What is Airbnb | Impact of Airbnb on Hotel Industry - Airbnb Vs Hotel Industry

Airbnb as a potential competitor for the hotel Industry 

Topics Under Discussion:

· What is Airbnb?

· Brief  Background.

· Hotel Industry?

· Impact of Airbnb on Hotel Industry ?

Introduction :

What is Airbnb? |  The whole study centralizes around Airbnb,a new concept,new technology with more efficiency and advancement.Now,what actually the Airbnb is, the imprint behind the service is that it joins people needing a lodging, to private people providing such facility.Airbnb is  a market place for arranging or offering lodging, home stays and tourism experiences.It has since starting in 2008 developed exponentially with its online home-sharing stage, to become one of the chief privately held business in the world with a $31 billion estimate(Lunden, 2017).For guests, using Airbnb offers a more true knowledge compared to a hotel state, at a inferior price point. For hosts, letting there room or apartment via Airbnb can be a great way to make extra income and encounter travelers around the world. The facility has registered over 300 million guest’s influxes since it started and in early 2018 the corporation has under 5 million listings existing in more than 191 countries.(Airbnb, 2018).

Now the question arises how this whole system works,the whole concept is implemented through software.What basically happens is, suppose you have a vacate room and you are not getting anything from it you can list yourself in our software. Now customer will see your hostel listing if someone wants to come to your location and can’t afford the expensive hostel he will come to your location and accommodate at relatively less price and they will offer multiple services to them like tea, air condition, wifi and can uses the other facilities. First of all they are creating opportunities for the room owner as they can earn along with that customer can stay comfortably at lesser price. The main point is user can also give reviews about the room or place, facilities and about their owner..Tourist and host connects through software and then the whole process follows.

Brief Background :

How Airbnb come into existence ? | Airbnb Industry | The motivation behind the development of this software is to create a world where anyone can belong anywhere. The concept of this software was created by two friends brain and Joe who used to study together and moved to san Francisco and become the roommate and they did not have much money so they rent a room in that area and due to some financial and expenses issues They think of renting their another vacate room so they bought only air bed as a furniture and place that in that vacate room They publicize that room for the one who are in seek of staying it for a day or more and the named it Air bed and breakfast(Airbnb),that's how the name originates, and then they grows their concept in online market and they got high amount in the reach.

Performance in the hotel industry:

Performance of  hotel industry as compare to Airbnb | There are proper management systems that are working on their customer,their needs,their financial statuses because different customers have different financial statuses and their requirements are different,so in order to maximize the profit they have to analyze their customers in their specific areas.Revenue management is a highly important aspect of refining performance in the hotel industry(Vinod, 2004). In revenue organization, hotels aim to exploit the profits by managing the customer performance through price and availability of their inventory in different channels(Anderson and Xie, 2010). Revenue managements systems becomes particularly effective, when they are combined to multiple data sources. Hotels have numerous channel partners and services contributors that are able to provide data ranging from competitor inventory to implementation tracking in reaching clients.

Airbnb impact on the hotel industry:

Airbnb Vs Hotel Industry | Impact of Airbnb on the hotel industry has been covered by both media and academia research bu the less extent of academia research.Media has covered Airbnb both as negatively and positively.If we talk about tourism point of view it has encouraged the tourism ,has increased the frequency of travel and the length of stay.

If we investigate the substitution of  customers between airbnb and hotel industry from demand or supply-side perspective,then ten recent academia research papers has done that work.. Nowak etal. (2015) surveyed 4000+ adults from four countries (i.e. U.S, UK, France and Germany) and found that travelers used Airbnb as a substitute for hotels in 41% of the cases, while ‘bed & breakfast’, ‘friends & family’, and ‘extended stay’ hovered around 30% each. The findings were similar in Guttentag (2017)

Now to compare the degree of substitution in both mid-scale and lower-scale hotel two researches has already done one  (Guttentag, 2016, 2017)tied to the North American context and second (Hajibi and Dolnicar, 2017) tied to the Australia.Degree of substitution was found to be relatively high in the lower-end of the accommodation offerings, with mixed results for mid-scale hotels, in both Guttentag (2016) and Hajibi and Dolnicar (2017). On the other hand, in a newer dataset Guttentag (2017) found that Airbnb substituted mid-scale hotels to a large degree. The findings also indicated that mainly wealthier, “nonbackpackers” or families chose Airbnb over both mid- and upscale hotels (Guttentag, 2017).

Conclusion :

The rapid global expansion and exponential growth of Airbnb has surprised many market spectators including hotel executives that have largely dismissed the new competitor (Varma et al., 2016; Guttentag, 2017)

The major area of the research lies in the area of the consumer behaviour through which we can get an idea of the competitiveness between both,but the data shows that it depends on various factors whether they are traveling for business purposes and leisure and for tourism ,along with the delay for how many nights they want to stay.But it has a great impact for hotel industry and the organizations of the hotel should not underestimate this business.