FINAL PROJECT BRA

GENERAL PRESENTATION OF AIRBNB

Airbnb is an online marketplace for arranging or offering lodging, primarily homestays, or

tourism experiences. The company does not own any of the real estate listings, nor does it host events;
it acts as a broker, receiving commissions from each booking. The company is based in San Francisco,
California, United States.
The company was conceived after its founders put an air mattress in their living room,
effectively turning their apartment into a bed and breakfast, in order to offset the high cost of rent in
San Francisco; Airbnb is a shortened version of its original name, AirBedandBreakfast.com.
Shortly after moving to San Francisco in October 2007, roommates and former schoolmates
Brian Chesky and Joe Gebbia could not afford the rent for their loft apartment. Chesky and Gebbia
came up with the idea of putting an air mattress in their living room and turning it into a bed and
breakfast. The goal at first was just "to make a few bucks".
In February 2008, Nathan Blecharczyk, Chesky's former roommate, joined as the Chief
Technology Officer and the third co-founder of the new venture, which they named AirBed &
Breakfast. They put together a website that offered short-term living quarters, breakfast, and a unique
business networking opportunity for those who were unable to book a hotel in the saturated market.
The site Airbedandbreakfast.com officially launched on August 11, 2008. The founders had their first
customers in town in the summer of 2008, during the Industrial Design Conference held by Industrial
Designers Society of America, where travelers had a hard time finding lodging in the city.
Computer programmer Paul Graham invited the founders to the January 2009 winter training
session of his startup incubator, Y Combinator, which provided them with training and $20,000 in
funding in exchange for a small interest in the company. With the website already built, they used the
Y-Combinator investment to fly to New York to meet users and promote the site. They returned to
San Francisco with a profitable business model to present to West Coast investors. By March 2009,
the site had 10,000 users and 2,500 listings.
In March 2009, the name of the company was shortened to Airbnb.com, and the site's content
had expanded from air beds and shared spaces to a variety of properties including entire homes and
apartments, private rooms, and other properties. In April 2009, the company received seed money
from Sequoia Capital, and in November 2010, raised financing from Greylock Partners and Sequoia
Capital in a Series A round, and announced that out of 700,000 nights booked, 80% had occurred in
the previous six months.
 In February 2011, Airbnb announced its 1,000,000th night booked. In January 2012, the
company announced its 5,000,000th night booked. In June 2012, Airbnb announced its 10,000,000th
night booked, doubling business in the previous five months. Of these bookings, 75% of the business
came from markets outside of the continental United States.
At the 2011 South by Southwest conference, Airbnb won the "app" award. In October 2011, Airbnb
established an office in London, its second international office.
Due to the growth of international end-users, in early 2012, Airbnb opened offices in Paris, Milan,
Barcelona, Copenhagen, Moscow, and São Paulo. These openings were in addition to existing offices
in San Francisco, London, Hamburg, and Berlin. In September 2013, the company announced that it
would establish its European headquarters in Dublin.
In November 2012, Airbnb opened an office in Sydney, Australia, its 11th office location, and
announced plans to launch the service in Thailand and Indonesia. In December 2012, Airbnb
announced its strategy to move more aggressively into the Asian market with the launch of an office
in Singapore.
In November 2012, Airbnb launched "Neighborhoods", a travel guide of 23 cities that
provides in-depth information via collaborative filtering to help travelers choose a neighborhood in
which to stay based on criteria such as public transportation, dining, peace & quiet, nightlife, tourist
attractions, and shopping.
By October 2013, Airbnb had served 9,000,000 guests since its founding in August 2008, and
in December 2013, the company reported it had over 6,000,000 new guests in 2013, and nearly
250,000 properties were added in 2013.
In July 2014, Airbnb revealed design revisions to the site and mobile app and introduced a
new logo. In April 2015, following the Obama administration's easing of restrictions on U.S.
businesses to operate in Cuba, Airbnb expanded to Cuba, making it one of the first U.S. companies
to do so.
In the summer of 2016, at the request of three members of the United States Senate, the
Federal Trade Commission began investigating how Airbnb affected housing costs. In October 2016,
New York Governor Andrew Cuomo signed a bill charging Airbnb fines for violations of local
housing laws. The New York Times reported that these events were related and part of a "plan that
the hotel association started in early 2016 to thwart Airbnb".
In January 2017, Airbnb led a $13 million investment in restaurant reservation-booking app,
Resy, along with serial entrepreneurs Gary Vaynerchuk, Ben Leventhal and Mike Montero.
Airbnb first became profitable during the second half of 2016. Airbnb's revenue grew more than 80%
from 2015 to 2016.
 In February 2018, the company announced Airbnb Plus, a collection of homes that have been
vetted for quality of services, comfort and design,[48] as well as Beyond by Airbnb, which offers
luxury vacation rentals. By October 2019, two million people were staying with Airbnb each night.

