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Talking in reference with the hospitality, tourism and event industry, it is considered as important industries in the world as it shows the relationship amid host and guest. Hospitality encompasses giving respect to their guests, treating them equal and offering services and products as per their needs. When clients are in the hotel, it is vital for the service provider to make arrangements for the necessary services and facilities so as to make them contended. Thus, it can be well attributed that the hospitality and tourism industry is engaged in offering lodging and accommodation to people who travel and desire shelter for a day (King and Cichy, 2006). In this competitive and dynamic era, hospitality industry is providing ample of choices to its customers all across the world i.e. from hotels to resorts, inn, hostels etc. The main focus of hospitality and tourism industry is to satisfy their valuable customers, as they are main major to pay for this industry. Thus, they need to maintain quality standards in almost every aspect to grab the attention of large pool of customers.
Pertaining to this, the present research report focuses on the case study of Airbnb that revolves around the problem being faced by the firm related to quality and services. Airbnb is an American company operating in online hospitality service and market place for people to lease o rent short-term accommodation such as holidays, hostel, beds, homestays, cottages and apartments. Recently, the firm was in the news for rendering unreliable services to its customers and as also accused for fraud (Airbnb, 2017). The customer service of Airbnb was also appalling when things go wrong. Consequently, the main aim of the research is to evaluate current problems faced by the company and will also analyze the capabilities as well as competence of the firm to improve the quality for the same. The later part of the report will focus on assessing the impact of quality techniques could have on the company in regards with consistent and effective management of quality.
Task – 1
Problems currently experienced by Airbnb
Airbnb is an American company operating in online hospitality service and market place for people to lease or rent short-term accommodation such as holidays, hostel, beds, homestays, cottages and apartments. In addition, the firm does not own any real estate or carry out tours, it is simple a broker that receives percentage service fees in unification with every booking. Same as hospitality services, Airbnb is also regarded as an example of collaborative sharing as well as consumption. Furthermore, the firm has over 4 million lodging listing in around sixty five thousand cities and almost in 191 nations (Zaleski, 2017). Further, they have also facilitated around, 260 million check-ins. Recently, the firm was in the news for rendering unreliable services to its customers and as also accused for fraud. Seemingly, a millions of holiday makers have fallen victim to fraud on Airbnb last year. The website was also accused of making to too easy for the scam artists. As per the analysis of letting business, the company has cancelled around 1.1 million bookings at the last minute of travel. Pertaining to this, the holiday makers were on the streets of an unfamiliar city where they have no place to stay. Other than this, many reports also claims that at the time of problem and crisis, the customer service of Airbnb is quite appalling. More than four to five people in Europe had a bad experience and states that the firm was rude, unhelpful and was also failed to refund the amount to the customers (Smith, 1993). The firm is also receiving many poor reviews on Trustpilot in relation with the provision of bookings and customer service. Elaborations of the problems currently faced by the company are as follows:
- Incompetent customer service – The firm was in the limelight for incompetent customer service being rendered to the customers. Many people were of the view that the services offered by them were very horrible. They also mentioned that if people want to handle unnecessary stress than they should use the services of Airbnb. One review revealed that after cancelling the bookings, they refund the amount being paid by the customers in such a way that they are doing favor by cancelling ticket in the last moment (Dale, Ton and Jos, 2013).
- Too much cancellation – They are also in the news for too much cancellation of the bookings. Due to this, many customers are placed in a great trouble as they have to make arrangements for travel at the last minute or need to cancel their trip. Customers book their tickets and if any amendments are required than the firm directly cancels tickets. This is highly depressing and ruining the image as well as reputation of the company in the world market.
- Poor facilities – Further, the facilities offered by Airbnb is quite poor and distressful. One of the customer stated that they were staying in an apartment in the midway and they found a bedbugs in the apartment. They wanted to leave the same day. They went to mediation center with Airbnb, where they gave conflicting messages in order to sort out alternative accommodation. This took several hours and the whole trip was disturbed because of this. The customers were compelled to change their accommodation for an extra night and the succeeding night they got an email that they have breached the terms and conditions by changing the apartments and they will not going to support the extra hostel cost (Robert, Graham and Michael, 2012).
