Most Disruptive Business Model — Airbnb
The most disruptive business model I saw is the business model of Airbnb. Airbnb uses a new business model to give customers a new way of lending their homes and renting homes, which changes the way of how people utilize their resources and finding the accommodation.
So what is the business model of Airbnb? Let’s call it platform business model. This means that Airbnb provides a platform for both producers and consumers to exchange the resources they have to get what they want. As for Airbnb, it provides a platform for both travelers and local hosts. On one side, it enables local hosts to list their available space, such as empty room in the house, empty apartment or empty house and then earn extra income from the rent. On the other side, travelers can book the home stays they like from local hosts, which will be cheaper than living in hotels and make them feel like at home. This business model can make Airbnb grow in a fast rate since there are many homes out there that can be Airbnb’s potential customers and the needs of accommodation from travelers are always there.
If compared with traditional hotels such as Hilton and Marriott, which uses linear business model, we can see that Airbnb’s business model definitely has more benefits. First, it doesn’t need to invest money to build hotels and facilities. Second, it doesn’t need to hire so many people to maintain and manage the hotels. Third, it is more flexible and easy to grow and expand. So this kind of business model really will define the future of this economy, which is this kind of sharing economy.
But how does this kind of business model help Airbnb to make money? By using the Airbnb platform to do transaction, customers will need to pay fees for the service they get from Airbnb. The one source is the commission from property owners. If there is one booking done through Airbnb platform, it will charge 10% commission. The other source is the transaction fee from travelers, which is 3% of the booking amount. So generally, the Airbnb is like an agent and it gets its revenue from both clients. But what is smart of Airbnb is that it moves the agency online to gather more clients so that it can get more revenue.
Airbnb’s business model also has some problems it needs to solve, but it has made some solutions to them. The biggest one is how to earn trust from travelers and host. Because as for travelers, it is a little strange to live in someone’s house without even knowing the hosts. And for hosts, it could also be pretty scary to let someone they don’t know to live in their houses. So to solve this main concern, base on the basic business model, Airbnb add some extra processes to the model to ensure the safety. For example, it has a verification process for every host and traveler and it motivates people to sign up using social media account to let them know each other better. And there is insurance policy which Airbnb has in case there is something going wrong.
I think the future of Airbnb is very promising. Now Airbnb has already gathered a total funding of $2.3 billion and having its presence in more that 190 countries across the world, it will grow further and attracts more customers to use this platform. But it is sure that using this kind of new business model will face many more problems. If Airbnb can insist and solve them successfully, it will definitely be very a successful and competitive company.
