MGG final report

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Team Project Plan
MGG303: Comm Literacy for Business
Prepared for: Kirti Harnal
Prepared by:
Yi Ren Lim (50375404)
Lee Ai Tong (50431826)
Prachi Roshan (50398224)
Date: 18th April 2022
Academic Integrity Declaration
This assignment has been completed in accordance with assignment guidelines and the
UB Policy of Academic Integrity as stated in:
https://catalog.buffalo.edu/policies/integrity.html

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Innovative Proposals for Airbnb’s services
Prepared for: Airbnb Inc.
Prepared by: Pace Inc.
Date: 18th April 2022

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345 Peyton Road,
Dewton Avenue, Singapore 375426
+65 54789621
April 18, 2022
Mr. Jailyn H. White
Chief Operating Officer
Airbnb Incorporation
3405 Shadowmar Drive
San Francisco, CA 87585
Dear Mr. White,
Enclosed is our proposal report for Airbnb as requested by Ms. Cornelia Jones, Executive
director. With considerations to Airbnb’s current standing, the report entails our analysis and
evaluates the potential gains for the proposed service, which aims to provide a new stream of
revenue for Airbnb.
Based on Airbnb’s financial statements, net losses have been reported for the past three years.
Through our SWOT analysis of Airbnb, we have recommended Home Office Rental as it meets
Airbnb’s current needs and approaches the future target market. We believe that the report's
recommendations will aid Airbnb in alleviating its financial concerns.
We hope that this report will provide Airbnb with the idea that it could. We would be glad to meet
with you for further discussion at your convenience. Should you have any further questions,
please us by email at leeaitong@paceinc.com. We would like to thank you once again for giving
us the opportunity to provide our innovative solutions for the future business of Airbnb.
Sincerely,
Ai Tong Lee
Ai Tong Lee,
Director of Research
Enclosure: Innovative Proposals for Airbnb’s services

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Table of contents
EXECUTIVE SUMMARY 5
1. Introduction 6
1.1 Background: 6
1.2 Airbnb’s Current Financial Position: 6
2. SWOT Analysis 8
2.1 STRENGTHS 9
2.1.1 Affordable Pricing Strategy 9
2.1.2: Third Party Booking Tool for Business Travelers 9
2.2 WEAKNESS 9
2.2.1 Lack of Quality Control 9
2.2.2 Low Profitability 10
2.3 OPPORTUNITY 10
2.3.1 Increasing Demand for Flexible Workspaces 10
2.3.2 Partnership with Coworking Companies 10
2.4 THREAT 11
2.4.1 Legal Laws and Regulations 11
2.4.2 Privacy and Safety Issues 11
3. Problem/Opportunity Statement 12
4. Recommendation 13
4.1 Options considered for Airbnb 13
4.2 Proposed Service for Airbnb - Home Office Rental 14
4.2.1 Proposed Service 14
4.3 Target Markets 15
4.3.1 Working professionals 15
4.3.2 Business Travelers and Digital Nomads 16
4.4 Competitor analysis 16
5. Benefits of Home Office Rental 17
5.1 Benefits to Working Professionals, Business Travelers and Digital Nomads 17
5.1.1 More job control 17
5.1.2 Cost saving 17
5.1.3 Flexibility 17
5.2 Additional Benefits to Airbnb 18
5.2.1 Wider Consumer Base 18
5.2.2 Competitive edge 18
6. Foreseeable Challenges and Mitigation 19
6.1 Insufficient amenities and safety equipment 19
6.2 Personal Safety 19
6.3 Mitigation 19
7. Conclusion 20
References 21

