Airbnb : The digital platform-”trend” maker.

WHAT IS DIGITAL PLATFORM ?

Unlike a Website, Banner, Facebook app or a 30-second ad, digital platform is a always-on environment, allowing brands to run one or more specific programs. … with the aim to interact with consumers at many different levels in the most meaningful way. it creates a direct connection between users and the brand without being materially dependent on any available network such as social networks, forums, or traditional media. There are so many activities that can take place on digital platforms, but it all ends with a transaction.

AIRBNB, THE MOST POPULAR DIGITAL PLATFORM

Airbnb (Air Bed and Breakfast) is a service aimed at connecting tenants, accommodation with those who have rental and accommodation needs. User just need to enter the desired place, confirm the address of the apartment will be sent. All payment will be through this app and it will collect an intermediary fee for both the tenant and the lessee. Airbnb is also known as the Uber of the hotel industry.

HOW DOES AIRBNB WORK ?

When an apartment owner has no need to use that place, they rent it out.

The operating model of Airbnb is like Uber or Grab services: Airbnb acts as an intermediary for tourists and apartment owners, collecting connection fees.

If you have an apartment or villa that you want to rent out, by registering an account with Airbnb, posting information on the website and giving it to tenants, you will become a host (landlord).

Tourists will go to the website looking for the place they want to rent. All payments are made via Airbnb.

WHO ARE AIRBNB’S CUSTOMER SEGMENTS ?

There are two main type of user in Airbnb platform:

-Group of people want to rent out a room, apartment or a place to live (also called the hosts)

-Group of people want to search for a room, apartment or a place to rent during their trip (also known as guests)

AIRBNB’S TRANSACTION COST

Transaction cost is a cost in making any economic trade when participating in a markeT. Transaction costs are divided into six types, and all can affect the choices we make:

SEARCH COST

Searching cost is the cost (which can be time, effort and money) that consumers spend to research, select and decide on alternative products that are suitable for consumers’ needs.

Airbnb lower this cost by giving users filters to filter out which type of place that meets their need such as studio room, apartment, homestay, etc. Each type of place will be attached with a picture that can describe the place. Users can use all that picture and filter to save their time on searching places.

INFORMATION COST

Information cost is about collecting all information of alternatives options. When users find out the place, they want to know more detail about that place such as sizing, amenities, house rules ( no smoking for example), pricing and fees.

Basic information about the place
More detail information about amenities of the place

BARGAINING (NEGOTIATION) AND DECISION COST

Bargaining cost is the cost required to come to an acceptable agreement with the other party (here are host rules and platform policy) to the transaction, drawing up an appropriate contract and so on. After bargaining, will customer accept to book/pay the place ? Bargaining and decision cost have a correlation.

For example, the adjustment of the price depends on the number of person who will live in that place

The price for 2 guests
The price for 4 guests

EVALUATION COST

Evaluation cost is about after customer bought a service, is it worth the price or did the service meet customer’s expectation. Airbnb has a feedback section where previous customer can write their evaluation there. It helps new customer to get know better about the place that they will purchase.

Feedback and rating section on a host side

COMPULSORY COST

For example, outside of the listed price, Airbnb charges a fee for both the reservationist and the host. The fee for the owner/host is 3% of the total reservation value. There is a tourist fee of 6-12% and this fee will be displayed during the booking process / apartment. Although the fee is quite high, even if you include the entrance fee, you will still save a lot more than when booking a hotel through traditional channels.

Once your booking is confirmed successful, Airbnb will deduct the money from your (credit / debit) card and will pay the owner after you have checked in.

Source:

https://www.airbnb.co.uk/

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