Hospitality Management Studies | Assessment1

Hospitality Management Studies
Name of Student:
Name of University:
Author’s Note:

Introduction
Singapore is well known for its tourism and hospitality as well as for its ease of doing
business. This leads to a lot of scope of business in the hospitality industry and the volume of
international tourists largely underpins this industry’s growth. While leisure is one of its major
supporters, business tourism contributes an even larger share to the nation’s tourism and
hospitality. Altogether, Singapore is one of the most visited cities in the world (Rosen 2019),
which caters not only to the super luxury or boutique hotels, but also the budget hotels, motels
and hostels. According to an analysis by Loo (2015, p. 7) a lion’s share of the visitors to the city
were willing to opt for a budget accommodation. However, these visitors did not necessarily
spend less in Singapore as compared to those staying in luxury hotels
The idea of the experience of staying at a home away from home has gained popularity
with the rapid growth of peer-to-peer business platforms like Airbnb. As a result of this shift in
the mindset of travelers, hostels and economy hotels in Singapore have to compete not only on
the element of pricing but also on lodging experience. The concept of peer-to-peer business, or
sharing economies, is where two individuals communicate and make a deal to buy and sell goods
or services directly with each other, without having to involve an intermediary third-party.
Sharing economies allow people to generate revenue out of underused or unused assets such as
spare rooms, by renting them out. In a way, it allows physical assets to be utilized or shared as
services.
Airbnb is one such company that has masterfully utilized and promoted the concept of
shared economy, to the extent of becoming one of the biggest hospitality and tourism brands
across the world. Booking.com, Outdoorsy, Homestay and Roomorama are some other

significant names in the market of homestays or shared rental inventory, but their markets are, as
of yet, dwarfed by Airbnb, which has over 6 million inventory listings in 190 countries.
Roomorama, which is based in Singapore and caters mainly to the Asia-Pacific region, has
around 80,000 properties (Mody, Sues and Dogur 2017). As a result of the availability of the
cheap inventory, more tourists and visitors are opting for their services, leading the incumbent
hotel industry in a serious dearth of customers. Taking a close look at the revenues of the city-
State’s hotel industry, one can find a flattening revenue trajectory over the last few years (Jobs
2019).
Despite the slight increase in the number of tourists since 2017, the hotel industry has
been seeing stagnation in terms of revenue. This proves that there is not deficiency of the influx
of tourists, but the alternatives available to them in terms of lodging has resulted in the shift of
revenue from the hotels to the peer-to-peer platforms. This report will attempt to analyse the
effects of Airbnb on Singapore’s budget hotel industry and the different steps being taken in its
response.
In response to the growing threat to the country’s tourism and hospitality industry along
with various concerns for the hosts, Singapore’s Urban Redevelopment Authority has restricted
short-term home rentals, thereby effectively banning Airbnb and such like organisation.
Discussion
Introduction to Airbnb
Airbnb is the world’s largest brokerage service provider, which offers lodging to local,
national and international tourists, mainly in the form of home stays. The company also offers
tourism activities and experiences to its customers. Surprisingly, the company does not own any

of the advertised real-estates or host events itself. It basically only provides the necessary
connection between the hosts of the lodging and the prospective guests. Its headquarters in San
Francisco, California, USA, but it provides services in over 100,000 cities and regions in 190
countries all over the world including Singapore (Airbnb, 2019). Its total listings contain over 6
million different properties which can be rented, ranging from single bedrooms to entire villas,
resorts and holiday homes in exotic locations. The company also offers tourism experiences by
giving customers access to over 40,000 local communities, interests and activities run by hosts
across the world (Airbnb 2019).
The company was founded in 2008, when its two founders Brian Chesky and Joe Gebbia
came up with the idea of turning their living room into a bed-and-breakfast by laying down an air
mattress, in an attempt to better afford the expensive rent of their San Francisco apartment.
Along with their friend and third co-founder Nathan Blecharczyk, they named it Air Bed and
Breakfast, which was later shortened to Airbnb. The company, due to its unique ideas and
policies became extremely popular, and by December 2012, it had opened branches in 11
different cities around the world including Paris, Milan, Barcelona, Sao Paulo, Sydney and
Singapore (Airbnb, 2019). It not only serves as a tourism and hospitality corporate, but also
offers business to people who are ready to rent out their homes to tourists and visitors on a
shared basis. It provides a platform for hosts to let out their property to accommodate guests with
short-term lodging. It also allows guests to offer various tourism-related activities.
Guests, with the help of Airbnb’s website or mobile app can search for lodging according
to their preference using various filters such as location, check in and check out dates, type of
lodging required, and price range. Guests can search for specific types of stays, like vacation
homes, bed and breakfasts, unique locations and experiences. Special offers such as Airbnb Luxe