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EXECUTIVE SUMMARY
This report analyzes Airbnb’s current market trends and services and presents the recommendations
to increase its revenue stream to seek financial stability for Airbnb.
Airbnb is an online marketplace that allows homeowners to put their houses up for renting it to
travelers whilst not owning any properties. Since 2017, Airbnb had reported losses, the highest of
which was USD $4.5B in 2020. Despite the 27% increase in revenue from 2020 to 2021, Airbnb is
still making a loss due to high operating costs that are deemed essential for the growth of the
business and recent acquisitions.
Based on Airbnb’s SWOT analysis, the company has an affordable pricing strategy that allows them
to reach a wider consumer base. Its customized services and ability to offer affordable rates
compared to the larger hotels gives them a competitive advantage. However, Airbnb faces low
profitability and a lack of quality control. Since Airbnb’s business model makes the hosts liable for
the guest experience, the quality of the stay for each individual may be subjected to variations. The
threats Airbnb faces are the legal laws and regulations for property rentals in each country, and
safety and privacy concerns.
Research has shown that there is a rising demand for flexible workspaces and the flexible
workspace supply has been projected to grow by 21 percent. This offers Airbnb an opportunity to
further introduce new services that could increase its consumer reach and revenue stream. With
companies adopting hybrid work models and the demand for greater work flexibility, Airbnb can
leverage this trend to expand its business through its services.
Having analyzed the issues faced by Airbnb, various options have been considered. The services
that were considered are Airbnb Car Service and Global Membership for Digital Nomads and
Itinerants. Among these recommendations, Home Office Rental was chosen to be the proposed
recommendation.
Home Office Rental allows homeowners to rent out their spare rooms as a working space for people
who prefer a more private and homier environment to co-working spaces. This service aims to target
business travelers, adults working from home and digital nomads. Airbnb’s main competitors are
companies that provide office rental services such as JustCo, LiquidSpace and WeWork. Although
there are existing office rental services, Airbnb’s Home Office Rental specifically caters to individuals
seeking complete privacy in comparison to a shared co-working office space.
With the introduction of a new service, Airbnb will likely face challenges with its execution. The
challenges identified are insufficient equipment and safety concerns. These challenges can be
mitigated by establishing standards and protocols for each office listing. Additionally, a specialized
team will personally inspect the space before approval.
Given the low profitability faced by Airbnb, the Home Office Rental service can strengthen its
revenue stream through market expansion. This new service will provide Airbnb with a competitive
advantage against competitors with similar business models.

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1. Introduction
The purpose of the report is to recommend a new service for Airbnb that meet current market
needs and strengthen its revenue stream through market expansion. The report outlines the
recommended services that will allow Airbnb to penetrate prospective submarkets of the rental
market. The analysis and evaluation of the current market needs of travelers and potential
renters here provides the best estimates of what Airbnb can expect to add into their service line
to generate more revenue.
1.1 Background:
Airbnb operates as a marketplace primarily for tourism, lodging and home rental activities
through listing and renting rooms in the host’s apartment or home to travelers or renters via its
website and mobile app (MarketLine, 2021). Airbnb's aim is to make the world a better place by
promoting healthy, local, authentic, varied, inclusive, and sustainable travel (Airbnb Inc, 2019).
1.2 Airbnb’s Current Financial Position:
From 2017 to 2020, Airbnb reported net losses consecutively. In 2020, loss reached a high of
4.5 billion USD, most likely as a result of the coronavirus (COVID-19) pandemic. In Q3 of 2021,
Airbnb’s revenue of $2.2 billion was 36% higher than Q3 2019. In Q3 of 2021, Airbnb’s net
income was $834 million, nearly 4 times larger than 2020 (Airbnb Newsroom, 2021). Overall, there
were improvements in Q4 of 2021 despite the impact of the Omicron variant in December 2021.
The adjusted 2021 EBITDA (margin of 27%) of $333 million has been recorded as the most
profitable Q4 ever, which helped then recover losses of Q4 of 2019 and 2020 (Seeking Alpha, 2022).
To sum up, the best performance for Airbnb was in the year 2019 with $4.8 billion USD and only
$886.94 million USD compared to the previous 6 years.

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Source:(Airbnb, n.d.)
Figure 1: Fall in Revenue from 2019 to 2021
Table 1 below shows the profit and other management ratios from the year 2020. In terms of
capital management, the return on equity (ROE) focuses on how well they run their company
(Stock Metric, n.d.). According to Airbnb, an ideal ROE should be greater than 10%, however,
the company in 2020 was shown to have financial distress.
Table 1: Profit and Management Ratios
PROFIT MARGIN -5.87%
OPERATING MARGIN 7.68%
RETURN ON ASSETS 2.38%
RETURN ON EQUITY -9.17%
Source: (Airbnb, n.d.) --.

