STUDY OF THE FACTORS LEADING TO THE

GROWTH OF ONLINE HOMESTAYS

Submitted By
KAMALESH 160211410
ROY 51
PANIENDRA 160211410
DUTT 56

Under Guidance of
Dr. SRINIVAS KUMAR

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 CONTENTS
SL. NO. TOPIC PAGE
1. NEED FOR STUDY 3
2. OBJECTIVES 4
3. RESEARCH DESIGN 4
4. DATA COLLECTION 4
PROJECT
5. FIELDWORK 5
6. SAMPLE DESIGN 5
7. ANALYSIS 6
8. RECOMMENDATIONS 12
9. HYPOTHESIS TESTING 13
10. FINDINGS 14
11. LIMITATIONS 15
12. REFERENCES 15
13. EXHIBIT : QUESTIONNAIRE 17

1. NEED FOR STUDY

The leading businesses that are advancing the concept of the sharing
economy are in many respects no longer insurgents and newcomers.
The size and scale of Uber, Airbnb and several other firms now rival, or
even surpass, those of some of the worlds largest businesses in
transportation, hospitality and other sectors.

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 Online Homestays like Airbnb are e-commerce and homestay networks
enabling people to list or rent short-term lodging in residential properties,
with the cost of such accommodation set by the property owner.

Although online homestay businesses as Airbnb are a recent

phenomenon, a rapid growth has made them a serious competitor for the
hospitality industry with important consequences for tourism and for
tourist destinations.

Airbnb recently had a valuation of $10 billion and reported revenue of

$250 million last year. The company, overtook 10 million stays on its
platform last year and doubled its listings to 550,000 in 192 countries.
This has led to the speculation that Airbnb would usurp the current
hospitality industry worldwide as the worlds largest hotel chain
without owning a single hotel.

The need for this study is to understand the factors that have led to its
exponential growth, executions made to become the major contributor
towards the sharing economy, to weigh the preference of customers for
homestays over hotels in case of short-term accommodations.

The findings can add to the inventory of existing businesses as well as

emerging startups looking forward to enter the market with a similar
business model, potential developments in the future by taking into
consideration the recommendations by its past users and to assess the
customer satisfaction with respect to its service.

2. OBJECTIVES
> To study the determinants of the success of online homestays.
> To weigh the preference of customers for homestays over
hotels.
> To gauge the customer satisfaction with respect to their
current service.
> To obtain recommendations for better customer experience.

3. RESEARCH DESIGN
For this study we are employing a QUANTITATIVE RESEARCH DESIGN.

> QUANTITATIVE RESEARCH DESIGN

A research design or methodology that seeks to quantify the data and

typically applies some form of statistical analysis.

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 Under Quantitative research design, we are following a DESCRIPTIVE
RESEARCH APPROACH.

> DESCRIPTIVE RESEARCH

A type of conclusive research that has as its major objective the description
of something usually market characteristics or functions. In this study,
descriptive research is conducted for following reasons:

To estimate the percentage of units in a specified population preferring

online homestays over hotels.
To determine degree to which marketing variables are associated like to
what extent is selection of online homestays related to extras or add-ons
provided by the landlords?
To make specific recommendations. For instance allowing two customers
to share a space on their agreement.

4. DATA COLLECTION PROJECT

For this study Both PRIMARY and SECONDARY data is taken into consideration.

> PRIMARY DATA

The information that is collected specifically for the purpose of research and
is tailored as per the research needs. Out of different methods for primary
data collection, we have used questionnaire.

> SECONDARY DATA

Data that was collected by someone other than the user. In this study the
secondary data is collected from online sources like journals, research papers,
records of the company and data of past sales.

> DATA COLLECTION INSTRUMENT

QUESTIONNAIRE

A well-structured set of questions were devised following the steps for

questionnaire design and taking into consideration the research objectives.

The questionnaire was issued in both HARD format (Paper pencil format)
and SOFT format (Online based questionnaires).

5. FIELDWORK
> Hard copies of questionnaires are provided to the respondents
and inputs are recorded.

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 > Soft copies are circulated via mail and data reverted back is
recorded.

