Airbnb: The emerging player of Sharing Economy in UAE

Abstract

Based in San Francisco, California, Airbnb is a trusted community marketplace catered to the people who wish to list, discover, and book unique accommodations around the world- online or from the mobile phone or tablet. It was founded in August of 2007 and in summer 2008 they found the perfect kick-start for their business (Note 1).

The Airbnb’s model has always kept its overheads and operating leverage (fixed asset investment) low by using online app and host and guest business model. With low pricing strategy model and tailored offerings to the needs of many segments with varying needs and price points, Airbnb became a threat to many budgeted hotels in globally and especially in UAE where the cost of living is comparatively high. To convey the challenges faced by Airbnb, the case introduces the background of the Sharing Economy, highlights the strategies adopted by Airbnb, and sheds light on future opportunities.

However, Airbnb had faced several challenges like breaching the laws, illegal listing, renting period, limited in-country assets or workforce, etc. Now Airbnb teaming up with UAE government, which certainly presented its own set of challenges in this sharing economy. (Note 2)

The case is suitable for Innovation and Strategy courses that require students to understand various risk elements in the new venture and role of innovation in the success of a new business. It is an attempt to illustrate a starts up can grow and differentiate itself by adopting “Blue Ocean Strategy”.