Characteristics of users of the sharing economy: the case of Airbnb

MASTER’S THESIS PROPOSAL

CHARACTERISTICS OF USERS OF THE SHARING ECONOMY: THE CASE OF AIRBNB.

 

  • Research Context

1.1      Background

This Master Thesis research aims to obtain more information about the characteristics of users of the sharing economy and more specifically, the characteristics of users of Airbnb. In order to obtain a better understanding of how the research will be conducted, it is important to understand the underlying theory or principal concepts, and the history and development of the sharing economy and the entity involved.

The flied of consumption is changing. It Is clear that the habits of consumption and the way in which customers try to satisfy their needs are undergoing notable changes in recent years. Sharing economy is not just a fashion. According to Ernst & Young the global sharing economy is forecasted to grow at a compound annual growth rate of 139,4%. This means that the sharing economy will reach US$115 billion by 2016 from US$3.5 billion in 2012. (Trivett, Vincent et al. 2013).

The sharing economy, also known as ‘’collaborative consumption’’ or ‘’peer-to-peer economy’’, is a new economic model that emerges as a result of the new digital era: Web 2.0. Web 2.0 ‘’refers collectively to websites that allow users to contribute content and connect with each other’’ (Carroll & Romano, 2011).  This new digital era gives people the possibility of interaction, leading very quickly to a peer-to-peer network.

Sharing is an alternative to private ownership. We can share things, homes, services or ideas and those involved in the process have to deal with the costs and benefits (Belk, 2007).  Russell Belk (2013) defines collaborative consumption as ‘’people coordinating the acquisition and distribution of a resource for a fee or other compensation. By including other compensation, the definition also encompasses battering, trading and swapping which involve giving and receiving non-monetary compensation’’. However, this definition excludes sharing activities as CouchSurfing, where there is no compensation involved. A more complete definition is given by Rachel Botsman (2010). She defines collaborative consumption as ‘’an economic model based on sharing underutilized assets from spaces to skills to stuff for monetary or non-monetary benefits’’ (Botsman, 2010). From this definition we can say that sharing resources such as space or skills is better for everyone involved. For example, you need a car just one day per week. Instead of buying it, you can just rent the car that you want through a sharing economy platform, as for example CarAmigo, at a lower price than if you rent it from a corporation such as Avis. However, if someone thinks about the precise meaning of the word ‘’sharing’’, people do not relate this word with an economic compensation. As we can see, find a concrete definition of this concept is not easy due to the wide definitions this concept offers. This concept is innovative and dynamic so it cannot be ultimately defined. (Brighenti, 2015).

The pillar of the sharing economy is trust. People have to share what they have, but do not use, with someone who needs it. Building trust and relationships between people and communities is the fuel of peer-to-peer consumption. This new economic model challenges the established status quo and the established business model.

In order to understand how the sharing economy works and the characteristics of its users, one must know the differences between the different users. There are some academic researchers, as Lamb (2011), that explored the motivations of Airbnb. However, all these studies considered guests as a homogeneous group, failing to consider that the users of Airbnb can be split up into different segments based on their reasons for choosing the service. The offer of Airbnb is varied, which make it suitable for segmentation.

Airbnb is a house rental peer-to-peer service. Is an online marketplace and homestay network that offers people a new way to list, discover and book accommodations around the world. The cost of the accommodation is set by the property owner (Airbnb, 2016). The acronym Airbnb comes from ‘’Air, Bed & Breakfast’’. Airbnb was founded in 2008 in San Francisco, California. The company currently operates in more than 191 countries around the world. They are present in more than 34.000 cities allowing more than 60.000.000 of guests (Airbnb, 2016). The company makes money by charging a 6-12% fee from hosts of the total sum of every transaction. The company does not require a lot of capital to operate.

The main purpose of the service is to connect people with unused space with them who need it. The hosts are free to charge the amount they wish per day, week or month. Hosts receive an insurance underwritten by Lloyds that covers any property damage up to 1 million USD.

1.2      Problem Definition

The purpose of this study is to gather information about behavior patterns of users of the sharing economy in order to understand the success of this new economic model and to try to predict who are the potential users of these new groups of platforms. This study could give insights to these platforms and to other tourist accommodations, to adapt their products, channels and marketing to their customers.

The study focused on exploring the reasons that attract people to Airbnb. The research on Airbnb is limited due to the recent birth of the platform (2008).

 

 

 

 

 

 

2      Research Question and Objectives

The main objective is to understand the different characteristics of the different users of Airbnb. We want to know if there are different segments of Airbnb guests and which are their characteristics. This study will be focus on answering two main questions:

  1. Are there different segments between the Airbnb users?
  2. What are the characteristics of the users of Airbnb and of these segments?

