UNIVERSITY OF ECONOMICS HO CHI MINH CITY

COLLEGE OF BUSSINESS

FACULTY OF INTERNALTIONAL BUSINESS – MARKETING

FINAL ASSIGNMENT

THE COMPANY CASE

AIRBNB: MAKING HOSPITALITY AUTHENTC

Subject: Principles of Marketing

Instructror: Assoc. Prof. Dinh Tien Minh

Class Course: 24C1BUS50307011

Student: Pham Nguyen Nhu Truc

Student ID: 31241026620

Class: IBF004-K50

Ho Chi Minh
 INTRODUCTION

In the increasingly developing society, when work pressure increases, people ten to seek
activities to fulfill their spirit and relieve stress. Traveling, exploring new destinations and
experiencing diverse cultures have become popular choices. During these journeys, a
comfortable and convenient place to stay is an essential factor. And hotels or resorts are
often considered the top solutions. These places not only provide necessary amenities
after a long day of exploration and enjoyment but also bring travelers new and interesting
experiences.

To improve service quality and minimize risks, many hotels and resorts have applied
standardization to their rooms. This helps ensure uniformity and provides comfort and
peace of mind to visitors. However, the traditional accommodation model with this
standardization sometimes leads to boredom, lack of uniqueness and novelty,
significantly affecting the overall experience of customers.

Recognizing this problem, Airbnb has appeared as a breath of fresh air in the
accomodation service, bringing difference and innovation. Unlike conventional
approaches, Airbnb offers diversity and personalization, giving visitors the opportunity to
immerse themselves in local life and culture. TAs a result, travllers not only find a place
to stay but also enjoy authentic and memorable experiences.

This essay is conducted to provide a deeper understanding of Airbnb's remarkable

success, through summarizing the case, analyzing the relevant theories, and answering
the questions from pages 276 to 278 of the eBook [Philip_T._Kotler, Gary Armstrong,
Principles of Marketing, 17th Global 2018
1. SUMMARY OF COMPANY CASE

1.1 CURRENT STATUS OF HOTEL COMPANIES

Nowadays, a number of hotel companies in service industries have done remarkable jobs
to ensure that customers will enjoy the highest quality of service and have attractive and
unforgettable experiences. Customers who book rooms through hotel chains can be
completely assured of the basic elements they will receive. Most rooms in hotel
companies usually have room size about 13x25 feet and include a bathroom which is
fully equipped with basic necessities such as soaps, products for hair care and personal
hygiene essentials, one or two beds with nightstand lamp, a mini-fridge and a microwave
oven, a television, a wardrobe, a desk and a padded chair and matching ottoman are
positioned in the distant corner.These hotels are often designed with modern decorations,
but customers can easily predict the details of rooms . Although the level of luxury may
vary through different hotel companies, the style and ambiance are consistently
maintained. These uniformities can sometimes lead to monotony for customers This is
where Airbnb emerges as a refreshing and exciting alternative, offering a unique and
personalized experience.

1.2 AIRBNB’S OVERVIEW, CHALLENGES, SOLUTIONS

AIRBNB’S OVERVIEW

Airbnb was the brainchild Brian Chesky and Joe Gebbia who sought to earn extra
income to cover their rent in San Francisco. The idea of developing Airbnb was born
when all the hotel rooms in the city were fully booked during a major convention. They
leased out three inflatable beds placed on their apartment floor at $40 per night. Chesky
and Gebbia realized the desire of customers to connect and realized that the tourism
industry was losing connection with customers because Hotels often provide a repetitive
and predictable experience, lacking the distinctive, exciting, or innovative elements
needed to captivate guests. This sameness can lead to a sense of monotony and
disengagement among customers. Realizing that great potential, Chesky and Gebbia
quickly planned to create and develop Airbnb.

Figure 1.1 Brian Chesky & Joe Jebbia

Co Founder of Airbnb

(Source: Airbnb Newsroom)

CHALLENGES

In its early days, Airbnb faced numerous challenges. Both investors and customers were
skeptical, believing that the founders were pursuing a crazy idea since no one would want
to stay with strangers. Therefore, every venture capitalist they approached turned them
down and they struggled to convince customers to stay with people they had never met
before. Moreover, Airbnb had difficulties in legal procedures because certain cities
prohibit the short-term rental of personal properties for periods under 30 days.