CANVAS MODEL FOR AIRBNB

1. KEY PARTENERS
Key partners are not easily replaceable. They contribute significantly to the success of the company
and influence its future trajectory.

1. Hosts are the supply side of the Airbnb platform. They bring their homes/units to the
table. Achieving a critical mass of supply and variety of choice is important for the customer
value proposition. Airbnb has two types of hosts:
 Rental hosts offer houses, units/condos, rooms, and more exotic stays, such as castles,
igloos and more.
 Event hosts offer to guide through local experiences, food, art, fashion, nightlife, etc.
2. Investors/venture capitalists bring the initial rounds of funding to the table. The funding helps
with developing the functionality, apps, algorithms, but also for acquiring customers. Investors
bring down the (weighted) cost of capital (WACC).
3. Lobbyists are crucial for Airbnb at all levels of government. New York City has made it illegal
to advertise homes for stays of less than 30 days. The exception is to share rooms where the
landlord stays in the same apartment. Legal analysts point out that this is building on
regulations that were in existence since the early 2000s to clampdown on illegal hotels at the
time. Airbnb called it lobby-supported “back-room dealing“. On the federal level, the well-
known Senator Elizabeth Warren requested the Fair Trade Commission to investigate
allegations against Airbnb (and peers). It turned out that both events were part of a secret plan
of a hotel lobby group, As a consequence, Airbnb has ramped up their lobbying efforts
further (on the federal level through Clinton-close Podesta lobbyists) and through a PAC on
NY City level. The aggregate success (or failure) of their lobbyists can make a considerable
difference to Airbnb’s trajectory. Fortunately, here in Australia, things are a bit more
transparent.
4. Corporate travel partners: Airbnb has opened a large source of new guests by expanding into
the business travel world. Through their alliances with platforms like Concur and Flight
Centre, Airbnb inventory becomes available to corporate travel managers.
 5. Corporate travel managers have some discretion as to which suppliers, including lodging
providers, they enlist within their corporate travel policies. These corporate travel managers
have the discretion to add thousands of potential guests. Early adopters are particularly valuable
as they can set a precedence for peers to follow.
Non-key partners are those where Airbnb have several options with comparable offerings to choose
from. This doesn’t mean the service non-key partners are providing is unimportant:

 Airbnb hires freelancing professional streets/events/property photographers in some cities. The

photos are very important. But there is sufficient supply of photographers. Even if all current
photographers decided to jump ship, it would not affect Airbnb’s revenues and within a few
weeks, they would fill the ranks back up.
 Maps, payment platforms, cloud storage, identification platforms are important but they are not
proprietary any longer.
 Insurance companies, while very important and initially challenging to make a deal with, by
now are not a big challenge any longer.
Cloud providers (and many other tech API providers) are not key partners if they provide easy-to-
replace commodities (unlike a few years ago). Airbnb has acquired a number of small tech companies
that may end up becoming key resources if they contribute significantly to Airbnb’s growth.
2. KEY ACTIVITIES
The network effects are the moat (i.e. competitive advantage) of platform businesses. The key
activities should revolve around improving positive network effects and reducing negative ones.

1. Enhance positive network effects between the participants (hosts and guests), by enticing more
users to join and participate
2. Reduce negative network effects, by making the individual host-guest transactions easier and
managing complaints swiftly and learning from them
3. Grow the platform by:
 getting more participants to join,
 entering new cities,
 complementary offering that increases stickiness, such as events.
4. Keep participants engaged, e.g. high utilisation of homes
5. Keep guests returning by providing great travel experiences in accommodation and
events/experiences
6. Add new customer value propositions, e.g. event hosting:
 creates complementary offerings to lodging,
 adds new hosts and offers income opportunities,
  increases host and guest engagement
7. Deliver on the customer proposition
8. Analyse the data to fine-tune everything, example on improving the check-in process

