What recommendations would you make to Airbnb to improve its competitiveness in accommodation market while mitigating any current and future risks?

Answer:

I. Internal factors to improve competitiveness:

          1. Web improvement and innovation:

                   a. Web design: If we look at the current design of the website, it looks very monotonous and simple. It lacks main color tone and thus it is not appealing for the customers. Thus the web site should be redesigned and more dynamic and appealing layout and features must be added.

                   b. Web language: The main language of the website is Spanish but if we notice than the AirBnB caters the customers of almost 191 countries, thus while entering in the website, the language option should be provided to the customers for their ease of operating it.

          2. Customers services:

                   a. A strict and accurate management system: Trust is the biggest issue when it comes to hosts and guests. A review system is being developed by AirBnB in which both hosts and guests will have the option of rating each other. But this is also hampered as they can rate or review themselves and thus the rivals can take the advantage of it. This will also lead to ignoring the real and authentic reviews. A greater focus should be given to review system by AirBnB. Some kind of OTP system can be introduced to authenticate the review and if any of the host is having more than specified negative review should be removed from the list.

                   b. Loyalty programs: A certain amount of total transaction is being charged by AirBnB whenever there is a transaction between guest and hosts. There is no loyalty program for the regular customers and each customer is treated similarly. In order to encourage guests, some kind of promotional tools must be employed. “Free breakfast for group of 5 or more”, “ sale 20% of fee charged if that host have more than 30 guests this month”, etc kind of plans can be introduced by AirBnB.

II. External factors to miligating current and future risks.

          1. Legitimize the business:

                   The biggest issue related to AirBnb among the local government is the impact of AirBnB on the supply of affordable long term housing. As the short term rentals are more attractive than the long term, there is a apprehension in the government that most of the landlords will ignore the long term rental and will go for short term rentals. It can lead to supply shock as lowering the supply will impact the price of the housing. The biggest threats for this kind of phenomenon are related to those who have multiple properties registered with AirBnB which are termed as “commercial users”. In order to control these “commercial users’ some kind of coordination must be held between the AirBnB and the government. This is more expected from AirBnB as it aims at providing affordable housing.

          2. Improve safety and insurance for hosts:

It is not advisable to have strangers in your house at night and vice versa. Theft, destruction of property, kidnapping are the probable threats which are related with the AirBnB apartment and thus the customers prefer to stay in hotel. In fact most of the insurance companies are not providing coverage for AirBnB host. The attempts should be made by AirBnB to prepare some comprehensive insurance plans which can mitigate the risk away from the insurers.

Reference:-

Lu, V. (2016, March 31). 5 recommendations for Airbnb and other home-sharing services. Retrieved July 30, 2017, from https://www.thestar.com/business/2016/03/31/5-recommendations-for-airbnb-and-other-home-sharing-services.html