Question
Textbook: Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland III, A. J. (2017).
Crafting and executing strategy: The quest for competitive advantage: Concepts and cases.
McGraw-Hill/Irwin. [edition 21e]
Assignment Questions
Compare and contrast the general strengths and weaknesses of large, hotel chains such as Marriot and
Hilton, bed & breakfasts, and Airbnb.
CASE 02 Airbnb in 2016: A Business Model for the Sharing Economy John D. Varlaro Johnson & Wales University John E. Gamble Texas A&M; University-Corpus Christi n the future, you will own what assets] you want responsibility for," commented CEO and founder of Airbnb, Brian Chesky, concerning " not leave and hosts needing to evict them because city regulations deemed the guests apartment leas- ees were beginning to make headlines. the sharing economy Noah on The Daily Show in March 2016.1 Airbnb United States, and in countries like Japan, debated was founded in 2008 when Chesky and a friend regulations concerning Airbnb, Brian Chesky needed decided to rent their apartment to guests for a local to manage this new business model, which had led to convention. To accommodate the guests, they used phenomenal success within a new, sharing economy air mattresses and referred to it as the "Air Bed & in an interview wi As local city and government officials across the Breakfast." It was that weekend when the idea- OVERVIEW OF and the potential viability-of a peer-to-peer room- sharing business model was born. While not yet a publicly traded company in 2016, Airbnb had seen Hotels, motels, and bed and breakfasts competed immense growth and success in its eight-year exis- within the larger, tourist accommodation market tence. The room-sharing company had expanded to over 190 countries with more than 2 million listed properties, and had an estimated valuation of $30 billion. Airbnb seemed poised to revolutionize the hotel and tourism industry through its business Motels specifically offered smaller rooms with model that allowed hosts to offer spare rooms or ACCOMMODATION MARKET All businesses operating within this sector offered lodging, but were differentiated by their amenities. Hotels and motels were defined as larger facilities accommodating guests in single or multiple rooms. Ze entire homes to potential guests, in a peer-reviewed ties such as la digital marketplace. direct parking lot access from the unit and ameni laundry facilities to travelers who were using their own transportation. Motels might also This business model's success was leveraging what had become known as the sharing economy be located closer to roadways, providing guests quicker and more convenient access to highways. Yet, with its growth and usage of a new business It was also not uncommon for motel guests to seg- ment a longer road trip as they commuted to a vacation destination, thereby potentially staying at several motels during their travel. Hotels, however invested heavily in additional amenities as they were able competed for all segments of travelers. Amenities, ties due to Par- including on-premise spa facilities and fine dining, n other were often offered by the hotel. Further, proper ties offering spectacular views, bolstering a hotel resistance, as bed asts were crying fowl. While these tradi tional brick-and-mortar establishments were subject model, Airbnb was now faced with owners and tors of hotels, motels, and to regulations and taxation, Airbnb hosts to circumvent and avoid such liabilities ticipation in Airbnb's digital marketplace. I par instances, Airbnb hosts had encountered legal issues due to city and state ordinances governing hotels and apartment leases. Stories of guests who would Copyright© 2017 by John D. Varlaro and John E. Gamble.
Explanation / Answer
Large Hotels:
Strengths:- Their strength is they have a very strong financial shield regarding any industry shock, a company in this industry can face, as they can deal with it better than the rest of the other competitors as well as their ability to provide a more secure environment to their customers. Large Hotels are able to provide the best services to their customers, as well as their availability everywhere. Large Hotels can serve in other purposes too as there can be reliable for business trips and more formal purposes, and publics purposes such as holding seminars and business meetings. Due to their ability to provide those kind of services mare than any other competitors.
Weaknesses:- The large Hotels weaknesses are that they are not prices competitive as they can not beat the price of many competitors. As their profit margins are lower than the rest of the industry. Large hotels cannot provide a personal environment as they can only provide their customers a general stay experience not like some of their other competitors such as bed and breakfasts that offers better experiences and makes the customers feel like they are in their homes.
