Need to be fixed:
Section 1: process map, also expand the writing–
Section 2: process map, 3 solutions more in-depth, 5C more in-depth–
Section 3: Analysis more in-depth–Tiggy
Section 4: Visualize your solution ( )
Final Report: Cover Page, Table of Contents, Executive Summary, Appendices and references pages
In 2007 two San Francisco roommates realized that they wouldn’t be able to afford rent on their apartment. There happened to be a large design conference coming to town and hotels were all booked up. That’s when Joe Gebbia suggested to Brian Chesky that they put in a mattress and offer their space including wifi and breakfast to these “young designers.” That first trial produced 3 clients and the two thought that they had a bankable idea. After many rejection letters and several rewrites to their original concept, the team thought that they finally had their idea polished. Just in time for the 2008 Democratic Convention in Denver Gebbia, Chesky and their newest partner Nathan Blecharyczyk rolled out their latest version. Unfortunately, they weren’t making the money that they had expected. They used a very unique marketing strategy to get the word out about their product. Selling $40 boxes of cereal with cartoons of the candidates and a link to more information about their “pad crashing site for travellers”(techcrunch.com). This led to them finally getting the name recognition and seed money funding that would allow them to take their idea to the next level. Today Airbnb is a well-known company, valued at around $18 Billion as of April (cnbc.com) and has plans to go public in 2020.
Planning requires various stages and tools to be effective. However, the planning process faces multiple problems that build the overall planning problem. The first planning problem involves the alignment of the plan. It is nearly impossible to determine the strategies for coming up with an aligned plan. Consequently, the lack of alignment leads to short-term organizational support. The second planning problem involves designing information system architecture. The architecture has components such as databases and supporting software. It is always challenging to come up with responses that diversify the short-term information system. Also, the allocation of development resources among all the units is challenging. There is a need for the conformity of the functional organization unit. Another planning problem involves the completion of projects in the schedule. Most of the time, project plans are inaccurate, with the resource requirements underestimated. The last issue is the selection of methodologies. The underlying problem is the lack of an overall framework for the classification of methodologies. These methodologies are Strategy Set Transformation, Business System Planning, and Critical Success Factors.
The planning problem is humanistic factors, environmental factors, and organizational factors. The humanistic factors include a lack of clear and working definition of the needs and subsequent analysis and the lack of collaborative participation of the system design users and managers. Some of the common organizational factors include lack of right participation conditions for all the system users such as users, directors, and managers and lack of consistency and complexity of the current systems. The common environmental factors are the lack of proper consultation necessary for the system’s design and missing quality criteria for the current IS.
Why the Problem Matters
Throughout the years, Airbnb received many complaints regarding the lack of communication, last-minute cancellation, legitimate of the host house just to name a few. Voon Chin Phua conducted a study using reviews left by both Airbnb hosts and guests “from 2010 to 2017 on Sitejabber.com” (Phua). Out of the 738 reviews, “3.8% were positive reviews and 6.2% were reviews by those who have been hosts only. The remaining 664 reviews were used in the analysis” (Phua). In his analysis, the top four problems he found were the legitimacy of the house and/or rental and how accurate the place/price description is.
As more and more people rely on the convenience of booking rooms on Airbnb, the hosts sometimes put inaccurate descriptions of their rental house in order to attract more guests. This could be a problem because it displaces the trust between the guest and Airbnb. Once the trust gets broken, the customers would then no longer seek business with Airbnb, leave negative reviews, and go to their trusted hotels instead. The unfavorable reviews and leaving customers would impact the business credit score negatively. If the Airbnb business credit score drops, they would lose all of their vendors and partnership they had with other companies, which will decrease their revenue and reputation significantly.
Potential IT SOlution
In order to solve this problem, Airbnb could hire local people as their inspection agents to film the places that are listed on their website. The video should show what the place actually looks like, also have the agents check the environment of the listed place constantly. More importantly, check if the environment in the room matches with the pictures showing on the websites. The agents will upload the videos to Airbnb’s website as a reference for its customers. In this way, the customers could check the place they want to stay through a short video, not just based on the photographed pictures, this would increase customer satisfaction. Even though this could increase Airbnb’s operating cost by paying salaries to agents, but this would increase the potential revenue by having more satisfied customers use their services.
