AirBnB Consumer Behavior Analysis

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Airbnb Consumer Behavior Model

In the previous article, I’ve explained the 4Ps of Airbnb so in this article I will go deeper into the consumer behavior model of Airbnb. Before we go deeper, let’s take a glimpse look at Airbnb.

Airbnb is a platform (web application) to facilitate hosts all over the world to offer unique stays and one-of-a-kind activities that make it possible for guests to experience the world in a more authentic, connected way (Airbnb website, 2021).

Airbnb offers guests an amount of choices, unique stays, and experiences while offering the hosts additional income and accommodation management tools.

The Airbnb sharing economy ​​business model provides an online marketplace for hosts and prospective renters or travelers all over the world. Basically, what they do is connecting people who have something to offer with others who need what they have. Airbnb only providing a digital platform and doesn’t provide any properties or any other physical assets. Therefore, unlike Hotels they don’t have to worry about providing physical building, booking agents, receptionists, cleaning services, and any other things required for standard operational for conventional hotels or such. As for the revenue, Airbnb earns revenue by charging a service fee of 3% for the host and 14,2% for the guest. There is an additional fee only for the host. The host-only fee typically ranges from 14% to 16% and is mandatory for hotels and some other hosts (Airbnb website, 2021).

Now, after we learned about the concept and the business model of Airbnb, let’s pay attention to “Who are the consumers of Airbnb?”

Since Airbnb is a marketplace connecting hosts and travelers, the coverage of their customer target is huge. Everyone can be their customer. Therefore, Airbnb use market segmentation based on geography (Countries), behavior, travel styles (leisure, adventurous, family, honeymoon, business, etc.), Lodging types (shared space, entire home, apartment, hotel room, etc.), and interests.

According to Engel et al. (2001), consumer behavior is the action and decision processes when people purchase goods and services for their needs. In the fact, understanding consumer behavior is important for companies in order to know how the potential consumer will respond to their product or service and to help companies identifying their opportunities in the future.

Hilke Plassmann, INSEAD Chaired Professor of Decision Neuroscience and Associate Professor of Marketing at INSEAD, explained on how to understand consumer behavior, from the inside out

Based on the theories above, the Airbnb consumer behavior model can be defined as follows:

1. Sharing economy segmentation: Host & Guest
2. Reason for stay: Leisure, Business Trip, Visiting Family, Honeymoon, and Backpacking
3. Age: According to the research done by Barry in 2016, around 75% of Airbnb consumers are millennials (generation Y).
4. Personality: Adventurous, Open to New Experiences, and Looking for authentic local experiences that hotels can’t provide.
5. The number of guests: Solo travel, traveling with family, traveling with a spouse, and traveling with friends or coworkers.

Organizational (B2B) Vs Individual Consumer (B2C) Model

Airbnb B2B Model

Lately, Airbnb not only welcoming individual hosts but also boutique hotels as their business partners (See Airbnb Website). As we can see, the B2B concept is only valid for 1 side of the sharing economy segment, that is the host (lodging provider). Airbnb provides a platform where hotels can join their listing so that prospective guests will find them easier.

Airbnb B2B Model is as follows:

1. Economy sharing segmentation: Host (providers)
2. Reason for joining: To get more publicity, earn more profit (Economic driven)
3. Geography: 144 Countries all over the world
4. Operational: Easy to manage (online platform)
5. Cost: Reduce operational cost

If we see from the general consumer behavior model (which is mostly B2C), Airbnb’s B2C Model is more personal and psychological driven which is affected by the motivational, emotional, personality, and personal situation of the customer. Whereas Airbnb, B2B Model is more economic driven (the motivation of consumers are heavily affected by profit generation and cost reduction purposes).

References:

Jiang, W. (2019, August). The Relationship between Motivation to Use Airbnb and Guests’ Repurchase Intention. Digital Scholarships.

Dao, N. L., & Vu, A. (2016, November 28). Customers’ purchasing behavior between Airbnb and hostels when traveling to Helsinki. Ammattikorkeakoulut — Theseus. https://www.theseus.fi/bitstream/handle/10024/119462/Dao_Lien.pdf?sequence=1&isAllowed=y

Wahono, F. A., & Kartika, E. W. (2016). CONSUMER BEHAVIOR STUDY ON THE ACCEPTANCE OF AIRBNB FROM CONSUMERS IN SURABAYA, INDONESIA.

How Airbnb’s exponential business model works. (2020, August 3). Business Models Inc. https://www.businessmodelsinc.com/exponential-business-model/airbnb/

Pereira, D. (2021, August 23). Airbnb business model canvas. Business Model Analyst. https://businessmodelanalyst.com/airbnb-business-model/#Airbnb_business_model_canvas

Note:

This article is written based on University of The People Marketing Management (BUS 5112) written assignment by Fristy Tania in September 2021