6. SAMPLE DESIGN
> TYPE OF SAMPLING

In this study, Non-probability sampling is used where the probability of

selecting a sampling element is unknown and does not involve
randomization. Under Non-probability sampling, Quota Sampling is opted,
which involves segmentation of the target population based on strata
decided. For this study, the base for quota is taken as gender i.e. Male and
Female.

> DETERMINATION OF SAMPLE SIZE

Target Population: Students of Symbiosis Institute of Business Management

and Symbiosis Law School. Hyderabad.

Sample Size: 200

Male Quota: 100

Female Quota: 100

7. ANALYSIS
> CUSTOMER PREFERENCE OF SHORT-TERM ACCOMODATION

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 Hotels VS Homestays

72; 36%

128; 64%

Hotels Homestays

From the data collected, it is inferred that 64 % of the total respondents prefer to
go for online homestays over hotels where as rest 36 % opted to stay in hotels
for short-term accommodation.

> CUSTOMER SATISFACTION

Experience
Very Dissatisfied 13

Dissatisfied 40

Neither 87

Satisfied 47

Very Satisfied 13

0 10 20 30 40 50 60 70 80 90 100

No. of Customers

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From the above representation, it is seen that 7% of its previous customers are
very dissatisfied, 24% are dissatisfied, 44% had a neutral experience, 20% have
had a satisfactory experience and rest 13% were delighted.

> NUMBER OF STAYS OF PREVIOUS CUSTOMER

Stay Frequency
160 147
140
120
100

No. of Customers 80
60
40 33

20 13
7
0
1-5 6 - 10 11 - 15 15+

No. of Stays

From the previous criteria i.e. Customer Satisfaction, it was inferred that around
75% of customers had a bad or neutral experience which in turn relates to the
Stay Frequency which shows that around 72% of customers fall in the range of 1
5 stays. From this interpretation, it can be said that bad experience might have
led to fall in stays. The observation is quite evident as the rest 27 % who had a
satisfactory and delighted experience have a stay frequency of greater than 6.

> SELECTION OF COST RANGE BY CUTOMERS

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 Cost ra n g e V S N o. Of cu stom ers
67 67

46

20

No. of Customers

Cost Range

For an average salaried person, an expense up to Rs. 1500 for accommodation

per night can be considered within budget. So from the above data it is seen that
around 57% of the respondents have opted for online homestays considering
cost as a factor.

> QUALITY OF HOST RECOMMENDATIONS

Quality of Host Recommendations

120 113
100
80
60 54

40
No. of Customers 20
20 13
0

As per the responses obtained, 27% of the respondents confirmed that host
recommendations to the local spots have significantly added to their guest
experience, 54% said the recommendations were meaningful and rest 13% and
20% sorted to somewhat and no value addition respectively.

> VALUE OF ADD-ONS PERCEIVED BY THE CUSTOMERS

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 Value Of Add-ons
70
60 60
60
50 47

40 33
30
No. of Customers 20
10
0

The study shows that 17% of the respondents would review the value additions
in the range of 0 - 100, 30% of the respondents would note in the range of 101 -
200, rest 54% would note the value additions above 200. These 54% of the
respondents form a part of the customers who have had a good experience.

> CHOICE OF CASH VOUCHER VERSUS ITEM VOUCHER

Cash Voucher VS Item Voucher

Item Voucher; 84; 42%

Cash Voucher; 116; 58%

Item Voucher Cash Voucher

From the responses, it is seen that 42% of the respondents would like to receive an Item
voucher whereas rest 58% prefer a cash voucher.

> PROBLEMS FACED BY CUSTOMER IN RECEPTION

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 Frequency of Inconveniences

127
73

Yes No

Out of 200 previous users, 73 respondents i.e. around 37% confirmed that there were
inconveniences in their pickup and drop-off like they had to wait for the host to get the
keys. Rest 64% had faced no problems in the process.

> ATTITUDE TOWARDS CHANGE IN RECEPTION OF GUESTS

Likeliness towards professional reception

Strongly Disagree 20

Disagree 27

Neither 66

Agree 20

Strongly Agree 67

0 10 20 30 40 50 60 70 80
No. of Customers

The study clearly indicates that 34% of the respondents are more favorable towards
reception in a professional way, this inference can be linked to the observation that 37%
of the customers have encountered inconveniences in first meeting and getting the keys
which might have directed this thought of professional reception.20% of the respondents
have a agreeableness towards this change, next 33% of the respondents tend to be
neutral, and rest 24% would resort to the traditional process.

