Research Study on 'Risks in Hospitality Industry (Airbnb)'

By Jyoti Shrivas and Kartik Sarin, PGDRM Batch July’20-21

About

Airbnb operates as an online marketplace for lodging primarily, homestays for vacation rentals, and tourism activities. It connects people who want to rent out their homes with people who are looking for accommodations in that locality. Its user includes: host and travelers, host lists and rents out their unused spaces and travelers search for and book a property in 220 countries. It is free to create a listing and the host decides the cost per night, week, or month.

On December 10, 2020, the company became a public company via an initial public offering.

Quick Facts

Competitors

Airbnb’s presence in India

Airbnb has approximately 55,000 listings across India in 2019.
It stood at $320 million in 2018.
The economic activity supported by Airbnb’s presence in India sustained 49,900 jobs in 2019.
83 percent of Airbnb guests staying were domestic visitors, seeking options for overnight stays in Indian destinations.

Risks faced by Airbnb

Financial Risks

Probability of losing money due to currency fluctuations.
Concerns involved in online transactions.
Hosts can be subjected to pay a fine if unaware of the laws/regulations of the cities in which they are located.
Hosts have to bear damages in case any during the stay of the guest.
Airbnb, which is known for its short-term lodging platform, now offers to facilitate events and activities (“Experiences”). However, potential risks need to be fully vetted and considered.
Municipal Tax.

Operational Risks

Possibility of mismatching facilities provided by the host with guest’s expectations.
The host might cancel the booking at the last moment leading to reputation loss.
Gender factor, ethnicity, etc. of certain locations. E.g., Hosts might not be comfortable with two males or females staying in their house, Tourist Pollution as reported by residents in Japan, etc.
Background check is also a big risk consideration when it comes to staying at a residential property.
Possibility of damage to the property.
Liability risk because most homeowner’s and renter’s insurance policies do not cover regular commercial activity in the home.

Business Model

Read the full research study here: Risks in Hospitality(Airbnb)- Karthik Sarin and Jyoti Shrivas

Disclaimer
This report has been produced by students of Global Risk Management Institute for their own research, classroom discussions and general information purposes only. While care has been taken in gathering the data and preparing the report, the student’s or GRMI does not make any representations or warranties as to its accuracy or completeness and expressly excludes to the maximum extent permitted by law all those that might otherwise be implied. References to the information collected have been given where necessary.
GRMI or it’s students accepts no responsibility or liability for any loss or damage of any nature occasioned to any person as a result of acting or refraining from acting as a result of, or in reliance on, any statement, fact, figure or expression of opinion or belief contained in this report. This report does not constitute advice of any kind.