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2. SWOT Analysis
This section provides SWOT analysis in determining Airbnb’s strength and weaknesses, as well
as its new opportunities and potential threats. This is crucial in determining and planning future
strategies for improvement. Airbnb can also make adjustments to the services they are already
offering based on the SWOT Matrix below.
Table 2 illustrates Airbnb’s strengths, weaknesses, opportunities and threats respectively.
Table 2: SWOT Matrix
STRENGTHS
● Existing program for business
travelers (Black, 2016 & Airbnb Inc., 2016)
● Services provided can be
customized according to guests and
hosts' liking (Meleo et al., 2016).
● A range of pricing to cater different
budgets (Hui Li & Kannan Srinivasan, 2019)
WEAKNESS
● Lack of quality control (BStrategy
Insights, n.d.)
● Low profitability leading to net
losses for 3 years consecutively
(Airbnb, n.d.)
OPPORTUNITY
● Increasing demand for flexible
workspaces (De San José, 2021)
● Partnership with coworking
companies to broaden services
offered (Ali, 2020)
● Increasing demand for air travel
amidst the pandemic [travel
rebound] (Mazareanu, n.d.)
THREAT
● Travelers still prefer booking with
hotels due to safety concerns (Meleo
et al., 2016)
● Legal laws and regulations (Airbnb,
n.d.)

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2.1 STRENGTHS
2.1.1 Affordable Pricing Strategy
Airbnb uses a straightforward pricing strategy to charge lower than hotels and makes the host’s
space stand out by pricing their offer rates below the market average. Airbnb’s prices vary
based on the locations and the discretion of the hosts. In comparison to hotels, Airbnb is
recognized for delivering comparatively low-cost services nowadays (IIDE, 2021). In 2021, the
average Airbnb night cost $137 internationally (AllTheRooms, 2021). The most affordable Airbnb
pricing around the world is found in Asia Pacific, Africa, and Latin America at $104 per night,
$84 per night, and $81 per night, respectively (AllTheRooms, 2021). Airbnb stays in Europe have an
average pricing of $114 per night (AllTheRooms, 2021). North America has an average pricing of $208
per night because of a high demand for Airbnb stays in the country (AllTheRooms, 2021). The price
per night is low and market-related and therefore, making Airbnb a preferable choice for families
or individuals, over hotels and other guest houses.
2.1.2: Third Party Booking Tool for Business Travelers
Airbnb has already been operating Airbnb for Work (was Airbnb for Business) since 2014 and
the number of bookings has tripled yearly consistently from 2015 to 2017 with over 700k
companies with employees booking with Airbnb for Work to date (Airbnb Newsroom, 2018). Through
the bookings, Airbnb is noticing trends of increase in need for mobility whereby business
travelers are booking extended stays and relocations for various reasons (e.g., long business
trips, training sessions, etc.) (Airbnb Inc, 2019). In 2018, Airbnb added three new features where
business travelers are allowed to
1. Book tours or events for vacations or team building activities (Clark, 2018)
2. Make homes available for corporate off-sites and meetings (Clark, 2018)
3. Allows employees relocating for work to secure temporary accommodation (Clark, 2018)
Given the expansion of Airbnb for Work, it will entice more businesses to work with Airbnb in
planning their corporate trips.
2.2 WEAKNESS
2.2.1 Lack of Quality Control
Airbnb’s host requirement focuses on four aspects: be responsive, accept reservation requests,
avoid cancellations, and maintain a high overall rating (Airbnb Inc, n.d.). Although Airbnb provides
guidelines on how to host, it is not mandatory for the hosts to meet Airbnb's guidelines (BStrategy
Insights, n.d.), thus creating inconsistency in the quality control of the services offered. Guests may
experience substandard services concerning cleanliness, comfort and amenities, resulting in a
less-than-ideal stay (BStrategy Insights, n.d.). A study based on reviews left on Airbnb has shown that
customers have high levels of distrust with Airbnb (Sthapit & Björk, 2019). Recently, Airbnb had faced
a security issue where duplicates of keys were made to rob renters as a result of lacking policy