> PREFERENCE OF LOCATION FOR PICKUP

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 Pre fe re n ce Of Loca ti on For Fi rst M eeti n g
93

47
No. of Customers 40

20

Re t a i l S h o p Re s t a u r a n t Cafe N o d i ff e r e n c e

After mapping the responses, it is calculated that 10% of the previous users would like to
meet with the host at a retail shop in case they require something can directly pickup
and check-in, 24% would like to meet at a restaurant, 20% prefer a caf as a point of
pickup and rest 47% have no choice of destination.

> FAVOURABILTY OF ITEMS AS PER THE DEMAND BY CUSTOMERS

Count of Items as per Favourability

Gift basket 38

Bottle of wine 24

Ticket to a local attraction 52

Voucher to a local restaurant 55

Voucher to a local cafe 31

0 10 20 30 40 50 60

No. of Customers

The top 2 favorable items as demanded by the respondents are Voucher to a

local restaurant i.e. around 28% and ticket to local attraction i.e. 26%. Around
19% of the respondents would like to receive a gift basket, Rest two items Bottle
of wine and Voucher to local caf is demanded by 12% and 16% of respondents.

> REASONS FOR SELECTING ONLINE HOMESTAYS

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 Reasons for opting Online homestay

More unique accommodations with kitchens 39

More affordable than hotels 57

Access to specific neighborhoods and locations 30

The experience of hospitality and community 74

0 10 20 30 40 50 60 70 80

No. of Customers

From the previous analysis of preference of customers, it was seen that 64%
preferred online homestays which can be linked to the reasons as selected by
52% of the respondents i.e. experience of hospitality and community (37%) as
well as access to specific locations and neighborhoods (15%) which may be
remote from hotels. Another inference can be derived is 28% of the respondents
chose online homestays for its affordability which has also been analyzed
previously. Rest 20% of the respondents opted online homestays for its unique
accommodations with kitchens.

8. RECOMMENDATIONS
> Around 23 respondents recommended that online homestays
should allow two people to create a 'couple' account which
might initiate a new journey for strangers.
> Another group of 36 respondents mentioned advanced pricing
by certain days of the weeks like Dynamic pricing for weekdays
and weekends.
> Some of the respondents suggested addition of more modern
facilities.

9. HYPOTHESIS TESTING
> CHI-SQUARE TEST ( = 0.01 )

Null Hypothesis (Ho): There is no relation between preference of

accommodation and customer satisfaction.

Alternate Hypothesis (H1): There is relation between preference of

accommodation and customer satisfaction.

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 ACTUAL OUTCOME
Yes No Total
Very Satisfied 13 0 13
Satisfied 39 8 47
Neither 56 31 87
Dissatisfied 7 33 40
Very
Dissatisfied 0 13 13
115 85 200

EXPECTED OUTCOME
Yes No
Very Satisfied 7.475 5.525
Satisfied 27.025 19.975
Neither 50.025 36.975
Dissatisfied 23 17
Very Dissatisfied 7.475 5.525

CHI-SQUARE VALUE = 0.000000000000075

Comparing the Chi-square Value (0.000000000000075) with level of

significance ( = 0.01), it is seen that Chi-square value is less than
which implies Null Hypothesis (Ho) is rejected and Alternate Hypothesis (H1)
is accepted i.e. a relation exists between preference of accommodation and
customer satisfaction.

> T-TEST: TWO-SAMPLE ASSUMING UNEQUAL VARIANCES

Null Hypothesis (Ho): The average number of customers who preferred online
homestays are neither satisfied nor dissatisfied.

Alternate Hypothesis (H1): The average number of customers who preferred

online homestays are either satisfied or delighted.
Yes No
Mean 2.495652174 3.6
0.7428571
Variance 0.603051106 43
Observations 115 85
Hypothesized Mean
Difference 0
df 170
t Stat -9.338974799
0.00000000000000002
P(T<=t) one-tail 678
t Critical one-tail 1.653866317

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 P(T<=t) two-tail 5.35675E-17
t Critical two-tail 1.974016708

As per the rule i.e. ACCEPT Ho IF P-VALUE IS GREATER THAN 0.05 AND REJECT
IF LESS THAN 0.05. Here the P-Value is 0.00000000000000002678 i.e. less
than 0.05, Hence Null Hypothesis (Ho): The average number of customers
who preferred online homestays are neither satisfied nor dissatisfied is
rejected and Alternate Hypothesis (H1): The average number of customers
who preferred online homestays are either satisfied or delighted is accepted.