Problem and Impact
Airbnb is not a publicly traded company so it was difficult locating exact dollar amounts of losses. However, in a pre-covid article on the company’s profitability Vox quoted the Wall Street Journal stating that “In the first nine months of 2019, the home-sharing company posted a loss of $322 million… In the same period a year earlier it had a profit of $200 million.” According to the same article Airbnb planned to spend about $150 million on safety initiatives including verification of the properties it lists. (Molla)
By having a few trusted and vetted agents in each area inspect and verify the properties and hosts, Airbnb would be able to use fewer resources and move away from the self-reporting which was so unreliable in the past. In this way our proposal looks to cut costs and losses in the form of lawyers’ fees (Carville) and lost business (valuation dropped from 38 to 35 billion dollars in the wake of news about various lawsuits. (Carville, Locke).
The uptick in appointments is a sensational turnaround from where the beginning up got itself only a couple of months sooner, when virtually every state in the U.S. was on lockdown and air venture out had almost come to a standstill, with the Transportation Security Organization traveler tally under 110,000 for 17 continuous days from April 6 through 22.
To start with, Airbnb offered to discount the full expense of appointments for periods where areas were secured to prevent the pandemic from spreading. Yet, a few visitors said they confronted trouble gathering the full money discounts and took to online media to gripe.
Methods Currently Addressed
After booking a place, customers normally leave a review on the company’s website to express their staying experience to the company and other customers. When a customer leaves a complaint or negative review, the company would then attempt to fix their problem as quickly as possible. For Airbnb, there is a long delay to fix the problem their customers experienced due to their customers reserving their stay through a third party, the host. Typically customers complain about the cleanliness, amenities, and directions of the host’s house. However, some hosts have inaccurate listings on their description page in order to attract more customers. This causes great confusion and frustration to the customers as they are not promised for what they have paid for. Because of this, customers leave complaints on the Airbnb website in hopes it would be taken care of soon. However, this can take several weeks, if not, more to be resolved as the host and Airbnb will push this important matter to each other.
As-Is Process Map and Explanation
The above process map detailly shows what the average customer goes through when utilizing Airbnb’s service when they want to travel to a different place. As a customer, you want to have the best experience for your trip, the place you stay is one of the most important factors. After exploring the city, you just want a comfortable place to rest, but sometimes, what the customers see online is quite different from the reality. Therefore, customers give negative feedback to let the other customers know that this place is different from pictures, and file complaints to let Airbnb acknowledge the problem they had from using their services.
Host & Airbnb
The above process map also shows how Airbnb and the host manage their business. The host will rent out their place to customers for a short amount of time, the host’s job is to get the place ready and make sure it is a nice experience for its customers. Airbnb not only serves as a medium for the communication between the hosts and the customers, but they also need to deal with some special cases. When a situation occurs, Airbnb needs to let the host know so the host could solve the problem, if the problem is unsolvable, then both Airbnb and the host should offer some kinds of compensation to the customers.
Solution 1: Host will take video and upload to Airbnb’s website regularly. The video gives customers more reference, to give customers ideas of what the place actually looks like.
Pros: The video could serve as a virtual tour, Customers can see the entire place intuitively, not just through photos.
Cons: Since the videos are recorded by the host, it could be subjective and deceive.
Solution 2: After each visit, the customers will leave a rating of 1 through 10. As more and more customers leave ratings for the hosts, the scores will be averaged. The score will determine if potential customers would book their stay.
Pros: Airbnb Score helps customers with a better selection. Customers could avoid low score hosts.
Cons: This will also increase the operational cost at first because Airbnb will need to hire professionals to update their website so Airbnb Scores are available for all the hosts. Also, if some dishonest host wants to increase their scores, they could pay someone to give them high ratings, this could also increase their Airbnb Scores.
Solution 3: Hire local people as agents to do spot checks and quality control checks. We have a dedicated team of agents from all over the world who have agreed to our company’s code of ethics & conduct. We send people out to verify and inspect listings (or after there are complaints).
Pros: Would add legitimacy to the claim that they are “doing something” if they can hire outside quality control, we are an unbiased entity with only a responsibility to report to Airbnb what we find (no hidden agenda or grudge against the host or the company).
Cons: This would increase the operational cost of the firm since Airbnb will need to pay salaries to the agents.
We chose Solution 3 because the salaries of agents were paid by Airbnb, not the host, so the agents will provide honest feedback of the places as if they were the customers. This will also benefit the economy for various places since Airbnb offered more job opportunities to local residents. Also, Airbnb would benefit in the long run since customers would be satisfied with their service and could potentially increase their revenue.
Revised Process Map
Compare and Contrast
The first process map displays how customers, Airbnb, and the host interact with each other. How the customers book their stay, how the host prepares for the guest and how Airbnb takes care of both the host and customers. However, when a problem arises, the interaction between each party gets complicated. When the customer complains about the inaccurate listings of the host’s house and/or their surroundings, both Airbnb and the host would push the problem back and forth to each other. Not only will this waste all three party’s valuable time, but it will also decrease Airbnb’s revenue as the customers will seek another business for service.