3. KEY RESOURCES
The key resources of a platform business are the network effects. In this case, those between hosts
and guests. Airbnb is a great example for this. Airbnb hosts are providing places to stay, events,
recommendations what to do at the locations. Not every host does all and that is not required. On
aggregate, the hosts make their destinations (and thus travelling as such) more attractive by indirectly
collaborating. This is a great example that the total is larger than the sum of the individual parts.
The value propositions listed in the next section unfold their strength with the networks effects.
With this said, the key resources are:

1. The network effects

2. The homes listed & requested
3. The events listed & requested
4. User generated content on the webpages
5. Captured data
6. The algorithms
7. Development, analytic capabilities and engineers, data scientists
8. The brand
9. Access to venture capital to keep the business growing
10. Skilled employees
11. The app & webpages

4. VALUE PROPOSITION
Airbnb creates value propositions on (at least) three levels (apart from the financial value):

 Individual connections: Airbnb helps to start the every guest-host connection on the right foot.
In comparison, hotels try to provide the same looks&feel everywhere in the world. Individuality
gets lost. The people providing the service have to be adjusted to the service delivery standards,
etc.
 Community: connections between the users as a whole enabled by the vast amounts of user
generated content on the destination locations as well as the respective home/unit/room.
 Localisation: by adding an increasing amount of information/recommendations on the location
and adding events provided by event hosts.
This is how the value propositions for the hosts looks in more detail:

1. Income generation (“From saving for home repairs to taking a dream trip, hosts use extra
income to fund their passions.”)
2. Ease of transactions:
 joining the platform
 getting guests
 payments, etc
3. Experience of meeting new people (if desired)
4. Guests are already ID checked, plus ability to review guests ratings
5. Calendar, booking management through Airbnb
6. Insurance coverage through Airbnb (hosts still needs an insurance for certain items)
7. Other host service providers (non-affiliated 3rd parties) from cleaning only to full management
Relevant for both sides:
1. Airbnb recommended hospitality standards
2. Responsible hosting guidelines with all tips on safety, hazards, neighbours, etc
3. Dispute resolution process through Airbnb
4. Taking safety and trust seriously
Some of the value propositions for the guests (demand side) are:

1. Convenience of booking
2. The amount of choice and variety of types of homes
3. The proposition to experience the destination more authentically
4. Tons of authentic information about the destination city (selected large cities)
5. Often cheaper than comparable sized hotel rooms
6. Units and especially houses with several bedrooms
7. Cashless transaction
8. Rating system that allows for feedback
Airbnb is adding value propositions to both sides that hotels will struggle to compete with. Compare
Airbnb events to the old-fashioned flyers you find in some corner in hotel foyer.

5. CUSTOMER SEGMENTS
It is recommended to see both the supply as well as the demand side as a customer even though on
some platforms only one side pays. On Airbnb this is clearer as both sides pay (see below in
“Revenues” section).
  Guests:
 by travel type
 business travel guests; leisure travel
 tour of multiple destinations; single destination stay
 by demographic
 single; couple; family with children
 age brackets
 pre or post retirement
 by income bracket
 by interest
 Hosts:
 by type of accommodation provided
 Room; unit/condo; house
 by home/location
 country; city
 by location type
 countryside; suburb; metropolitan
 On macro level, you can segment
 rental hosts/guests only
 event hosts/guests only
 and on this, how to make both offerings more complementary (e.g. bundling, discounts,
promotions)
These are still very macro segments. All data-driven companies, like Airbnb, create much
more micro-segmentation that should be much more valuable than the above traditional segments.
These macro segments can be targetted in various ways: here’s an article targeting families with
kids and one targeting the post-retirement extensive traveller segment. The articles directly target the
respective segments and have links embedded to destination guidebooks and even to listings.

6. CUSTOMER RELATIONSHIP
The most important consideration on this dimension is to firmly own the customer relationship
and to keep it within your platform. Airbnb has poached many customers from Craigslist in their early
days. The business travel platforms (Concur, Flight Center, see above) and Airbnb will have careful
provisions in their contracts and the customer data that they share to avoid “leakages”. You might say
they are very different platforms but what about losing customers to hotels via the travel platforms or
to other short-term rental platforms that may collaborate the travel platform in future?
Relevant for both sides

1. Deal with customer issues in appropriate manner and timeliness (see “Channels” for more)
2. Manage bad behaviours and risks (the “harassing host” and the “house trashing guest”) and
improve rules continuously
3. Transparency around privacy, personal data, etc
4. Portray the desired company image through social and other media
Especially for the hosts
Customer relationships to the supply side (the hosts) will be mainly defined by what the platform
does for them in terms of income while protecting their property from bad guests.

