Case study 5

Airbnb
Those of us who travel regularly for either work or pleasure know that there are hotels out there which are not always the friendliest or even nicest places to stay in. But how many of us would let those thoughts lead us to thinking about our own post-purchase behaviour following the purchase of our own homes?
One company, founded in 2008, has revolutionised the hospitality industry and in the process turned itself into a multi-billion dollar company with more than 1.5 million listings in nearly 200 countries. The idea emerged after one of its co-founders, Brian Chesky, rented out air mattresses in the living room of his San Francisco loft apartment.
Airbnb.com, as it’s now known, is a website which enables people to list, find and rent accommodation. It has 12 offices around the world, in Barcelona (Spain), Berlin (Germany), Copenhagen (Denmark), Dublin (Ireland), London (UK), Milan (Italy), Moscow (Russia), Paris (France), San Francisco (US), São Paulo (Brazil), Singapore and Sydney (Australia).
Airbnb runs on a marketplace platform model where it connects hosts and travellers and enables transactions without owning any rooms itself. Such platforms disrupt traditional industries by creating new sources of supply and relying on curation for developing quality. Unlike traditional hotels, Airbnb grows not by scaling up its inventory but by increasing the number of hosts and travellers and matching them with each other. Users are categorised as ‘Hosts’ and ‘Guests’, both of whom must register with Airbnb using a variety of means. A valid email address and valid telephone number were initially the only requirements to build a unique user profile on the website, but from April 2013 a scan of a government-issued ID (a passport or identity card) is required.
Profiles include details such as user reviews and shared social connections to build a reputation and trust among users of the marketplace. Other elements of the Airbnb profile include user recommendations and a private messaging system. In addition to providing personal information, hosts display listing details including price, amenities, house rules, imagery and detailed information about their neighbourhood. Due to the nature of the business, a merit system is in place to allow guests and hosts to leave references and ratings which are displayed to the public in order to provide an evaluation method.
Its primary source of revenue comes from service fees from bookings. Fees range between 6% and 12% depending on the price of the booking. Airbnb also charges the host 3% from each guest booking for credit card processing. It has seen exponential growth over the past four years. In February 2011, Airbnb announced its one millionth booking since its inception in August 2008. Then, in January 2012, Airbnb announced its five millionth night booked internationally through the service. In June 2012, the company announced 10 million nights booked, doubling business in five months. Of these bookings, 75% of the business came from markets outside of the continental United States. By October 2013, Airbnb had served 9 million guests and in December 2013 the company reported it had over 6 million new guests in 2013.
In July 2010, the company received more than 300 emails from people who were on the brink of losing their homes through foreclosure due to financial hardship from the economic recession; these people said that they depended on their continued ability to sublet rooms in their residences. Non home-owning users also frequently sublet their homes to renters for prolonged periods (often a breach of tenancy agreements). Yet a July 2014 court in the USA rejected a landlord’s eviction plans after his New York City tenant sublet her unit through Airbnb. The judge found that local laws prohibiting short-term sublets only apply to landlords, potentially opening the doors to many more sublets through Airbnb in the coming months and years.
In the aftermath of Hurricane Sandy, Airbnb partnered with New York City Mayor Michael Bloomberg to offer free housing for persons displaced by the storm. Airbnb built a microsite for this effort alone where victims register for housing and meet property owners with free housing. Additionally, Airbnb waived all service fees associated with these listings while maintaining the Host Guarantee for all properties listed.
Airbnb is also appealing to luxury homeowners. While most wealthy homeowners would have never considered renting out their properties over traditional bulletin boards, classified ads, or Internet sites such as Craigslist, Airbnb offers a much more reliable service for affluent users to earn revenue from their second homes. This phenomenon has caused some distress for the American Hotel & Lodging Association as short-term private rentals continue to disrupt the hospitality industry. A further incentive for luxury homeowners occurred in August 2015, when Airbnb partnered with Tesla Motors to provide chargers at certain host houses, firstly in California.
As with many other websites, Airbnb’s blog has evolved into a content-rich resource for consumers, written by consumers (all showcasing their post-purchase behaviour). The Local Lens section shares individual narratives in a similar fashion to Stories. One post follows an Instagram photographer who spent a weekend photographing fall foliage in New York, while another taps third-party blogger expertise to explore Moscow’s cafe culture. Throughout all of its content channels (neighbourhoods, stories, short films, create) Airbnb makes a point of profiling its more interesting hosts, such as a Stockholm couple who live a vegetarian lifestyle and rent out a converted 1976 school bus for $98 a night. Also included on the blog is a recap of this year’s first annual conference for hosts, where over 40 countries were represented.
In order to influence their customers’ post-purchase (and even pre-purchase) behaviour, Airbnb’s content strategy extends to social media, where it embraces visual marketing to attract fans. On Instagram, the brand posts user-generated photos that it curates from its hosts and guests. Its YouTube channel is home to global content such as the new TV spot, ‘Interning at Airbnb’ and ‘The Making of the Airbnb iPhone App’. ‘Wall and Chain’ comes with three behind-the-scenes videos that are also posted on YouTube. The company uses Twitter and its Facebook page, which has over a million followers, to promote blog posts and particularly extraordinary listings. Seasonal and timely content collections such as ‘Where to Stay for the TCS New York City Marathon’ and ‘A Host of Haunted Homes’ keep the feeds fresh.
Airbnb is a company that has tapped into post-purchase behaviour in a big way. From the post-purchase behaviour of homeowners who use their purchase to earn money, through to the post-purchase behaviour of guests who post about their experiences, the company uses every available tool to create a viable, grassroots led business.
Questions
1.Why would someone want to post a review on Airbnb?
2.How does post-purchase behaviour of consumers influence a company that doesn’t actually own anything and yet is still valued at $10 billion dollars?
3.If a consumer has a complaint, where should it be targeted – the homeowner or Airbnb as the broker?
4.What part do business innovation and technology play in developing post-purchase consonance?
5.How does post-purchase consonance affect the quality of postings?