The revised process map (seen above) demonstrates the process of hiring local residents as agents to perform an inspection or quality check. When the customer booked a place to stay, Airbnb needs the agents to perform a quality check prior to the arrival of the customer. The agent’s job is to make sure that the place is clean and organized for the customer to stay. Customers will only stay in the approved places, in this way, their experience with Airbnb will be enhanced. However, if customers are still not satisfied with the experience, they could file a complaint, and Airbnb will investigate and validate the problem, if the responsibility is not on the customers, Airbnb will offer compensation to the customers.
|Capturing||By capturing information about customer complaint/feedback rates, price rates, and host site locations we would compile information on listings that may be fraudulent or suspicious and then use that information to investigate those sites. . Just like a mystery shopper can maintain high-quality service at a restaurant because the staff never know who the mystery shopper is.|
|Conveying||We would use data to narrow down our search for potentially problematic sites (as well as exceptionally well-run sites). Then we would inspect those sites and report (convey) our new information directly to Airbnb.com.|
|Creating||Using the captured data we would compile information on listings that may be fraudulent or suspicious (ie high nightclub neighbourhood listed as “quiet”) and then use that information to investigate those sites.|
|Cradling||We would use our data gathered to decide which listings need more/less attention from our investigators (we won’t have to check every single listing – just the ones that have issues|
|Communicating||We would report our findings directly to airbnb.com customer service management or fraud/safety division via automated updates.|
Hardware & Software Specifications (Tiggy)
Due to the rise of smartphones and tablets and the advances of cloud computing our solution is relatively easy to implement. Solution 3 of hiring local agents to do spot checks and quality control would require the use of a smart phone for each agent so that they could take pictures, and write brief reports etc on the go. The regional offices would also require laptops for the regional managers so that they could compile and analyze the data that we gather. In the larger zones we would need data storage equipment due to using video, and lots of pictures our solution would then also require a great deal of storage. Rather than using our own data storage due to the high cost of setting up our own system, it would make the most sense to use the cloud storage services of an outside company like Amazon or Alibaba.
Our company would develop specific software for our assessments. According to our specifications, this software should be easy to use, web-based and available in many languages. For this we would need to hire a group of programmers. It would need to be web based so that we could easily implement changes to our process rapidly. In addition it should allow us to have the same high standard of quality that we would like to see in Airbnb’s future while at the same time allowing us to vary our questionnaire by region as it is likely that there will be cultural differences to account for in each region/country.
Capturing, Conveying, Creating, Cradling, and Communicating data (Tiggy)
The main goal of our project is to capture and convey timely and accurate information to the Airbnb community. Therefore it is essential that we use software which is designed to capture the details that we need (time, location, condition of property) and cross reference that information with previously collected data (owner’s claims, reputation, previous complaints, guests’ feedback). This would require access to a large amount of stored data. Using cloud storage, we could ensure the security of our data. At the same time storing data in a central location reduces the risk of data redundancy and having false or out of date information.
As outlined in the following ERD, the agents employed would be using data from their inspections to create reports about the standards of the homes that they inspect including photographs, and written comments. The information would be cross referenced using the primary keys (underlined & in bold). Information would be gathered at several points in the process: when guests make a reservation it would generate a unique reservation ID that can be used to identify which guest was at which location, and who the owner at the time was. When homes are reserved this would also link data about the home itself and the current owner to the reservation file. We do recognize that homes may change ownership and we have included the host ID as a secondary identification for this reason. When agents are making their inspections this will also generate a unique ID that can be used to differentiate between inspections as there will likely be more than one agent in each area completing the task of inspecting the sites.
ERD (Vicki, Tiggy, Su, Rayan)
Costs and Benefit Analysis (Vicki)
In order to develop our application, a development cost of $90,000 will be incurred, but this development cost is a one-time expense. This cost is for Airbnb to hire professional programmers to upgrade both their existing website and app to match our application. Such as, adding subpages for agents to upload the visual media (photos and videos), and for customers to view additional photos or videos of the place that is uploaded by the agents. This cost is fairly expensive for a one-time website designer, but since our application is deeply related to customer’s experience, we want to make sure the final product to be smooth and effective.
After the development cost, the maintenance costs are also very important, this is an on-going cost that will occur every year. Airbnb needs to pay wages to programmers to monitoring the data closely, in order to ensure both website and app operating properly, if any bugs were found, programmers should fix the problem in the shortest amount of time to ensure that no negative effects on the company. We estimate this cost to be $750,000 for 5 programmers.