1. The platform’s ability to generate income (short gaps between guests, listing up the top, etc)
2. Provide good guests (weed out the bad apples)
3. Manage issues (accidents, damages, complaints) switly
4. Support in the on-boarding process
5. Help hosts to succeed in general and
6. Help super hosts to stand out and be rewarded
Beyond the customer
There is no field for key stakeholders in the business model canvas. This category is very important
for platforms. They are an emerging phenomenon. As such, the public opinion has not yet fully
formed and it will significantly influence your customer’s view of your platform.
I have already covered lobbyists and influencers as key partners. But here we need to talk about the
public as such.

1. Manage the social, communal, economic footprint/impacts of the platform

2. Liaise with cities, communities, regulators and other groups as required (and proactively where
beneficial)
3. Manage the platform’s image across the media and other relevant channels
4. Manage serious incidents quickly to avoid negative viral spread (want to be on an overbooked
United Airlines flight?)
Airbnb manages a number of channels through which they publish public opinion influencing articles.
They have the Airbnb newsroom, Airbnb Citizen and their Facebook pages. E.g. in August 2017 there
are articles on topics as sustainable travel, refugee/evacuee support, social impact, disaster response
support, and local updates.
 7. CHANNELS
Channels for the initial awareness and customer acquisition are:

1. Digital ad campaigns via AFAR, YouTube, Dwell, Lonely Planet, Buzzfeed, the BBC,
Facebook and Twitter
2. Content marketing: via their newsroom and guidebooks (see above)
3. Word of mouth:
 via social media and messaging apps
 user stories: “our users tell the stories better than we do”
 referral programs rewarding referrer and referral taker with credits
 digital influencers
4. Free media coverage based on the novelty factor
5. App stores (iOS, Android): through high ratings, ads and being featured
Channels for daily transactions:

1. Most transactions are fully automated through the app and web pages
2. Signing up through the web pages or the app
3. Airbnb uses emails & notifications to engage, stimulate participation, referrals,
reinvigorate/recover customers (through special offers, reminders, etc)
4. Keeping users engaged and drawing in new users is essential for all platforms. Airbnb’s
Facebook pages are a great example for this.
5. Tiered customer support channels
 Automated customer support for high-volume, low severity issues (e.g. forgotten items)
to be rapid
 Multi-tiered customer support (ability to contact a human) for more severe issues
6. Many communication channels, e.g
 Airbnbmag,
 Airbnb newsroom,
 Airbnb Citizen and their
 Facebook pages
 8. COST STRUCTURE
Airbnb’s most important cost elements are:

1. Cost of customer acquisition, CAC: referral credits, digital advertising, paid search (see
comments above), etc
2. Weighted average cost of capital, WACC (can be ~25% for start-ups, for Airbnb this should be
far less)
3. Development of new features, ongoing fine-tuning of algorithms, etc
4. Expansion to new cities and new niches
5. Payroll for permanent employees and freelancers (e.g. photographers)
6. Costs of payment processing
7. Lobbying, regulatory compliance
8. Legal cases and settlement costs
9. Infrastructure costs, computing power, bandwidth
10. Customer support
11. Insurance, legal costs
I have not distinguished between capex and opex but you can see there are a lot of growth-related
costs. The capex components will taper down as the company matures barring, of course, new growth
endeavours.

