Is Airbnb making travellers choose travel over health?

Non-fiction Apr 19, 2020

Airbnb, which started in 2008 to make money by renting their room on Craigslist, currently has more than 65,000 hostsworldwide with 7 million propertylisting. It has 150 million+users and 2 million+ people staying in Airbnb overnight. It has its presence in over 100,000 cities around the globe. It has about 1500 employees and 45 offices. It employs shared economy business model to carter its two customer bases- hosts and travellers. It takes 3% commission for being the user interface for user and travellers.

Airbnb has made strict rules that have to be followed by the hosts to be on the site. This has made staying pleasant, cheap and helped in developing a loyal customer base. They rely heavily on data analysis, digital marketing and communications with hosts to provide an amazing stay for its travellers.

Airbnb carters to two customer segments- hosts and travellers. For travellers, the places are cheap and safe. Airbnb has surpassed Hilton in number of booking and has forces a lot of traditional hospitality industries into including other types of lodges in their business portfolio. With no assets, its main cost is operating and maintaining the digital platform.

Good customer services, easy user interface and intense digital marketing with help of data analysis has helped the Airbnb from being the top hospitality firm in the world. It is estimated to get $35bn valuation during its IPO at the end of the year. On their official site, there are stories about how Airbnb increases the tourism where their hosts are more and how it helps in increasing employment and trade for localities. This has been proven through several studies in Germany, New Zealand, Australia, etc. They have paid over $2bn in taxes to local authorities over the world. They are partnering with Seville to develop tourism routes and businesses that would increaselocal business and would sustainable as well. All this produceda loyal customer following and high valuation as the goodwill of the company is high.

This all changedas Corona Virus started to spread and countries startedto issue traveladvisory. Airbnb business model is such that after keeping the pre booking amount for 48 hours, it transfers the booking amount, booking risks and responsibility of booking to the hosts. So it refused to refund travellers, asking them to negotiate with hosts. Hosts, depending on their personal choices, either returned the money, provided option of future booking or refused outright. Airbnb was unable to do anything about it and faced the brunt of dissatisfied customer’s bad reviews in all forms of media. As corona virus increased and several countries went under lockdown and shut their airports, Airbnb had to change its extenuating circumstance policy from 3 countries to cover 97 countries. It would be take of service charges refund for the hosts and their rating won’t be affected due to the booking cancellations. The travellers would receive full refund for their booking between 1 March to 1 May 2020.

Airbnb has also launched $ 7 millionfund for Chineseusers to help them throughthis difficult time. Over 100,000 hostshave opened theirhome, rent free, for the first line defenders fighting the Covid-19 crisis. It has startedincentive program to encourage hoststo refund the travellers and provide more homes for the first defenders. They have launched a “self-solve” tool, an AI application that solves troubles of travellers twice as fast as before. These all measures have come a bit slow and the sentiments of dissatisfaction is still lingering in the air for customers.

Many customers are seeing this pandemic time to see which company really cares about their employees and their customers, and who are just in it for money. For now, Airbnb is still in column for companies just in it for money.If they continue to stay in this column, then Airbnb can face some serious challenges, other than losing revenue and posting quarter loss after a long time. Especially with its major markets like Spain, France,Italy, China, Japan, USA, UK, etcbeing severely hit by this outbreak. The rivals will love to use this negative sentimentto eat some of Airbnb market share. Their goodwill value could go down, which would affect their stock valuation and that could hurt them. Some hosts might refuse to come work for Airbnb due to losses, that would mean less listing on the site, which mean less booking. Doing quick and correct social responsibility is very important for a company? Will Airbnb pay the price for being unemphatic to health of its travellers? Only time will tell, but for now the traffic on Airbnb has dropped by 50% and the booking will continue to cancel as the Coronavirus threat looms.

– Aishvarya Jain

References

Airbnb. (2020, March). Extenuating circumstances policy and the coronavirus (COVID-19).

Retrieved from Airbnb: https://www.airbnb.co.in/help/article/2701/extenuating-circumstances-policy-and-the-coronavirus-covid19

Bloomberg. (2020, march). Cancel your trip due to coronavirus? Airbnb refuses scores of refunds. Retrieved from Economics Times : https://economictimes.indiatimes.com/small-biz/startups/newsbuzz/cancel-your-trip- due-to-coronavirus-airbnb-refuses-scores-of-refunds/articleshow/74587738.cms

Chen, C. (2020, Feb). Pandily. Retrieved from Airbnb China Sets Up 70-Million-Yuan Special Fund to Restore Confidence During Coronavirus Outbreak: https://pandaily.com/airbnb-china-sets-up-70-million-yuan-special-fund-to-restore- confidence-during-coronavirus-outbreak/

Griffith, E. (2020, March). How your airbnb host is feeling the pain of Corona virus.

Retrieved from The New York Times: https://www.nytimes.com/2020/03/10/technology/airbnb-hosts-coronavirus.html

Jain, R. (2019, March). Airbnb- A Case Study on Digital Strategy, Revenue Model, Funding.

Retrieved from Speakrj: https://www.speakrj.com/airbnb-a-case-study-on-digital-strategy-revenue-model-funding/

Lee, J. (2020, March). Airbnb says US coronavirus stimulus bill could offer its hosts some relief. Retrieved from It news: https://www.itnews.com.au/news/airbnb-says-us-coronavirus-stimulus-bill-could-offer-its-hosts-some-relief-539852

Management, I. (2020, march). Airbnb Statistics. Retrieved from IProperty Management: https://ipropertymanagement.com/research/airbnb-statistics

Rastogi, R. (2016, May). Airbnb’s Phenomenal Growth Using Digital Marketing & Innovation Strategy. Retrieved from Digital Vidya: https://www.digitalvidya.com/blog/airbnbs-phenomenal-growth-digital-marketing-innovation-strategy/

Smith, J. R. (2020, March). Airbnb further expands its coronavirus response, hosts complain, Vrbo makes no change. Retrieved from CNN travel: https://edition.cnn.com/travel/article/airbnb-coronavirus-global-policy- change/index.html

Suciu, A. M. (2016). The Impact of Airbnb on Local Labour Markets in the Hotel Industry in Germany. Joint European Master Programme in Comparative Local Development, 2014-2016.

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