SOLUTIONS

Despite encountering tremendous obstacles, Airbnb overcame them with passion through
a range of strategies:
 Airbnb implemented a review
system for both hosts and guests to
evaluate each other, allowing each
party to rate the other and review
feedback from previous experiences.
This system not only fosters mutual
accountability but also creates
distinctive and appealing awards. For
instance, The "Superhost" title
guarantees a wealth of reservation
experience and outstanding service.
A “business travel ready” to
highlight hosts who provide high-
quality services, including amenities
such as Wi-Fi, desks, and basic
toiletries.

Figure 1.2 Airbnb - Superhost

Source: Hostex website

Additionally, Furthermore, Airbnb provided reassurance to both hosts and guests

through a verification process, guidance on securing safe and satisfactory bookings, and a
24-hour Trust and Safety support hotline. Hosts also benefit from an insurance policy that
protects against property damage, covering up to $1 million.

1.3 AIRBNB'S OPERATION MODEL

Airbnb does not own any accommodations; instead, it serves as a platform that connects
people looking to rent out their vacant spaces with those seeking places to stay and
experience local life.
 For hosts: The process of using Airbnb is straightforward. They simply need to
register and complete the verification process to confirm the legitimacy of their property.
The types of properties that can be listed are incredibly diverse, from sofas, a small
corner of the yard for camping to set up a tent to a magnificent castle. Each property will
have its own unique features, each homeowner's uniqueness will highlight the
homeowner's style. Hosts have the flexibility to set their own prices by day, week, month
and all prices, incidental costs and define the services they offer. Airbnb is only an
intermediary taking a small 3% booking fee, and the remaining payment is transferred to
the host within a very short time, approximately 24 hours.

For guests: Guests will easily be able to find a place to stay that suits their
personal needs and preferences. They can search for properties based on various criteria
such as city, room type, price, amenities, host language, and more. Listings are
accompanied by detailed information and photos to help guests get a clear and accurate
sense of what to expect. The booking process is straightforward and done online, and
guests can always reach out to hosts for additional information. In addition to the rental
cost, guests will pay a service fee of 6% to 12% to Airbnb. Payments are securely
handled through the platform, and when guests arrive, the host will either greet them
personally or provide clear instructions for entering the property.
 Figure 1.3 Airbnb’s Operation model

Source: Business Model ToolBox

1.4 AIRBNB’S DIFFERENCES

Airbnb began as a platform catering to budget-conscious customers, offering

accommodations often more affordable than hotels. Over time, however, the number of
high-income customers using Airbnb has gradually increased. Airbnb continues to
demonstrate that it offers customers not just a comfortable place to stay, but also a
memorable and enriching experience.

Figure 1.4 Aibnb’s differences

Source : Worldpress. com

At the second annual Airbnb Open, with the participation of 5,000 hosts from 110
different countries around the world, Brian Chesky delivered a speech highlighting the
unique value of choosing Airbnb. He emphasized how hotel companies often leave
customers feeling like travellers, whereas Airbnb creates opportunities for guests to truly
integrate into local life. To illustrate Airbnb's philosophy, Chesky shared a vivid contrast
between his parents' experiences during their trip to Paris.

Day 1: His parents were hosted by a regular tour guide and real tourists to
experience several activities: experiencing a double-decker bus, boat ride, and visiting to
the Louvre Museum. Chesky showed images and said something with skepticism and
humor: “Every year, 30 million people go to Paris. They look at everything and they see
nothing. We don’t need to go to monuments and landmarks to experience a culture. We
can actually stay with people.”

Day 2: Guided by the top host of Airbnb, they had a wonderful city tour and lived
like a long-time local. They sipped coffee at a sidewalk café, strolled through a
neighborhood park, drank and danced at Parisian bar with cozy atmosphere.

1.5 AIRBNB’S ACHIEVEMENTS

Airbnb's aggressive expansion in the

global market has certainly attracted
the attention from major hotel
companies. Real estate developers
started building hotels in places they
hadn't thought of before. For example,
There are eight new hotels are being
built in Williamsburg, an area in
Brooklyn that has a large market but is
not a conventional tourist destination.
However, even if hotel operators try to
enter Airbnb's territory, they will have
difficulty replicating the experience
that Airbnb offers.
 Figure 1.5

Source: eMarketer

In just eight years, Airbnb has achieved a

series of impressive milestones:

Global network: Airbnb has built a

network of over 2 million listings and
served 60 million guests across 34,000
cities in 191 countries.Market value: The
company has reached a market value of
over $25 billion.