9. REVENUES
On the surface, Airbnb makes their revenues by charging hosts and guest a service fee per transaction:

 Rental guests pay 5-15%

 Rental hosts pay 3-5%
 Event hosts pay 20%
 Event guests pay 0%
Other short-term rental platforms (e.g. VRBO, HomeAway) charge a listing fee rather than per
transaction fee. This is a different pricing model.
Here are some interesting observations on Airbnb’s pricing model:

1. Guests pay a 2-3 times higher fee per transaction than hosts. This has to do with supply and
demand of hosts and guests and with incentives. Hosts are harder to get as there are fewer
people who have a spare room/unit/house and are willing to rent it out (repetitively) to
 (potentially untrustworthy) strangers. Guests, by comparison, save money (=incentive)
compared to hotels.
2. Hosts pay 3% transaction fees if they select a flexible cancellation policy, 4% for a moderate
and 5% for a strict cancellation policy. Basically, they pay more for certainty (though they may
miss out on bookings from people who prefer flexibility). If you are offering a home that is
vastly popular, you can more likely afford a strict policy and even pass the additional costs onto
the guests by charging a higher price. Airbnb incentivises hosts to opt for a more flexible policy
as this is the most desirable option from a guest perspective and should lead to more aggregate
bookings.
3. Guest service fees are at the lower end of the 5%-15% range, the higher the overall transaction
value. The transaction value is obviously a function of the per night price of the
accommodations the duration of the stay. Given guests are already incentivised by low costs,
Airbnb figures they can charge more on the service fee. Another reason, of course, is that fixed
costs are roughly the same independent of the accommodation per night price.
4. Event fees are very different. There is no service fee for the guest and a 20% service fee for
event hosts. Event hosts are easy to get. Many of them have a small local business or a hobby
they are good at and use Airbnb as an additional advertising platform for their offering. No
doubt, these people will be quite willing to pay 20% as any booking from Airbnb is an
incremental booking to their other sales channels.

AIRBNB FIVE PORTER’S FORCES ANALISYS

1. The potential threat of new entries

The threat of new entries into the market for Airbnb is considered weak and flexible. On the
surface it seems like there aren’t many barriers to entry and that any website could pop up to compete
with Airbnb. However, Airbnb is not only well funded but is in operation in nearly 200 countries. For
any company to pose a threat, they will need both access to millions in capital to venture into the
account and an excellent brand equity to capture the requirements and demands of customers and
compete with Airbnb.
2. The threat of substitutions
The threat of substitutes is quite high because switching costs are non-existent to individuals who
utilize Airbnb. Customers can very easily choose a traditional hotel, B&B, hostel, and couch
surfing, as an alternative in the future. As Airbnb is growing, so is its competitors or companies who
offer the same concept. These companies usually fall into three principal categories:
 Hotels: They considered as the most readily available and well-known way for every traveler to stay.
With the existence of Airbnb, hotels have noticed the changes in consumer preferences due to the
availability of new social-oriented products, homier settings, and more functional apps. Hotels have
thus managed to achieve this demand by growing their portfolios by adding brands that are intended
to appeal to millennial customers and those who want less service and more connectivity — both
technologically and with shared space.
Hostels: Hostels tend to be attractive for backpackers traveling alone and wanting a great way to meet
like-minded travelers because these accommodations not only provide ample opportunities for social
interactions in the communal areas but are cheaper and have a more youthful, intimate vibe than a
traditional hotel. Features such as communal breakfasts, weekend party occasions, and fun little
structures like book exchanges and rooftop cinemas create a delightful atmosphere is attractive to
many travelers who would rather waive modern amenities of pools, room service, and polite if
impersonal customer service that are mostly offered in other establishments.

