airbnb business plan

airbnb business plan

Airbnb Business Plan

1. Introduction

The Airbnb business plan is a document written for entrepreneurs and investors. It is a detailed account of how the business will be built, what the business structure will be, marketing strategies, the expected profit, and how the business will be built up. The objective of the business plan is not only for the business but is to help gather information in one place, think about the concepts of the business, and to serve as a guide to help track the progression of the business. The aim is to eventually build a sustainable and successful business. The main aim of the business is to be a profitable and sustainable business through property investment. The business is built around a concept of purchasing property, renovating the property, and having the property tenanted. Once the property is tenanted, the concept is to engage the services of Airbnb to rent out the property on a short-term basis at a higher rate than that of a long-term rental. Information on the Airbnb concept can be found on the official Airbnb website.

2. Market Analysis

The market analysis highlights a trend of moderate to steep growth in nearly all areas. Travelers from all around the world are drawn to various destinations, whether it be through internet sites, road maps, or any other form of directions. They each have interests in unique activities and are eager to find lodging that will suit these. This is where Airbnb comes in, offering a range of different accommodations all around the world. As opposed to the limitations and high costs of traditional travel set by travel agencies, nowadays travelers have much more control over the details of their travel plans and are looking to cut costs. This is especially true in today’s economic downturn. Vacation and short term rentals are no longer just an alternative to the high cost of hotels, they are transitioning from frugal to fashionable. With this increase in demand it is projected that the VR industry will grow by 7.9% annually to reach 36.6 billion USD in 2018. The potential for Airbnb’s growth in the San Francisco market and in all others is a bright one. Currently the vast majority of VR managers are individuals and families using the web to advertise and rent out their properties as means to offset their overhead costs. The structure that Airbnb tends to augment its operations towards is much like that of inns and bed & breakfasts (which serve as great low cost alternative to hotels for many travelers). With today’s web inclined society and the openness among new and trendy internet transactions, VR has a very favorable platform for growth and success in the near future. On a grand scale, Airbnb has the potential to beneficially affect the entire spectrum of VR operations.

3. Business Strategy

Business strategy is a long-term plan of action designed to achieve a particular goal or set of goals or objectives. It is a set of management policy undertakings and decisions. In this sense, it is a system of taking day-to-day tactical decisions. It includes formulation of the mission and the vision for the organization. As per my planning, the mission of my business is the creation and expansion of the website so as to make it more appealing and provide a look and feel of a virtual tour to the users visiting the website. The vision of the website includes the increase in the customers and the increase turnover of the organization with a particular client and a number of agreements for renting his property in different parts of the world. Various functional strategies formulated with the division of marketing strategy, financial strategy, operation strategy and human resource strategy can be looked into. With determination and following the plans in tactics, the strategies will help reach the goal step by step. With a successful plan of action and achieving the purpose for the goal described, it is known to be a successful strategy. Failure of strategy is mainly due to the poor implementation; and considering dynamic environment it is a strategic drift. It needs to be monitored and updated, so there is an evolution and learning from experiences. Coming to an end it is a termination of the strategy. This can be in any form that business decides successful as long as it achieved its mission.

4. Marketing and Promotion

The key to marketing success is establishing a strong identity and clear message of what your company has to offer. This will have a direct correlation with an increase in revenue. To achieve this, we will spend a considerable amount of time developing our sales force and distribution culture to effectively convey our service to clients. Knowing that we offer a unique and valuable service, it is important that our sales force can effectively convey exactly what it is that we offer. If done successfully, this will establish a strong correlation between what we are selling and our customers’ needs. We will know we are successful once we have developed a strong awareness in the mind of our target market. This will allow us to easily find and reach our customers. Once achieved, we will shift to a strategy aimed at repeat transactions, leads, and customer referrals.

We intend to establish a company image as an innovative and customer-oriented organization. Currently, the company’s image is still in the developmental stages. We have taken an important first step by participating in various tourism and trade fairs. Here we have taken the opportunity to give out company literature and converse with potential clients. This is a positive step in the right direction, enabling us to put a face on our company and meet potential clients.

5. Financial Projections

The first case constructs a scenario where the rooms are filled at an average rate of 70% across the year; this falls in line with Sydney/CBD hotel occupancy rates. There are 334 days in which the room will be rented (11 months x 30 days + 4 weekends). At a rate of $90 per night, this provides annual revenue of $28,548. The alternative rate of $125 per night provides annual revenue of $41,750. Based on these figures, a decision can be made regarding whether or not the price should be increased. This provides total revenue between the two rates of $70,790 or $104,750. With the agreed 30% commission, total revenue for the homeowner will be $49,425 or $73,425.

The most important aspect to gauge success of a new project is financial stability. Forecasting future revenue and expenses is important in determining the potential and long-term health of any organization. I have used conservative revenue and expense forecasts, which have provided me with two different financial projections: the first of which is the conservative case and the other the goal case. In order to project revenues and expenses, I have separated the revenue streams and potential expenses.