Trend report Essay. Business & Marketing Assignment

The Effect of Airbnb on the Hotel Industry
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Institutional Affiliation
Executive Summary
Airbnb has revolutionized the tourism and hospitality industry. It has elevated the perception that is directed towards the sharing economy concept. The number of guests, as well as listings, has been on rising steadily. This trajectory has led to decreased revenues for the metropolitan hotels. Also, in some cases, they have had to downsize their employees. The current growth in Airbnb places the hotels in tricky positions that they have to introduce newer measures to counter the threat. For instance, they have to redesign their rooms to offer better ambiance. Also, they can allow for services such as cooking, which is a primary element in Airbnb cribs. On the other hand, the firm ought to save as much cash reserve as possible for any changes in the marketplace.
The Effect of Airbnb on the Hotel Industry
Introduction
The advent of the internet and the exponential rise in civilization is causing significant changes in several industries including tourism and hospitality. The sharing economy has been one of the greatest technological innovations with Airbnb bringing much change to the tourism and hospitality industry. A sharing economy promotes the sharing of goods and services that would otherwise be idle. Technology has facilitated this procedure as people can share their unoccupied rooms and homes to travelers bridging conventional services that were only provided by the premium hotels.
Both Airbnb users, sellers, and buyers perceive the platform as important in that it has reduced startup costs and convenient respectively. It allows individual entities to fight for the same consumer dollar with the giant players. The platform, which was founded in 2008 by Joe Gebbia and Brian Chesky, has enlisted more rental rooms than another hotel chain globally. Metropolitan hotels must get concerned with the trend that Airbnb is creating in the market because it is beginning to focus on business travelers, which was their primary market segment. Further, the launch of Airbnb for Business implies that the technology firm is in to grab the greatest market share it can. Estimations indicate that hotels are losing $450 million annual direct revenues to Airbnb (Shrestha & Fissha, 2017). Hotels must search for another effective approach in marketing their products or else they face the risk of lagging. The rise of Airbnb has guaranteed the spread of income among many potential hosts and convenience among users posing a significant threat to the traditional players including metropolitan hotels.
Trend Analysis
In the quest to provide better analysis for metropolitan hotels, there is a need to ascertain the trajectory of this new development. The sharing economy, as complicated as the phrase might sound, is never a new concept. It reminiscences instances where people offer each ride or hosting their guests in their houses. The modification in the contemporary environment is that these services are not done to help friends instead, similar services are offered to strangers in exchange for cash (Sundararajan, 2016). Hamari, Sjoklint, and Ukkonen (2016, p. 1) define a sharing economy as “the peer-to-peer-based activity of obtaining, giving, or sharing the access to goods and services, coordinated through community-based online services.” Airbnb has created new channels of sharing resources and thus, it is vital to access its probable impact to metropolitan hotels. So far, the company has grown its presence from its initial roots in San Francisco to approximately 65,000 cities, which are spread across 191 nations across the globe. Further, the three air beds in the initial town are now a shadow of the company with listings accumulating to over 3,000,000. Nevertheless, their position and more importantly, impact, can be accurately curated if there a step-step analysis in the company’s growth can be highlighted.
In February 2011, the company reached a milestone with its first million room nights booking, which means that it took three years for the company to attain this feat. After this, the company took a mere four months to reach its next million making a cumulative two million bookings. The bookings rose exponentially reaching 5 million by January 2012 (Guttentag, 2015). Golden (2017) highlights the growth of the firm as he was there since the early stages as the first product manager. In his period of service, he saw the company’s metrics such as employees, revenues, user, and listings grow to unprecedented levels of over 100X.
100X Growth (Golden, 2017)
Besides the number of bookings, there is the case for the number of listings on the platform. Bookings are from the customers' end while the listings represent the growth in hosting parties. In 2011 the listings began to grow considerably and by the end of 2013, they had hit 600,000 listings. The company hit a million listings by the end of 2014. According to Golden (2017), the upward trajectory continued to roll with the company reaching 2 million in 2016 and crossing the 3-million mark in 2017. In-between 2008 and 2016, the company served more than 140 million guests. 40 million of those came in 2015 and double that, which is 80 million, arrived in 2016 (Airbnb Citizen, 2016). These figures outline that the popularity of the company growing beyond expected standards. Another factor to consider the growth of the platform in major global cities that metropolitan hotels do operate.
This preposition redirects the discussion to places such as Seattle, San Francisco, and Paris. According to Airbnb Citizen (2016), “the size of our host-and-guest community in 2016 approached or exceeded 20 percent of the population” in the cities mentioned above. These cities are global tourist destinations, particularly Paris, which is renowned for its exceptional culture. Also, many metropolitan hotels have established their services in these areas implying that they must be encountering the draining effect of the new market entrant. A similar rate of development is being encountered at the national level in some of the countries with the greatest market potential. For instance, the Airbnb community in countries such as Japan and Australia has ...