 There is a significant possibility of finding free lodging all around the globe.
 A traveler can choose a host based on location thereby enabling them to stay downtown instead of a
low-priced motel a few minutes away.
 Individuals on couch surfing are interesting people who are well traveled and always glad to teach
and share life stories with their host. This trait makes their trips much more exciting and may even
turn some hosts to longtime friends.
3. Negotiating power of customers
The negotiating power of clients with regards to Airbnb is high because at the moment they have
a broad range of services to choose (price, location, and host rating).
The economic growth has always been helpful in developing the tourism and hospitality of a country.
Compared to other options like hotels or motels, Airbnb has been considered as a cheaper option for
most travelers. Though travelers have no avenue of price negotiation of the rooms or apartments with
the host in the Airbnb web platform, they, however, have the buyer power in the alternatives of
prices and styles available for them to choose from and can thereby quickly decide on the residence
where they will stay without hurting their finances.
4. Bargaining power of suppliers
The bargaining power of vendors is meager because Airbnb who control the connection between
the two parties has made it hard for individuals trying to rent out their rooms and apartments do not
have an alternative method to connect with customers using the Airbnb App.
For Airbnb, the supplier is the host that offers the room or apartment to travelers; they are the ones
that make the business happen. The hosts are the basic level that provides potential clients services
that they require. Airbnb works in tandem with the host to avoid problems with the customers. Though
there is nothing comparable to a union for these suppliers to work together to place demands on
Airbnb, Airbnb, however, offers hosts the liberty to decide the conditions to their boarders, always
following some rules and brand principles. The host can choose if he or she wants to alter the price
depending on any situation. The rents are exclusive and focus on unusual places for a high volume of
travelers thereby providing a range of prices for all types of customers.
5. Inter-firm rivalry
Rivalry among Existing Firms is usually the greatest force in five competitive forces. The inter-
firm rivalry is moderate or even low. There are several high-quality Airbnb competitors with networks
and websites similar to Airbnb. Sites such as OneFineStay.com,Tripping.com, HomeAway.com,
Expedia.com are working overtime to overthrow Airbnb from its throne. One competitor that has
inevitably caught the attention of Airbnb shareholders is Onefinestay.com. Onefinestay is a 5-year-
old London startup that operates as an upmarket Airbnb service, renting out expensive homes and
apartments to tourists in cities around the world while the owners are away.
Currently, in operation in London, LA, Paris and New York and over 10,000 homes in its books,
the houses available on the site are much swankier than those typically set up on related sites like
Airbnb, with the regular charge for a onefinestay property being above $600 (£382) a night.
Onefinestay also washes each property before and after people stay and offers linen and skincare
product, just like a hotel would. The company also takes all its photos of the properties to market
them.

SWOT ANALISYS FOR AIRBNB

Strengths
One of the Airbnb strength is Well established brand and public image where it is operating.
The business model enables the company to compete with low prices as compare with hotels and
guest houses.
Competent and well-trained staff for example Chip Conley Airbnb Manager is a hospitality
guru.Both guests and travelers focus on rating and review system, which provide trust and safety the
Airbnb online community.
Huge global presence in 192 countries and 34000 cities with over 1 million listings. With high
valuation and brand reputation, investors are easily available globally.

Airbnb business model has a great growth potential worldwide. The Company can expand
easily.
 Weaknesses
The Company violating the Housing Laws and Regulations in many countries. As per
many Housing Laws, hoteling and guest houses are prohibited in residential areas. The hoteling
industry as competitors is damaging its concept.
The Airbnb is dependent on quality provided by the hosts. It the hosts do not follow standard
guidelines it can damage the company reputation.
The business model can easily be copied.

Opportunities
Portland and San Francisco changed its housing laws and regulation. Both have legalized the
Airbnb listings, but hosts must be registered with authorities and will pay the taxes on the review
earned.
Over the past few years usage of mobile devices has increased. Since Airbnb is providing
mobile App which facilitates both guests and hosts to get connected and take advantage of shared
economy.
Mostly guest don’t like hotels due to high prices and worst conditions whereas Airbnb
provides with low prices and personal touch of the hosts.
Many world top class players and celebrities listed their properties for rent. For example,
Kevin Jonas listed his home situated in Denville for 15,000 Pounds per night. Other celebrities
include Aaron Paul, Elizabeth Taylor and many more. This shows a sign of trust and interest.
Airbnb can still exploit those markets where hotels ratio is very low, and hotels are very
expensive for example the United Arab Emirates.
After successfully implemented their business model, Airbnb has many options to expand
their business other than their core business model. For example, travel guides, car rentals.
It is fully automated and facilitates both hosts and guests to get connected in a secure way. To
provide security it verifies the profiles of guest and hosts by messaging services.

Threats
Airbnb services are functional in more than 192 counties. Every State and country has its own
laws and regulations to comply with. The company has no option but to rely on guests and hosts to
meet the local laws.
The company is already facing lawsuits and fines throughout the world, for example, New
York, Florida and many more. Barcelona authorities fined Airbnb 30,000 euros for violating tourism
laws. For running illegal hotel many hosts were fined by the New York authorities.
 Airbnb Competitors are growing out there, for example, tripping.com, FlipKey, VRBO,
Wimdu and many more. In future, these competitors can give Air BNB a tough time.