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in exchange of keys between homeowners and renters (Carville, 2021). Thus, the lack of quality
control could adversely affect Airbnb’s business reputation.
2.2.2 Low Profitability
Airbnb's main source of revenue comes from service fees from bookings, which are charged to
both Airbnb guests and hosts (Deane, 2022). Airbnb follows a business model where they charge a
shared host and guest fee and a host-only fee for hotels or other hospitality businesses (Deane,
2022). Airbnb takes 20 percent of the subtotal for booking fees from guests, 3 percent for host
fees, and 14 to 20 percent from hotels or other hospitality businesses (Deane, 2022). Having said
that, Airbnb has low profitability, and this can be highlighted in their annual report where despite
earning a revenue of $US5,991,760,000, Airbnb is still reporting a loss of $US352,034,000 due
to its high operating costs and recent acquisitions (Airbnb, 2022).
2.3 OPPORTUNITY
2.3.1 Increasing Demand for Flexible Workspaces
Despite the uncertainties surrounding the Covid-19 pandemic, demand for flexible workspaces
has surged in many markets globally (De San José, 2021). Additionally, research highlights over 21
percent growth in flexible workspace supply (The Instant Group, 2021). Companies are implementing
hybrid work models and adopting flexible workspaces as part of a strategy to increase
productivity, boost networking opportunities, and promote employee innovation (De San José, 2021).
In 2014, Airbnb launched a successful project, Airbnb for Work. Employees from nearly 700,000
companies have booked with Airbnb for Work (Airbnb Newsroom, 2018). Over 275,000 of these
companies have directly collaborated with Airbnb to assist them in managing their travel (Airbnb
Newsroom, 2018). In addition, bookings tripled each year, consecutively from 2015 to 2017 (Airbnb
Newsroom, 2018). This highlights the increase in demand for hybrid and remote work structures and
for greater work flexibility. With the demand for flexible workspaces expected to continue rising,
it provides Airbnb with expansion opportunities.
2.3.2 Partnership with Coworking Companies
As mentioned above, there is an increase in demand for flexible workspaces. This gives Airbnb
an opportunity to form partnerships with coworking companies. Partnership agreements will
enable both Airbnb and the coworking company to share risks, gain knowledge of the coworking
industry and diversify their portfolio (Ali, 2020). Furthermore, Airbnb is no stranger to this concept.
Over the years, Airbnb has partnered with SiteMinder to promote various boutique hotels and
support local businesses (Airbnb Newsroom, 2019). In addition, they have also partnered with
Newgard Development Group opening condo-hotel towers in Miami (Warren, 2019). Thus, starting a

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partnership with coworking companies will give Airbnb the potential to diversify the services they
already offer.
2.4 THREAT
2.4.1 Legal Laws and Regulations
Each country has its own set of laws as stated by the local government. For instance, hosts
need to register and obtain a permit or license before they can list their property (Airbnb, n.d.).
Some countries may prohibit unlicensed short-term rentals of under 30 days or at places that
are of primary residence (Airbnb, n.d.). In addition, hosts need to adhere to a unique set of rules
and regulations implemented by their local state governments and certain states have tax laws
on rental properties (AllTheRooms, 2022). For example, in Los Angeles, hosts that do not have a
permit are banned from hosting unlicensed short-term rentals under 30 days (Airbnb, n.d.). With the
continuous growth of the rental market, it is possible for new regulations to be implemented.
Thus, Airbnb may be more vulnerable to litigation in years to come.
2.4.2 Privacy and Safety Issues
Unlike hotels that follow the jurisdiction of the municipal legislation of that state, Airbnb does not
have the same safety regulations. In recent years, reports mentioned that some guests have
faced privacy and safety issues during their stay. Police interventions, attacks on guests, unsafe
surroundings, narcotics, drug dealings, and firearms found in the rental are common guest
concerns (Fergusson, 2022, para. 32). Some guests experienced unsafe living conditions and
infestation in their rented properties, where sightings of bugs, rodents, pests, mold, fluids, and
rotting food were spotted (Fergusson, 2022). In addition, gas leaks, missing carbon monoxide and/or
smoke detectors, and other fire or electrical hazards make travelers worry (Fergusson, 2022). For
example; a gas leak in an Airbnb in Mexico had resulted in the death of a California couple and
their 3-year-old son (Kilander, 2021).
Furthermore, with the advancement of technology, it is more common for hidden cameras to be
placed in smoke detectors, iPhone charging docks, USB adapters, and other hiding spots
(Fergusson, 2022), thus creating privacy concerns. Since safety and privacy issues are external
factors that Airbnb cannot directly control, this may cause mistrust and affect Airbnb’s
reputation.

