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Homework answers / question archive / Provide some background information on the chosen case study organization (AIRBNB) and identify the socio-economic trends which affect the chosen organization's business model

Provide some background information on the chosen case study organization (AIRBNB) and identify the socio-economic trends which affect the chosen organization's business model

Economics

Provide some background information on the chosen case study organization (AIRBNB) and identify the socio-economic trends which affect the chosen organization's business model.

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The company does not host any events; neither does it own real estate, but it acts as a middle line linking the apartment and lodge owners to customers (travelers). The company earns when people rent out properties where it receives a commission of 3% from hosts for each booking and collects around 6% and 12% from visitors. Statistical research states that it is cheaper to pay in Airbnb that a room in a hotel. According to the 2013 price economy, the results find that it was 21% cheaper to rent a whole apartment on Airbnb that a hotel, it also revealed it was 49% less expensive than renting a private room.

Airbnb is affected by socio-economic trends such as wealth, income, political participation as well as public awareness created through advertisement. In terms of wealth, some guests might be willing to pay more hence generate more revenue to the organization. Wealthy people will also have frequent visits and extended stays where they can book an apartment for an extended period, thus paying more. Government affects the firm through the regulation of travel policies where during travel restrictions, Airbnb earns less compared to peak periods when traveling is free, especially during holidays. The number of travelers per period determines income. Therefore, when there are more guests, and this is achieved through consistent advertisements to create awareness as well as free travel permits by the authority, the company earns more since the percentage commission is high.

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