booked that real estate got more than just a place to stay hotel rooms. But more and more, Airbnb is seeing a shift toward at a time when they needed it most - they got a unique network- customers-leisure and business travelers alike -who want more ing opportunity. From that moment, Chesky and Gebbila moved than just low price. This is hardly an accident. Airbnb deliberately quickly to develop and formalize the business concept positions itself as a provider of unique and authentic experience Today, using Airbnb to either list a property or rent one to through its branding, communications, and other aspects of it stay in is relatively simple, For hosts-Airbnb's official term for business, In doing so, Airbnb has taken the uncertainty of stay property owners who want to rent out space-It's a simple mat- ing in a stranger's house and turned it into an asset. Whereas ter of registering and being vetted to ensure legitimacy. Listings hotels can compete on price and convenience. they cannot can be pretty much anything from a couch, a single room, a suite compete when it comes to the relationship between guest and of rooms, or an apartment to a moored yacht, a houseboat. an host. "Guests are looking for experiences where they corned entire house, or even a castle (Airbnb currently claims more than with people and connect with culture." says Chesky. "You can't 1:400 castle listings). Some hosts even rent out space in their automate hospitality." yards for guests to pitch a tent. With more than 2 million listed Such was the theme of the second-annual Airbnb Open-a properties for rent, each is as unique as its owner. Because motivational event held in Paris, the company's biggest market listings are in private homes and apartments, they are typically and attended by 5:000 hosts from 1 10 different countries In his located in residential neighborhoods rather than commerce cert keynote address, Chesky explained that the entire hospitality ters where national and global hotel brands abound. Bookings industry caters to tourists in a way that makes them feel like tour can be offered by the day, the week, or the month, and hosts ists. But with an Airbnb experience, quests start to feel like they decide on price and the other details of their service and listings. are a part of the neighborhood and the city. Airbnb keeps only 3 percent of the booking fees and returns the As part of his presentation, Chesky summed up the entire out to the host within 24 Hours, Airbnb philosophy by illustrating the experience his own par For guests, the process is about like buying or booking most ents had when they arrived In Paris just days before the event anything online. Registered users search by city, room type Pictures of their first day in town-hosted by typical tours! price range, amenities, host language, or various other options. guides-were projected on a big screen. There was a picture of including entering their own keywords. Most listings provide them on a double-decker tour bus, another on a generic boat photos and details that give potential guests a reasonably ac- ride, and a third standing in line at the Louvre. Chasky narrated curate klea of what their stay will be like. Guests can contact each image with comical cynicism. "Every year, 30 million people potential hosts with questions before booking. On top of the fee go to Paris. They look at everything and they see nothing, We for the property, questa typically lay down a security deposit and don't need to go to monuments and landmarks to experience a pay a 6 to 12 percent service foe to Airbnb. Bookings are made culture. We can actually stay with people." Then Cheeky showed images from his parents' second day in Paris-guided by some 2Airbnb Case Airtino's top hosts-where they experienced the city from the perspective of locals. They had coffee at an authentic sidewalk cafe, took a walk in a garden, and drank frank and danced at a cozy a Brooklyn neighborhood that is a huge Airbnb market but not a parisian boite. "Maybe we should not travel to Paris," suggested traditional tourist locale. But even as hotellers attempt to invade thesky. "Maybe what we should do Airbnb's turf, they will have a tough time duplicating the Airbnb experience. Despite its expansion and success, Airbnb still finds itself Executing on the Promise battling for legitimacy. Some cities do not allow the rental of This ideal- one supported by all Airbnb employees-was the personal property for any duration less than 30 days. And there driving force behind a recent and ambitious rebranding effort by are many travelers who might prefer the Airbnb experience but me tech start-up. The company tossed out its original straight- still have concerns about staying with strangers. Airbnb is rising orward text logo in favor of something far more abstract-a to these challenges with idealistic fervor, In fact, Chesky goes so ambol that resembles a puffy capital letter "A" with the two far as to suggest that Airbnb's mission goes beyond providing sides crossing over. Airbnb calls it the "belo," "the universal an authentic guest experience and into the realm of establishing smbol of belonging." The new logo communicates a sense of world peace. He explains that living in close proximity to those belonging through something that transcends language, culture, from other cultures makes people understand each other a lot Anywhere." and geography. A new slogan accompanies the logo-"Belong more. He concludes, "I think a lot of conflicts in the world are between groups that don't understand each other." To ensure that the Airbnb guest experience is as authentic and unique as possible, the company focuses first and foremost on its community of hosts. In fact, Airbnb considers its hosts to be its primary customers. As a result, Airbnb has been able to nurture a huge global community of lodging providers who are true believers in the Airbnb vision. Treated as active participants in the business, hosts develop a sense of ownership and devo- tion. In this manner, Airbnb influences hosts to follow certain guidelines toward creating the best guest experience possible. This is by no means intended to create a standardized model. But by urging hosts to offer guest services such as airport pickup and walking tours, Airbnb strengthens the connections formed with guests. "What's special in your world isn't just the home you have," Chesky tells the crowd at the Airbnb Open. "It's your whole life." The explosive expansion of Airbnb in every world market has certainly caught the attention of the big hotel chains. Developers are beginning to build hotels in places where they normally would not. For example, eight new hotels are going up in Williamsburg,Airbnb Case Like many services industries, hotel companies have done a tre- mendous job of ensuring the quality of the customer experience property are equally predictable. And although luxury level across through standardization. People booking rooms through any of these features varies from chain to chain, the vibe is the same. the major hotel chains can be pretty much assured of certain Many travelers count on this standard experience-it assures basics. They'll enter the 13-by-25-foot room into a short hallway that their experience will be within a set of narrow, expected boundaries. Minimizing the risk of negative outcomes typically with a bathroom and closet on one side or the other. In the bath- results in a satisfactory lodging experience for most guests most room, they'll find the basics along with a sterile display of soaps, of the time. hair care products, and other toiletries. The room features a bed But one lodging provider is targeting travelers who have a dif- or two flanked on both sides by nightstands with a reading light ferent set of needs and expectations. Airbnb is turning lodging by each. An upholstered chair and ottoman sit at an angle in the services upside down by promising a hospitality experience that is far corner with a desk opposite. A dresser topped with a flat- the complete opposite of the one provided by major hotel chains. screen TV sits across from the foot of the bed. Visitors might also A major player in the new sharing economy, Airbnb is an online discover a mini-fridge and a microwave oven. community marketplace that connects people who want to rent The artwork and decor are fairly contemporary although out space in their homes with those who are looking for accom- impersonal and nondescript. Other details throughout the hotel modations. Like a true online marketplace, Airbnb doesn't own