Another on-going cost is the operation costs, which includes the working space for programmers, this cost of rent varies depending on locations, but we estimate this cost to be around $5000.
Last but not the least, the on-going personnel costs include the wages for the agents, which is the local residences hired by Airbnb to perform inspections for the places listed on their websites. The agents must collect photos and videos of the listed place and upload it to the corresponding host listing. This cost of labor also varies depending on the countries and the minimum wage in that country, we estimate this cost to be around $2,500,000.
We expect our on-going costs to increase, since the operating cost is the rent for the working space, and rent expense is generally unpredictable, often shifts up and down, but for most of the time, rent expense will increase. We expect the maintenance costs to increase since the maintenance costs include the salaries for programmers, this expense usually increases to retain talented programmers. The personnel costs, we expect this cost to decrease since we expect the agents to become more and more familiar and skilled with the inspection jobs and the company can reduce the number of agents in order to distribute the work more reasonably and evenly.
The benefit of our application is that our application has established an excellent reputation for Airbnb’s Company, by showing customers that the company listens to their concerns and complaints. The reason for customers to leave negative reviews are mostly due to the fact that the place does not match their expectation, not because of the service Airbnb provided to customers. Through our application, customers can have a better understanding of what the place they choose actually look like, they pay for what they want. This will increase customer satisfaction with the company gradually, which will result in more and more customers choose this company, which will increase Airbnb’s revenue in the long term. We expect our operating revenue to increase by 5% per year because of the improvement of reputation and satisfaction.
Airbnb will hire local residents to scope the host’s house and the surrounding area. After agents have been hired, then they will go through an extensive 6-weeks training (or equivalent to 240 hours) where they will learn the ethics (see Ethics and Risk section), what they should look at, whether the host holds the standard of Airbnb requirements, and finally if the descriptions provided by the host matches to their rental space. After their 6-weeks training, they will shadow experienced agents for another 2 weeks. Once the agents become Airbnb official employees, they will conduct inspections of the listings periodically and upload the updated pictures accordingly. This way it will ensure the credibility of the host and Airbnb.
This proposed solution will negatively impact Airbnb in the short run; however, this would benefit Airbnb the longer they utilize this method. By using agents who regularly update the hosts’ listings, this would be able to increase the trustworthiness of Airbnb. By increasing the trustworthiness of the usage of Airbnb, people would rely on and use Airbnb as their primary source of booking reservations. This would increase the sales revenue steadily and eventually increase their net income.
Risks and Critical Success Factors (Rayan)
Potential risks for the implementation of our solution is the change in user and functional requirements. Every solution is built based on customer needs, but at some point, this process may be too long and complicated. Thus these requirements are subject to change within the improvement, and discovery in the prototyping and integration activities. The risk will be handled by having a clear project plan with possible risks and how to mitigate them with every member’s input. The system architecture may be disrupted within the web platform or component posing disastrous consequences. It is vital to have a team with the technical knowledge required in the development and implementation of the software. Another potential risk is the organizational issues, where there are inadequate skills and staffing for project management. The team will be chosen to ensure there is a balance between the expectations of the clients and the needs for the development teams.
Some of the critical factors in the software implementation for our solution include staff training and involvement, allocation of resources, training and mentoring, management commitment. The answer may not be easy to use, and thus training and mentoring can help in user training reducing the difficulties in using the platform. Senior management helps in the allocation of resources; hence the product can be improved or changed to suit the clients’ requirements. Staff involvements show the commitment of the team in creating the solution; staff training can also increase the margin of ease of use by helping in practice and creating awareness among users of the platform.
Carville, Olivia, Andre Tartar, and Jeremy C.F. Lin. “Airbnb Builds Big Legal Team and Strategy Ahead of IPO.” Bloomberg.com. Bloomberg, 14 Feb. 2020. Web.
Lock, Published by S., and Jun 4. “Airbnb: Company Value 2016-2018.” Statista. 04 June 2020. Web.
Molla, Rani. “Why Airbnb Is Suddenly Struggling to Make Money.” Vox. Vox, 12 Feb. 2020. Web.
Babaei, M., & Beikzad, J. (2013). Management information system, challenges and solutions. European Online Journal of Natural and Social Sciences: Proceedings, 2(3 (s)), pp-374.
Voon Chin Phua (2019) Perceiving Airbnb as sharing economy: the issue of trust in using Airbnb, Current Issues in Tourism, 22:17, 2051-2055, DOI: 10.1080/13683500.2018.1440539
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