Surpassing Hilton Worldwide: Despite

its short existence, Airbnb has surpassed
Hilton Worldwide – the largest hotel
chain in the world with over 100 years of
history, 765,000 rooms, 4,660 properties,
and a market value of $22 billion.

Figure 1.6

Source: Second Measure

1.6 LOGO AND OBJECTIVES

Airbnb changed its logo from basic text to an icon that looks like a capital "A," with its
edges expanding and overlapping. The company refers to this design as "bélo." Alongside
the new logo, the slogan "Belong Anywhere" was introduced.
 Figure 1.7 Airbnb’s Logo

Source: Logohistory.net

To help our customers easily identify the brand. Although the logo is so simple, it is a
combination of people, places, love and Airbnb.

Figure 1.8 Meaning of Airbnb’s Logo

 Source: Viettimes.vn

Airbnb also focuses on its host community, considering them its potential customers. As a
result, Airbnb has built a strong global community of accommodation providers who
believe in the company's vision. Homeowners are treated as active participants in the
business, which develops a sense of ownership and commitment. Airbnb encourages
hosts to offer new services like airport pickups and walking tours to strengthen
connections with guests, but not to create a standardized model. Airbnb emphasizes that
what is special is not just the house but also the life of the host. At the same time, they
believe that Airbnb experiences will contribute to bringing peace because when using
Airbnb they will be in contact with each other and thereby better understand the culture
and lifestyle of other peoples, localities, countries and territories.

2. THEORY

2.1 SERVICES

Services are a form of product that consists of activities, benefits, or satisfactions offered
for sale that are essentially intangible and do not result in the ownership of anything.
Examples include health services, transportation, cleaning services, hospitality, pet care
services, social media management, design, consulting, etc.

Figure 2.1
 Source: Internet

Example: At a concert, we don't buy any tangible product. What we pay for is the musical
space, the emotional uplift, and the deep connection with the performer. These are not
things we can see or touch, but rather moments we feel: the vibrant melody, the
excitement of being in the crowd. After the show is over, all that remains is a sense of
happiness and unforgettable memories, lingering in the soul."

2.2 PRODUCT STANDARDIZATION STRATEGY

Standardization is the establishment of regulations, standards, and models for common

and repeated use for products or services to increase the uniformity of products and
services while also minimizing the risks that may be encountered.

Example: Traditional hotels have applied standardization to their accommodation. They

have built rooms with interiors that will have different levels of luxury but will still
follow a certain framework.

→ Advantages: By applying
standardization, hotels have
succeeded in helping customers
feel secure, erasing the worry
about whether others will get a
better room than them for the same
amount of money.

→ Disadvantages: Although
applying standardization will bring
safety, it comes with the boredom
of repetition that will not only hinder development but also gradually lose market share to
competitors.

Figure 2.2

Source: Snapseed.exe

2.3 BLUE OCEAN STRATEGY

Professor Kim and Renee Mauborgne of INSEAD

Business School developed the blue ocean strategy.
“Blue Ocean Strategy” is understood as a strategy for
developing and expanding a market in which there
are few or no competitors. This reduces risks and
hurdles in the newly created market through
differentiation from existing markets. It provides an
opportunity away from the existing red ocean of
competition.

Figure 2.3

Source: Blue Ocean Strategy

 Figure 2.4 Basic differences between “Red Ocean Strategy” and “Blue Ocean Strategy”

Source: Blue Ocean Strategy

AIRBNB’S APPLICATION:

Airbnb connects travelers and renters around the world with both affordable prices and
value. Airbnb’s strategy involves process innovation, where they do not own any real
estate but provide guests and sellers with a platform where they can serve both parties.