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3. Problem/Opportunity Statement
According to the analyzed weaknesses with reference to the SWOT, the major problem that
Airbnb is facing is its low profitability. As illustrated in Table 1, Airbnb has a profit margin of
negative 5.87 percent. The factors for the low profit margin identified are high operating costs
and recent ventures. If Airbnb does not gain an additional source of revenue, it could lead to
further losses. Furthermore, legal laws and regulations, privacy and safety concerns of
consumers may make it difficult for Airbnb to attract new and existing customers.
Despite the challenges faced by Airbnb, it can capitalize on its strength to improve its current
market and financial position. The recent increase in demand for flexible workspaces can allow
Airbnb to adopt new services, providing an additional revenue stream. This would ease Airbnb’s
financial concerns and improve their financial performance. Airbnb’s affordable prices in various
cities and ready availability to consumers could aid in developing partnerships with corporations
to attract and retain users, gaining trust and improving their reputation. Our SWOT also
suggests that the company has potential to dominate the coworking space market. Thus, Airbnb
should take advantage of its pricing strategy to gain more customers and partner with other
corporations planning their stays with Airbnb.

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4. Recommendation
This section of the report includes new services considered with the proposed service selected
for Airbnb.
4.1 Options considered for Airbnb
Table 3 provides a list of services that have been considered for Airbnb based on the SWOT
analysis and other various research methods.
Table 3: Recommendations of Alternative Ideas considered
Criteria Airbnb Car Service Global membership for Itinerants and
Digital Nomads
Description An add-on service that provides users with
a personal chauffeur for a set period of
time during their stay.
A set monthly budget for itinerants using
on a contractual basis for 6 to 12 months.
Unused budget per accommodation is
prorated.
Target
Market
Airbnb customers (leisure and business
travelers)
Itinerants and Digital Nomads
USP Private chauffeur service, convenience Affordable membership, flexibility of the
contract
Rationale The global car-as-a-service market is
expected to reach $225.65 billion by 2030
(Allied Market Research, 2021).
Increasing demand for business and
domestic travel (Auto Rental News, 2021, as cited
in Global Business Travel Association, 2021).
Offering premium services encourages
market expansion and boosts revenue
(Informa PLC, 2021).
Great demand for Long-term lease is
increasing (Herrig, 2022).
Hosts will be assured payment as per
contract of renter (Stauffer, 2022).
Growth in the rental market for Digital
Nomads (Stauffer, 2022).

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Limitation Rental car shortage due to semiconductor
production crisis (Travel Weekly, 2021).
Competitors with similar business models
such as Turo (Bloomberg, n.d.).
Restrictions by local regulators and legal
issues (Auto Rental News, 2018).
Background checks are limited and can't
identify all past criminals (Airbnb, n.d.).
Landlords will need to be responsible for
their tenants 24 x 7 (Stauffer, 2022).
Wages are growing but not fast enough to
keep up with soaring rent (Collins, 2021).
4.2 Proposed Service for Airbnb - Home Office Rental
The proposed service for the company is a Home Office Rental. It operates by allowing
homeowners to rent out their spare rooms as a working space for people who work from home
and prefer a more private, homier environment than co-working spaces. Homeowners will be
given the option to charge rental on an hourly basis, daily basis, monthly basis, or all of them.
The highlight of this service is the complete privacy and comfort it provides to individuals in
comparison to a shared co-working space.
4.2.1 Proposed Service
Figure 2 and 3 below shows what guests can expect from Home Office Rental.
Figure 2: Home Office Space (Source: Airbnb, n.d.)

