Factors Determining Success or Failure of Airbnb

This case study discusses the factors that will determine the success or failure of Airbnb, including business legitimization, technology usage, guest and host experience, business expansion, and safety and security.

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Contents
CASE STUDY 1: AIRBNB, INC........................................................................................................................2
ANSWER 4:..............................................................................................................................................2
FACTORS THAT WILL DETERMINE SUCCESS OR FAILURE OF AIRBNB:..................................................2
RECOMMENDATIONS FOR AIRBNB:.....................................................................................................3
CASE STUDY 2: ROSEN HOTELS AND RESORTS.............................................................................................4
ANSWER 1:..............................................................................................................................................4
IMPRESSIVE AND SUCCESS POINTS ABOUT ROSEN HOTELS AND RESORTS.........................................4
References...................................................................................................................................................6

CASE STUDY 1: AIRBNB, INC.
ANSWER 4:
FACTORS THAT WILL DETERMINE SUCCESS OR FAILURE OF AIRBNB:
1. Business legitimization: Airbnb was founded by Brian Chesky in 2008 with an idea of
room sharing business model. The business model is very simple; a host offers room on
rent and guest can book it directly; both things are done one Airbnb app. This new
business idea is totally different from old concept of hotels and motels which are under
rules, regulations and taxation policies of their respective local and national
government. Even local municipalities and countries believe that Airbnb must legitimize
and come under taxation, rules and regulation of their respective host countries. An
example of this is Los Angeles that passed regulation targeting Airbnb and such other
companies (Daniels, 2018). The level of Airbnb legitimization will decide its success or
failure.
2. Technology usage – It should be noted that Airbnb is a unique concept to book a stay
which is based on technology. So, it is important that technology used should be simple
and user friendly. In addition, the information provided by host should be correct about
their property.
3. Guest and host experience – Today, guest wants to live in properties to get the local
experience. Airbnb has hosts who are ready to share or rent their properties along with
providing their guest with local experience. Till the time, this setup works smoothly,
Airbnb will succeed. The moment there is some issue between guest and host;
company will be blamed for the same. This can affect the brand image of Airbnb.

4. Business expansion – As seen in Exhibit 2; the market for bed and breakfast is domestic
only (Varlaro & Gamble, 2017). This means that Airbnb has given opportunity to
international travelers to explore the local cultures by providing accommodation from
local hosts. Today, there are 15 million property listings on Airbnb in 190 countries. The
success of Airbnb depends on addition of more hosts offering quality property on its
app... Financially, there is high growth in revenue from $6 million in 2006 to estimated
$1229 in 2017 (Varlaro & Gamble, 2017).
5. Safety and security of guest and host – It is to be noted that Airbnb conducts
background checks of hosts and guests only in United States (Airbnb, 2019). This means
that it does not perform such check in other countries. This can put the safety of guest
or host at risk (Gallagher, 2018).
RECOMMENDATIONS FOR AIRBNB:
1. Background checking of host and guest – This is very important as Airbnb is working in
sharing space business. It is important that the host and guest both are safe for each
other. Or else, there can be issues arising that can finally result in negative brand image
for the company.
2. Getting regulated – Hotels, motels and bed and breakfast companies are registered and
comes under local, state and national regulation. They invest heavily in their business
and will lobby against the concept of Airbnb till it is legitimated. Therefore, it is
important for Airbnb to legitimate itself so that it can grow fast and smoothly.
3. Financial checks – Airbnb takes an estimated 11% fee for room stay. Though established
in 2008, it achieved profitability in the year 2016 in spite of constant revenue growth

(Varlaro & Gamble, 2017). Therefore, it is recommended that Airbnb should focus on
increasing profitability in order to sustain and grow.
CASE STUDY 2: ROSEN HOTELS AND RESORTS
ANSWER 1:
IMPRESSIVE AND SUCCESS POINTS ABOUT ROSEN HOTELS AND RESORTS
1. The first and foremost thing about Rosen Hotels and Resorts is the HR policy of open
door. Here, employees are free to present their ideas to top management; they can
even go to Mr. Rosen’s cabin and talk to him about their ideas. Each employee is free to
express. In addition, there is no formal organization structure; which makes employees
a part of family rather than a company. Company also awards its employees with
Golden Pillar awards every year (Resorts, 2019).
2. The benefits employees are given are one of the best in the industry. Employees are
not just free to express their thoughts but are given one of the best medical facilities.
Company provides medical coverage and insurance to employees, prescription
coverage, education, training for carrier enhancement, planning for retirement and
family support. This makes the company policy very impressive (Owen, 2012).
3. Rosen hotels and resorts does not take loans from banks. Whatever expansion or
renovation they do, everything is done from the funds company has. This means the no
debt policy makes company a debt free company with no worries and continuous
growth.

4. Rosen hotels and resorts have seven hotels in Orlando itself. The company is very clear
that it does not want to expand nationally or internationally. This means that the focus
is very clear and thus the planning and strategies are focused on growing in Orlando
market itself. The strategy of company is to compete in two important sectors in
Orlando; leisure and convention. Four hotels of company are targeted towards leisure
segments ranging from economic range to slightly higher range. This means it caters to
variety of customer segments. Three hotels of company are focused towards
convention segment focusing on upper middle to upscale price range.
5. “Great Service” is the most impressive strategy that Rosen Hotels and Resorts is
working on. Company believes in competing on basis of location, facilities, food, price
and service. Since there are high level of employee retention, employees are known to
service standards expected from them and try to maintain the same. This means high
level of service standards are always maintained.
6. Yield management was adopted by Mr. Harris Rosen even before other industry
adopted it. His experience in the industry before starting his own hotel helped him to
use yield management during the time when Orlando tourism industry was at its lowest
(Lambert, 2013).
7. The location chosen by Mr. Harris Rosen is one of the best tourist destination in United
States. 66 million visitors were hosted in Orlando in year 2015 (Harris, 2017). This level
of far sightedness is one of the key success factors of Rosen Hotels and Resorts.

8. Company is ahead in terms of technology as it has established The Millennium
Technology group that provided technological in various fields. This means company is
independent in terms of technology too and this helps in its growth and expansion.
9. Company understands its corporate social responsibility and is involved in being a green
company, opening its own college and providing free education. This enhances
company brand image too.
References
Airbnb, 2019. Trust & safety. [Online]
Available at: https://www.airbnb.co.in/trust
[Accessed 1 April 2019].
Daniels, J., 2018. Los Angeles passes regulation targeting Airbnb and other short-term rental
services. [Online]
Available at: https://www.cnbc.com/2018/12/12/los-angeles-passes-regulation-targeting-
airbnb-rental-hosts.html
[Accessed 1 4 2019].
Gallagher, L., 2018. Airbnb Story. Reprint ed. s.l.:Mariner Books.
Harris, R. D., 2017. Cases in crafting and execution strategy. 14 ed. Oh, United States: Mc Graw
Hill Education.

Lambert, S., 2013. Hotel Yield Management Skills: Maximizing Revenue. 1 ed. s.l.:Amazon
Digital Services LLC.
Owen, J., 2012. Rosen Hotels and Resorts in Orlando Steps up to Diversity Challenge [Interview]
(22 10 2012).
Resorts, R. H. a., 2019. About Us: Service of Excellence. [Online]
Available at: https://www.rosenhotels.com/about-us/service-of-excellence/
[Accessed 1 April 2019].
Varlaro, J. D. & Gamble, J. E., 2017. Airbnb Inc., in 2017; Cases in crafting and Executing
Strategy. 14 ed. s.l.:McGraw Hill.