Figure 2.5

Source: Designorate

Airbnb’s sole goal is to create great accommodations for their guests at the best possible
price. With their “Blue ocean strategy”, they have created their own market, eliminating
the hassle of booking hotels, service quality, location, inconvenience of finding the most
suitable place and many other problems that customers face. Airbnb has created
innovation in the hotel and lodging industry that never existed before, becoming
successful and beneficial for both hosts and travelers.
2.4 SHARING ECONOMY

The sharing economy can be described as an economic model in which goods and
resources are shared by individuals and groups. This creates connections and
understanding between people and at the same time generates additional income for those
who share.

Figure 2.6

Source: UEH Future

AIRBNB’S APPLICATION: Airbnb has quickly embraced this new and potential trend
to apply and become a leading business in the trend of the sharing economy. They have
created a community of people who want to rent and customers who are looking for
accommodation, helping strangers get closer together. Not only that, Airbnb has taken
advantage of this to bring customers the experience of being a local resident. Especially
for Airbnb, they take advantage of the sharing economy to contribute to creating peace by
connecting strangers together, understanding more about others.

2.5 COMMUNITY

Community marketing focuses on creating and nurturing customer relationships to build

trust and brand loyalty. This is also the goal that businesses are currently aiming for.
AIRBNB’S APPLICATION: Airbnb is a pioneer in connecting people and creating a
sustainable community. Airbnb wants its guests to understand and integrate into the
community where they will stay, from which they can learn more interesting things and
understand more about the lives of others. As the founders of Airbnb wish, they want to
go beyond providing experiences and accommodation for guests. Airbnb aims to
contribute to creating a peaceful world, reducing war, helping people increasingly love
and cherish the relationships around them through living and experiencing the world with
strangers.

2.6 DIFFERENTIATION STRATEGY

Differentiation strategy is a method of

distinguishing a product or service
from other competing and similar
products in the market offered by
competitors in the market. It involves
promoting a unique product or service to
customers, in terms of product
configuration, features, brand image,
quality or customer service.

Figure 2.7

Source: Ho Dong Thu – Avertising Vietnam

AIRBNB’S APPLICATION: Airbnb realized the boredom of customers with hotels

when they only provide one type of room over and over again. Because of realizing that,
Airbnb has become a pioneer in the field of connecting renters with landlords,
encouraging those who have extra living space to become an Airbnb host, helping to
connect people with people and create additional income. With that uniqueness,
customers can get close to and experience the life of the local people where they stay.

2.7 LEVELS OF PRODUCTS AND SERVICES

Levels of product and services can be seen as a hierarchical structure that breaks down a
product and service into different layers based on its value proposition. Each level adds
more customer value, making it more appealing and beneficial for the customers.
Understanding these levels can help businesses to better position their products in the
market

Typically, there are three levels: core customer value, actual product, augmented product.
Each of these levels represents a different aspect of the product, starting from its
fundamental purpose to its potential for future enhancements.

Figure 2.8 Level of products and services

At the first level, core customer value is the fundamental value or need that the product
or service fulfills for the customer. It is the important factor and the main reason why the
customer considers buying the product or service.
At the second level, this level combines the core values with essential elements to create
tangible products or services . The planners must transform the core benefit into an actual
product. This involves developing product and service features, creating a design,
determining the quality level, selecting a brand name, and designing the packaging.

At the third level, these are the additional product values that the customer gets when
purchasing the product or service. These augmented products usually included: after-sale
service, product support, delivery and credit, warranty, etc

AIRBNB’S APPLICATION:

Core value: Airbnb offers a core value of unique, authentic accommodation experiences
where travelers can live like a local and enjoy local culture instead of just staying at a
standard hotel. This value aims to address the needs of users who are looking for a
different experience, avoiding stereotypes and boredom.

Actual products: Airbnb has created a convenient interface for both hosts and guests
with features such as:

 Search tool: Airbnb allows guests to filter accommodations by criteria such as

price, location, amenities (kitchen, Wi-Fi, swimming pool, etc.) and also includes
detailed information: Each listing provides detailed descriptions, real photos,
transparent prices, and available amenities.
 Live chat feature: Airbnn helps guests quickly contact hosts to exchange
information or answer questions before booking
 Superhost: An important practical feature is the Superhost title for highly rated
hosts with a history of trust, helping guests feel secure

Augmented products

 Warranty (Property Insurance): Airbnb offers up to $1 million in insurance

coverage, protecting hosts against property damage caused by guests.