RISK ANALISYS

The main risks of Airbnb are :

1. Dangers and threats coming from the virtual space
2. Bad reviews from guests
3. Liability - When you rent to Airbnb guests, you are essentially allowing strangers to
stay on your property
4. Every Airbnb host risks renting to squatters
5. Changing regulatory environments for Airbnb hosts
6. Unavoidable Airbnb risks : canceled booking
7. Airbnb’s negative impact on property values

For a correct identification of the risks with a high probability of realization, we will use the
risk matrix. As mentioned above, risk comprises two fundamental aspects: probability and impact,
with which we will establish the risk category for the most important risks mentioned above.
I will note the probability of accomplishment with values from 1 to 5, where:
1- Very unlikely
2- Unlikely
3- Probably
4- Sure
5- Very sure

The impact that the materialization of a risk could have on the company will be outlined as
follows:
1- Impact that has the effect of stopping the activity for a few hours
2- Impact that has the effect of stopping the activity for a few days
3- Impact that has the effect of ceasing the activity for one month
4- Impact that has the effect of ceasing the activity for a period greater than one month
5- Impact that generates the cessation of activity
 Nr. Risk description Probability Impact
crt.
1 Dangers and threats coming from the virtual space 4 4
2 Bad reviews from guests 5 2
3 Liability 4 3
4 Every Airbnb host risks renting to squatters 4 3
5 Changing regulatory environments for Airbnb hosts 3 4
6 Unavoidable Airbnb risks : canceled booking 4 1
7 Airbnb’s negative impact on property values 5 3

The next stage of the analysis consists of building the risk matrix, based on the information
previously identified. This consists in building the risk matrix, based on the information previously
identified.
Probability/impact 1 2 3 4 5
5
4 5 1
3 3/4 7
2 2
1 6

Upon completion risk matrix, we can determine risk categories identified for Airbnb. So, we
have:
High risks :
1. Dangers and threats coming from the virtual space
Medium risks :
1. Liability
2. Every Airbnb host risks renting to sqautters
3. Changing regulatory environments for Airbnb hosts
4. Airbnb’s negative impact on property values
Low risks :
1. Bad reviews from guests
2. Unavoidable Airbnb risks : canceled booking
 In conclusion, the risk scenarios identified during this analysis phase have the role of
supporting the risk management within the Airbnb. Making decisions about diminishing them must
be a shared responsibility of the executive committee, so that they are optimal and take into account
the interests of the company.

RISK MANAGEMENT AND IDENTIFYING RISK MITIGATION STRATEGIES

1. Dangers and threats coming from the virtual space

 Impact - It leads to the loss of the information collected and processed until the
moment of the virus, as well as the impossibility of carrying out the company's activity
in the short term.
 Preventive actions - All computer systems used within the company will be protected.
Also, three times a week, all information on the company server will be saved by the
IT department, on external memory, in order to have a back-up of information at all
times.
2. Liability
 Impact : A guest may get injured, damage your property or even cause injury to your
neighbors.
 Preventive actions: Instead of hoping that you can weasel your way out of a civil
lawsuit, make sure that you have the proper Airbnb liability insurance coverage
necessary in place before you ever list your property on Airbnb. Not only will having
the right insurance help to minimize your out-of-pocket expenses, but it can also shield
you from personal liability.
3. Changing regulatory environments for Airbnb hosts

 Impact : One of the greatest Airbnb risks that all Airbnb hosts face is an ever-changing
regulatory environment. In response to the rising popularity of Airbnb, many cities
around the world are looking to place greater restrictions on short-term property
rentals by enacting new zoning regulations and rental laws. As a result, there could
come a time where vacation rental services like Airbnb are prohibited altogether in
your area. Furthermore, even if Airbnb isn’t banned, governments can end up making
the cost of compliance so high that it becomes nearly impossible for you to make
healthy profits from your business.
 Preventive actions: To avoid the risk of running an illegal Airbnb business or being
pushed out of the market, it’s important for all Airbnb hosts to stay on top on
 regulatory updates that affect short-term vacation rentals and the hotel industry. Hosts
should never rely on Airbnb directly to provide them with this information because
once the information becomes available via Airbnb it is likely too late to mitigate the
damage to your business.

4. Airbnb’s negative impact on property values

 Impact : In areas where Airbnb usage is high, Airbnb may actually have an impact on
the overall value of properties in that market. For properties where most of the units
are rented out on Airbnb, Airbnb may actually adversely affect the value.
 Preventive actions : Hosts should know about if they plan to buy and sell properties
to grow their Airbnb business.