- Awful experience – Many customers were of the view that the services being rendered by the company is not up to the mark. Their main motive of the firm is to earn money and not satisfying the customers. The communication system as well as customer service of Airbnb is horrendous. In addition to this, company’s system of chat based forums is quite useless in order to deal with the emergencies or to get the problems being resolved quickly. Many customers ended up with poor services such as no timely refund, no extra compensation, poor facilities and accommodation etc. Airbnb offer services satisfactorily until and unless any type of problems are being encountered.
- Attack from the authorities – The firm offers online platforms to the customers to allow the individuals to rent out their homes, apartments and rooms to the visitors. This is not illegal and many a time rentals are advertised on the site fall filthy of housing laws and regulations. For instance, in New York, the owners are not allowed to rent their apartments legally for short period of time unless and until they are also living in the same property. In addition to this, there is also a tax issue in several cities those who are renting out accommodation for holidays (Fitzsimmons, Fitzsimmons and Bordoloi, 2014). They are required to pay hotel or tourists tax.
- Illegal Airbnb property – Some of the properties of Airbnb are illegal, which becomes difficult for the customers to stay peacefully. They need to comply with the local laws when the firms list their property on site. In case of any cancellation of bookings, the firm offers a guest refund policy from the host. Further, if the property of the company is misrepresented, the guests are needed to notify Airbnb within 24 hours. Other than this, the travel insurance being offered by the firm also need to be checked by the guests before travelling, as there might be some exceptions that might be applied (Trustpilot, 2017).
Task – 2
Capabilities and competence Airbnb possess to improve the quality
Speaking in relation with the hotel industry, it is quite mature and saturated industry which generally needed companies to maintain substantial fixed costs, capital property and reputation in order to compete in this fluctuating market. Because of this, the competition level is high within this industry. Further, there is a little room for the new entrants in the hotel industry. To create economic profit in this type of industry is very difficult. Airbnb, amalgamation of the three entrepreneurs has established a disruptive concept known as Air Bed and Breakfast. The company has developed a blue ocean market that allows everyone who poses sleeping space to become a competitor to hotels (Hayes, Ninemeier and Miller, 2011). The web based hoteling application of the firm allows the customers to rent out their privately owned sleeping space for the short period of time to anyone who are searching for reasonable place to sleep.
Despite of all the poor reviews being received, the business of the Airbnb is growing and expanding. They are also earning good amount of revenue. According to Zaleski, the company has pulled out around $1 billion from $500 million in the same period last year. The core competency of the firm lies in its ability to utilize technology in order to manage the property of future customers for rent and employs efforts so as to make it attractive and appealing to valuable guests. Furthermore, the listing of rental on their website is free. However, Airbnb charges 3 percent fee from the property owners for all the bookings and around 6 to 12 percent from guests. In the year 2011, the company incurred gross sales of around $45 to $50 million. Other than this, the fixed costs of a web based hoteling application are quite low. The organization also appears to be valuable to both direct customers and their end users due to the cost of professional photography service and popularity of the rare experience offered to the direct customers and guests (Airbnb posts 238% rise in India revenues, 2017). Airbnb is successful in realizing high economic profits due to less intense fixed costs and capital investment.
With a few clicks of the mouse, around 1000 owners of the property are becoming bed and breakfast owners all across the world monthly. Due to this, it makes the lodging affordable for millions of consumers and also successful enough in draining out millions of dollars from the hotel market. In addition to this, the penny conscious people are becoming more adventurous in the interest of saving precious disposable income through offering low cost lodging facilities. The core competency and capabilities also lies in the competitive advantage of Airbnb such as uniqueness, price and differentiation and relevance (Kapiki, 2012). However, this type of competitive advantage in relation with cost and value is not sustainable for long run. The services being offered by the company is relatively very easy to imitate and thus, firms can easily enter into the blue ocean. However, there might be chance that the time other potential entrants catch on the value to both the property owners, the end users of the services will diminish considerably (Sripun and Ladkin, 2001). The other competencies of success of Airbnb’s business are being defined underneath:
- Demand for Airbnb’ business travel program – Airbnb is one of the world’s leading communities driven hospitality company. It has announced that the firm has signed leading organizations in Asia Pacific (APAC) such as Hyundai Motor Company and Culture Convenience Club Co. Ltd for work programs so as to capitalize on the regions which are booming business travel sector (Schlichter, 2017).