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Figure 3: Workspace station with Amenities (Pinterest, 2019)
4.3 Target Markets
4.3.1 Working professionals
As nations move towards the endemic phase of COVID-19, researchers believe that working
from home is here to stay. Hence, this service targets the working adults who seek privacy they
cannot get working from home. In terms of demographics, the recent statistics have shown that
millennials make up about 60 percent of bookings for Airbnb (Deane, 2022), making this the target
market for the Airbnb Home Office Rental service. As mentioned above in the SWOT analysis,
Airbnb is already providing various price ranges that cater to various demographic, mid to high
income level working adults will be most likely to afford such services given the flexibility of the
booking system.
Working Professionals under the Hybrid Work Model
Hybrid Work Model is a mix of working from home and going to the office as a form of flexibility
in work (SAP, n.d.) and it has become increasingly popular as a result of the pandemic given that a
recent survey found that 61 percent of the surveyed Singaporean employers plan to keep this
work model (Staffing Industry Analysts, 2020). In addition to that, another Gartner study found that 82
percent of the employers surveyed intend to keep said model in place after the pandemic
(Gartner, 2020). These studies support the idea that Hybrid Work Model will be a common work
model adopted by companies in the near future and it will be an opportunity for Airbnb to take
advantage of.

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4.3.2 Business Travelers and Digital Nomads
A different survey had shown that freelancers make up 41 percent of the coworking space
occupant, but a good chunk of occupants are of the IT and PR industry (Foertsch, 2017).
Additionally, the survey also found that 85 percent of the coworking occupants have a
bachelor’s degree at the least (Foertsch, 2017).
4.4 Competitor analysis
Table 4 provides a list of services that are present in the market in competition with Airbnb.
Table 4: Competing Companies and their Featured Services
Company Competing Services Features USP
JustCo
Singapore
● Co-working
spaces
● Office Rentals
● Specialized team for
IT issues
● Variety of co-working
spaces
Flexible membership
terms
LiquidSpace
➢ altSpace
● Co-working
spaces
● Office Rentals
● Customizable furniture
setting
● Personalization of
workspace design
Personalization
altSpace
Turnkey office rental for
teams of 20 and above
WeWork
● Co-working
spaces
● Office Rentals
● Added amenities and
service offerings
● Monthly membership
with access to
numerous locations
worldwide
Convenience
Airbnb ● Home Office
Rentals
● Flexible pricing Privacy

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● Home Rentals
(JustCo, n.d.)
(LiquidSpace, n.d.)
(WeWork, n.d.)
5. Benefits of Home Office Rental
5.1 Benefits to Working Professionals, Business Travelers and Digital Nomads
5.1.1 More job control
As mentioned above, experts believe that working from home is here to stay. With that said, a
survey highlighted that 83 percent of its respondents prefer the hybrid work system whereby at
least 25 percent of the week, workers are working from home (O'Donnellan, 2022). Given the
increase in demand for hybrid work systems, the Airbnb Home Office Rental service allows
prospective customers to have more job control.
Prospective customers will not have to face the usual distractions like cleaning or doing chores
from their own home, nor will they have to deal with office politics (Spreitzer et al., 2018).
Furthermore, this gives them the opportunity to choose an environment they wish to work in to
boost their productivity (Wertz, 2019). Overall, the increase in job control increases worker
productivity.
5.1.2 Cost saving
Both the employees and employers may profit from the transition to remote work. Employers
could save money by renting smaller spaces like Airbnb instead of leasing large offices at
exorbitant prices. This is further supported by experts who predict that offices will transition from
a place where workers go every day to more of a central meeting spot for important meetings
and collaborative work (Snouwaert, 2020). There are some cities in the world where it makes
economic sense to work remotely where they can save on commute costs, cost of living and
coworking spaces (Hroncich, 2020). Furthermore, working remotely is also an attractive option
because it can help employees save on housing.
5.1.3 Flexibility
The opportunity to work at any time and location is a key lure for individuals with work online
sprouting up all over the world (Bishop, 2020). This allows individuals to have greater control of their