 Delivery and Credit (Online Payments) Guests and hosts transact through the
Airbnb platform, ensuring safety and transparency.
  Product Support: Airbnb also reassures both guests and hosts through its
verification process, safety tips for reliable bookings, and a 24-hour Trust and
Safety hotline.

2.8 MARKETING MIX 4P

The 4Ps of Marketing were first introduced by E. Jerome McCarthy in 1960 in his
seminal book, “Essentials of Marketing, A Management Approach.” This concept
provides a comprehensive approach to addressing several important issues in Marketing,
including:

 Understanding consumer needs and wants.

 Determining what is causing problems with current products.
 Finding ways to solve problems and change the way they view products/services.
 Creating a differentiator to gain a competitive advantage.
 Understanding how products interact with consumers and vice versa.

The 4 Ps of the marketing mix are: product, price, place, and promotion.

Figure 2.9 The 4 Ps of the marketing mix

Source: Management Weekly

 Product means the goods-and-services combination the company offers to the target
market.

Example: Airbnb has no tangible product to offer to their customers. They are just a
middleman connecting people who need to rent and homeowners who have spare space.

 Price is the amount of money customers must pay to obtain the product.

Example: Airbnb will collect a percentage of the price paid by the renter as well as the
host. For hosts, Airbnb will charge a 3% service fee, for guests, the percentage will be
higher, ranging from 6%-12%.

 Place includes company activities that make the product available to target
consumers.

Example: Airbnb accommodation is usually located in residential areas, usually houses

or apartments. They avoid busy city centers, where the market for multinational hotels is
growing strongly. Because they have identified the market early, recognized the potential
market along with the different experiences, so even if hotels try to build more in
residential areas to compete with Airbnb, it is very difficult for hotels to capture Airbnb's
market share.

 Promotion refers to activities that communicate the merits of the product and
persuade target customers to buy it.

Example: Airbnb has cleverly conveyed its meaning and message to customers through
its logo and slogan. In addition, they use their own consumers to advertise their products
and services to their relatives and friends.

3. QUESTIONS FOR DISCUSSION

3.1 How do the four characteristics of services apply to Airbnb? How does Airbnb
deal with each characteristic?

In just eight years, Airbnb has surpassed the achievements of the world's largest hotel
chain—Hilton Worldwide, a 100-year-old brand. And today, Airbnb is a leading travel
service company, connecting people who want to rent their accommodation and travelers
who want to find places to stay with special and interesting experiences. To achieve such
significant success in the service industry, Airbnb has clearly understood how to apply
and handle the characteristics of the service to help the company grow stronger and more
stable.

SERVICE INTANGIBILITY

Service intangibility means that services cannot be seen, tasted, felt, heard, or smelled
before they are bought.

Airbnb is a service company that operates as an online community marketplace providing

customers with unique experiences when they want to enjoy and immerse themselves in
local cultures and communities. Therefore, their products cannot be felt, touched, or tried
before buying. Customers can only feel and see directly when they arrive or after they
have purchased and used.

→ Airbnb’s solutions

Airbnb addresses this intangibility by providing the most accurate and authentic
information and images about the accommodations customers select. Besides, there is
detailed information about the surrounding area along with objective comments and
reviews from previous guests. Customers can also call the host directly to ask more
questions about the accommodation. All of these efforts help customers have a deeper
insight into the accommodation before making a booking decision, avoiding negative
influences leading to dissatisfaction. Moreovwe, these assist to create customer trust in
Airbnb encouraging them to return after using the service.

SERVICE INSEPARABILITY

Service inseparability means that services are produced and consumed at the same time
and cannot be separated from their providers.

Airbnb is a service company that acts as an intermediary so there is always a close

relationship between supply and demand.
→ Airbnb’s solutions:

In order to attract and retain both groups, Airbnb has built a comprehensive support
policy for both:

 Safe booking suggestions: Guide users on how to choose a suitable and safe place
to stay.
 Strict verification process: Ensure that both hosts and guests are clearly checked
for identity, creating mutual trust.
 24-hour support line: The "Trust and Safety" hotline operates continuously, ready
to resolve any safety and trust issues.
 Two-way review: Providing a platform for hosts and guests to review each other,
improving service quality over time.
 Property insurance policy: Provide an insurance package of up to 1 million USD
for hosts' properties, helping them feel more secure when renting, minimizing
worries about potential risks.