- Doubled net revenue – The home rental firm has maintained a steady profit before amortization, taxes and interests for at least 17 months. Airbnb pulled in about $1 billion up from $500 million in the same period last year. In addition to this, the company is also experimenting with the new products and services such as Airbnb branded apartments, luxury accommodation, guided tours etc. Other than this, the firm also introduced varied services that sell hat-making classes, tourism experience and truffle-hunting expeditions.
- Sound business operations – In order to become popular and prosperous, it is not important to have more properties. However, it is essential to earn rental revenues of less than $10,000 per year. The entrepreneurs of Airbnb are taking unequal share of the total bookings being made on Airbnb (Laloumis and Katsoni, 2010).
- Better risk mitigation – It is quite apparent from the study that issues related to theft as well damage are the major concern for 18.5 percent hosts of Airbnb. Thus, to become successful it is important to envisage such qualities that help in weeding out bad guests who causes damage and leave bad reviews for the company.
- Sound business plan – The Company has a sound plan to grow their business. In order to sustain their position and compete for the top spots which are occupied by most of the successful business, company has stopped treating their business as a side gig (Go and Govers, 2000).
Task – 3
Impact of Kaizen and benchmarking on Airbnb’s delivery consistent and effective quality management
There are many companies who maintain some or the other sort of quality in their working environment. Comparison of such nature of work can be done with the companies related to the same field of work. Therefore, to specify such type of comparison, firms make use of benchmarking process. In other words, benchmarking is nothing but a matter of work from different companies which develop some standard for the work being delivered by them. This standard of work is called benchmarking (Reddy, 2018). Benchmarking can help Airbnb in delivering consistent and effective quality management in various ways. It can support the firm in implementing creative ideas, developing improvements, determining the essential activities and increased level of performance. However, Airbnb can be covered with some sort of disadvantages by adopting benchmarking technique for effective quality management. Many a times, it is found that companies pay attention on the activities of the competitors instead of improving their own performance. Further, benchmarking also results in lack of customer satisfaction. This is because of the fact that companies are engaged in increasing the overall productivity of the firm for growth and ignores satisfaction of customers (Evans and Lindsay, 2010).
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Talking in references with the Kaizen technique, it is being defined as an activity that helps in improving the functions of the firms continuously. It takes into consideration employees from the top level management to assembly line workers. The main aim of this technique is to eliminate waste through continuous improvement in the standardized processes and techniques. Many companies have implemented this technique of quality management and achieved growth significantly. Airbnb can also implement kaizen system to improve their processes and techniques so as to satisfy their customers as well as to regain the brand image in the hospitality market. Furthermore, the firm will be able to trace the areas where things went wrong and can improve the same by eliminating the mistakes (Robert, 2011). The requirements of the customers are placed on the forefront of the firm’s effort and services are being geared up as per the needs of the customers. However, many a times the problems created badly impacts the firm that it becomes very difficult to rectify and eliminate. Further, by adopting new style and processes, organizations might not get expected results.
Thus, to conclude it can be said that quality management is quite necessary in each and every aspect of the business. If the customers are not satisfied, the firm cannot sustain in the long run. As in the case of Airbnb, despite of having poor reviews from the customers, the firm is achieving the path of success and growth due its competence and abilities. However, to create a brand reputation, quality management is indispensible.
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- Fitzsimmons, J., Fitzsimmons, M. and Bordoloi, S., 2014. Service management: Operations, Strategy, Information Technology. 8thed. New York, US: McGraw Hill Education.
- Go, M.F. and Govers, R., 2000. Integrated quality management for tourist destinations: a European perspective on achieving competitiveness. Tourism Management, 21, pp.79-88.