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work. In the wake of coronavirus, office workers settle into their home-based routines and prefer
to continue working from home as it encourages them to be more productive (Snouwaert, 2020). “A
survey conducted by IBM found that 54 percent of employees would prefer to primarily work
remotely” (Snouwaert, 2020, para 2).
5.2 Additional Benefits to Airbnb
5.2.1 Wider Consumer Base
Airbnb's primary target market is working professionals that are seeking individual private office
space as opposed to co-working spaces. However, Home Office Rental also targets
subcategory markets such as business travelers and digital nomads. By expanding into these
markets, Airbnb is increasing its consumer base, thus growing its market reach. A study
conducted by OpenGrowth (2021) found that having a large consumer base increases the
chances of reaching out to more people. The increased brand awareness influences consumer
decisions, encouraging repeat purchases, thereby driving incremental sales (Rhodes, 2017). Thus,
if Airbnb were to implement Home Office Rental, they will be able to expand their consumer
base and increase brand awareness.
5.2.2 Competitive edge
Diversified their product range from only renting homes to renting out offices will place Airbnb at
a competitive edge. As an example, Grab started off as a ride hailing company and ended up
expanding to various markets ranging from food delivery to same day delivery services, turning
grab into a superapp offering over 20 services which made them competitive (Khoso, 2021). With
that said, Airbnb can be competitive in the rental market starting with implementing the
recommended business plan and continuing adding on more services, making them competitive
in the rental industry too.

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6. Foreseeable Challenges and Mitigation
6.1 Insufficient amenities and safety equipment
Some homes may lack necessary amenities that are required, such as high-speed internet
access, office desks, connectors, and plugs. In addition, some homes may not have proper
safety equipment that are needed to ensure the safety of its occupants, which may possibly lead
to endangerment of the occupants in times of emergency. Instances of such would be fire
extinguishers and smoke alarms.
6.2 Personal Safety
Airbnb faces the challenges of safety for guests, legal battles, and bad reputation from
unsatisfied guests. Safety of guests has been a challenge for the company since Airbnb does
not have direct control over the properties. It has also been challenging to use Airbnb in some
locations due to risk of insecurity. Hence, this causes Airbnb to lose clients to more established
brands. Additionally, Airbnb has encountered legal battles where the property owners do not
follow local regulations.
6.3 Mitigation
Given the nature of Airbnb’s online business model, trust in safety has always been an issue. A
study on cross-platform purchasing behavior has shown that the trust consumers have in other
platforms also influences their cross-platform purchasing behavior (Zhang & Yu, 2020). In the
context of Airbnb, it will be beneficial for Airbnb to assure safety by gaining trust from
prospective customers. To counter the challenges mentioned above, Airbnb should hire a
specialized team to check new listings to ensure that safety requirements and basic amenities
are met. While it may be costly to execute this plan, another study has shown that positive
emotions from brand usage generate trust which brings in more loyal customers (Eisingerich et al.,
2021).

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7. Conclusion
Given the growing popularity of flexible working models combined with the rising demand for
corporate travel, Airbnb can capitalize this trend to improve its revenue stream. To conclude, the
proposed Home Office Rental will be an ideal service to Airbnb’s existing business model,
allowing Airbnb to remain competitive in the rental industry. With the implementation of Home
Office Rental, Airbnb can improve their overall financial performance.

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References
Airbnb Inc. (2016, October 4). Qantas partners with airbnb to make frequent flyers right at home.
Airbnb Newsroom. https://news.airbnb.com/qantas-partners-with-airbnb-to-make-frequent-
flyers-right-at-home/
Airbnb Inc. (2019). Airbnb 2019 business update. Airbnb Newsroom. https://news.airbnb.com/airbnb-
2019-business-update/
Airbnb Inc. (n.d.). Host requirements – airbnb help centre. Airbnb. Retrieved April 16, 2022, from
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