Although it cannot guarantee that every transaction will be flawless, these policies have
made Airbnb a reliable platform, ensuring trust and satisfaction for both guests and hosts.

SERVICE VARIABILITY

Service variability means that the quality of services depends on who provides them as
well as when, where, and how they are provided.

In Airbnb's case study - Making Hospitality Authentic, a prominent phrase stands out:
"Two Million Rooms - No Two Alike." This title highlights the diversity and uniqueness
of each room offered by Airbnb. The quality of each experience varies depending on
factors such as the service provider, location, timing, and the method of service delivery.

→ Airbnb’s solutions:

Airbnb has turned the variability of choices into a strength, a competitive advantage for
itself compared to its competitors. Because of such variability, the possibility of
customers being dissatisfied with their accommodation is also very high, so Airbnb has
created a comfortable space for both hosts and guests and a review channel to help
customers better understand the place they are staying.

 Hosts can list a variety of spaces for rent, ranging from a single room, suite, apartment,
yacht, houseboat, to an entire home or even a castle. With over 1,400 castles and more
than 2 million properties available, each one is unique and reflects the personality of its
owner.
 Guests can easily find the suitable place - whether by city, room type, price,
amenities, host language, or by using custom keywords.
 The “Superhost” status and “Business Travel Ready” badge help guests make
appropriate choices, ensuring a quality experience that fits their needs.

SERVICE PERISHABILITY

Service perishability means that services cannot be stored for later sale or use.

Airbnb was built as a business that provides tangible services without owning any
physical assets, which means they can't store their "products" like traditional business
models do.

→ Airbnb’s solutions:

Instead of worrying about the risks of not storing, Airbnb focuses on enhancing the value
of its intangible product - the experience of travelers staying at their chosen
accommodations. They are committed to giving guests the opportunity to truly immerse
themselves in and authentically experience the local life at their destinations. This is the
model that Airbnb has established, is continuously refining, and will continue to pursue in
the future. With its pioneering position in the market, Airbnb has secured a strong
foothold in the accommodation industry, making it a tough competitor for others to
surpass.

8-20 How does Airbnb differentiate its offer, delivery, and image?

Nowadays, there are many companies and places providing accommodation services in
the market. Therefore, the market has become a fierce and fierce competition between
parties. If they only compete on price or apply traditional strategies without any
outstanding factors, businesses will gradually lose customers. For Airbnb, they attract
both hosts and guests through its differences - "One of a kind".

Offer

Airbnb is not simply a place to stay but also brings an experience. Airbnb gives you a
unique experience when traveling to a certain locality. You not only visit the usual places,
but also immerse yourself in the life of the local people and feel like a real resident
during your stay. It is a valuable experience, far beyond what traditional hotels can bring.
When you have authentic experiences, you can learn more about the culture, geography
and history of that place, thereby developing empathy with the people where you go. As
more and more people have such experiences, the gap between peoples of the world will
gradually narrow, increasing empathy, and helping to reduce racism and global conflicts.

Delivery

One unique aspect of the Airbnb online marketplace is that travelers can easily search for
a desired location, then contact hosts directly to arrange accommodations, number of
guests, and negotiate a good price for themselves. Airbnb also has a number of guidelines
for hosts, such as picking up guests from airport or taking them on tours around town,
which are some of the approaches to enhance the interaction between hosts and guests.
Finally, Airbnb has designed a superior delivery process that no other companies have.

Image

In 2014, Airbnb changed its logo from simple letters to a logo that has both words and
symbols. With the gentleness of the sunset orange color, it has made customers pay more
attention to Airbnb. Airbnb's new logo has fully expressed the meaning and goal that their
founders wanted to aim for when establishing Airbnb. That logo is a combination of 4
elements including people, place, love and the letter A in Airbnb, creating a shape that is
both simple and unique. It shows love, location, and close connection between strangers.
Because of the simplicity of the logo - called "Bélo" - it helps customers easily remember
and easily recognize Airbnb in a market full of other competing companies.
Accompanying the logo is the slogan "belong anywhere" which shows the true spirit of
Airbnb, to be anywhere, to integrate with the lives of local people.
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