When we talk about motivations, we link them with positive reasons. In this study, we talk about characeristics so it is important to understand not only the positive reasons why guests choose Airbnb, but also, what they are willing to tolerate.

  • Methodology

In order to collect all the information, I will conduct a survey. The intention is to gather information through 3 different channels: printed questionnaire, mail and survey platforms. I will support these channels with social media, such as Facebook or Instagram, in order to obtain faster results. The survey will include different characteristics related to the person who is completing the survey (age, current status…) as well as different motivations related to the choice of Airbnb. The process I will use to conduct the survey is:

  1. Construct the questionnaire.
  2. Testing the questionnaire to find out if the content is clear and consistent with the subject. I will ask people to review the content.
  3. Conduct the survey and administering the questionnaire.

After that, a statistical analysis will be carried out and the findings will be documented.

4      Added Value

The added value this research will provide is that it will allow the finding of the motivations and characteristics of this new era of consumers. We can find studies that aim to investigate the factors that influence the selection of hotel accommodations by guests. For example, ‘’Understanding the dynamics of hotel accommodations purchase decision’’ (Tim Lockyer, 2005). However, as mentioned before, the research on Airbnb is limited. Studies about sharing economy have been done with American citizens, as for example ‘‘The sharing economy: Exploring the Intersection of collaborative consumption and capitalism’’ (Ellyn E. Erving, 2014) but there is not a lot of information about European citizens. This Master Thesis will allow gathering more information about the European consumers.

 

5      Structure and Contents

  1. Introduction

1.1 Background

1.2 Why this topic?

1.3 Research Objective

1.4 Why Airbnb?

1.5 Structure of the report

  1. Literature overview

2.1 The sharing economy

  1. Definition
  2. Drivers for growth of the sharing economy
  3. How is changing the business world
  4. Critiques

2.2 Generations

2.3 Airbnb

  1. General Overview: History, How it works
  2. Variables related to Airbnb choice
  3. Method

3.1 Data collection

3.2 Survey design

3.3 Data analysis

  1. Method
  2. Conclusion
  3. References
  4. Appendix

 

 

 

 

 

 

 

 

 

6      References

Airbnb. (2015c, September). Airbnb summer travel report: 2015. Airbnb. Retrieved from http://blog.airbnb.com/wp-content/uploads/2015/09/Airbnb-Summer-Travel-Report- 1.pdf.

Airbnb. (2016a). About us. Airbnb. Retrieved on March 24, 2016 from https://www.airbnb.ca/about/about-us.

Belk, R. “Why Not Share Rather Than Own?” The ANNALS of the American Academy of Political and Social Science 611.1 (2007): 126-40. JSTOR [JSTOR]. Web.

Belk, R. W. (2013). Extended self in a digital world. Journal of Consumer Research, 40(3), 477-500.

Botsman, R., & Rogers, R. (2010). What’s Mine is Yours: The Rise of Collaborative Consumption. Harper: Collins.

Brighenti, B. (2015). DRAFT OPINION: The local and regional dimension of the sharing economy. Committee of the Regions, Commission for Economic Policy. Available here: https://webapi.cor.europa.eu/documentsanonymous/COR-2015-02698-00-00-PA-EDIEN.

docx/content. Accessed on October 11th, 2015.

Carroll, E., & Romano, J. (2011). Your digital afterlife: When Facebook, Flickr and Twitter are your estate, what’s your legacy? Berkeley, CA: New Riders.

 

Chawla, R. (2014). Four Ways AirBnB Could Be Smarter About Pricing. Forbes – online edition. Available at: http://www.forbes.com/sites/rameetchawla/2014/11/07/fueled-fix-how-AirBnB-should-unleash-market-pricing/. Accessed on October 11th, 2015.

 

Cooke, Christina. “The Sharing Economy.” Oregon Business. N.p., 28 May 2013. Web.13 Jan. 2015.

 

Helm, Burt. “Airbnb Is Inc.’s 2014 Company of the Year.” Inc.com. N.p., Dec.-Jan. 2015. Web. May 2015.

 

Lamb, Z. (2011). Rethinking authenticity in tourist experience: Analyzing the motivations of travelers in person-to-person hospitality networks. Master’s thesis, The University of Chicago, Chicago, IL.

Tim Lockyer, (2005) “Understanding the dynamics of the hotel accommodation purchase decision”, International Journal of Contemporary Hospitality Management, Vol. 17 Iss: 6, pp.481 – 492

Trivett, Vincent et al.2013. What the Sharing Economy Means to the Future of Travel. New York (Skift Report, 7)

 

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