10. FINDINGS
> From this study it is inferred that the rapid growth of online
homestays can be attributed to the experience of hospitality
and community as well as access to specific locations and
neighborhoods which may be remote from hotels.
> Customers or travelers expecting to stay as a local and
experience cultural exchange opt for online homestays.
> Moreover the extras or add-ons provided by the host also add
value to the customer experience because some extras like
souvenir or home cooked food provided by the host could
influence the customers to become loyal.
> As per this study, many recommendations came into picture
like allow two people to create a 'couple' account and
advanced pricing by certain days of the weeks which can
be incorporated for attracting more customers.
> In the end, hypothesis tested using chi-square to check
relationship between preference of accommodation and
customer satisfaction was proved to be true i.e. a
relationship exists between preference of accommodation
and customer satisfaction are inter-related.
> From t-test, it was inferred that the average number of
customers who preferred online homestays are either
satisfied or delighted.

11. LIMITATIONS
The results obtained from this study are only applicable to a population of
Students pursuing Under Graduate or Post Graduate Programme in
Symbiosis Institute, Hyderabad.
The answers submitted by the respondents may not be genuine or
correct, hence validity of results cannot be guaranteed.
The time window for this study is short which may cause the findings to
be compromised.

12. REFERENCES

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> Jeroen Oskam , Albert Boswijk , (2016) "Airbnb: the future of
networked hospitality businesses", Journal of Tourism
Futures, Vol. 2 Iss: 1, pp.22 - 42
> https://www.airbnb.co.in/economic-impact as accessed on
February 10 2017 at 4:00 pm
> https://www.airbnb.co.in/press/news/study-finds-that-airbnb-
hosts-and-guests-have-major-positive-effect-on-city-
economies as accessed on February 2 2017 at 7:36 pm
> Advani Kingsley (2016, January 20).3 Learnings from Airbnb
https://www.linkedin.com/pulse/3-things-learnt-from-airbnb-
kingsley-advani
> http://www.mckinsey.com/business-functions/strategy-and-
corporate-finance/our-insights/how-the-sharing-economy-can-
make-its-case as accessed on February 4 2017 at 1:14 pm

EXHIBIT: QUESTIONNAIRE
ONLINE HOMESTAYS SURVEY QUESTIONAIRE

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 Online Homestays like Airbnb and OYO are e-commerce and homestay networks enabling
people to list or rent short-term lodging in residential properties, with the cost of such
accommodation set by the property owner. Symbiosis Institute of Business Management,
Hyderabad is conducting a survey

PLEASE () THE APPROPRIATE BOX

1. For short-term accommodation, which one would you prefer (assuming charges are same)?
Homestays Hotels

3. Rate your Experience?

Very Satisfied Satisfied Neither Dissatisfied Very dissatisfied

4. How many stays have you had as a guest?

1-5 6 - 10 11 - 15 15+

5. What is the typical cost range per night of the places you have stayed?
500 - 1000 1001 - 1500 1501 - 2000 2001+

6. How much have host recommendations to local neighborhood spots add to the quality of
your guest experience?
Significantly Meaningful Somewhat Not much

7. If the host supplied you with add-ons (e.g. local tickets, welcome basket, food, bottle of
wine, etc.), at what value would note the add-ons in your review?
0 - 100 101 - 200 201 - 300 300+

8. Please select the 2 items you would most want to receive from a host.
Voucher to a local cafe Bottle of wine Gift basket

Ticket to a local attraction Voucher to a local restaurant

9. Would you rather receive a cash voucher (e.g. 50 voucher to the local deli), or a voucher
for a general item (e.g. "soup and sandwich" voucher to the local deli)?
Cash voucher Item voucher

10 If your arrival/departure were handled by a business (like hotel reception), would that add
. to your experience?
Strongly Agree Agree Neither Disagree Strongly
Disagree

11 Where would you most prefer to arrive and pick up the keys at? A locally owned:
.
Retail Shop Restaurant Cafe No difference

12 Have you ever arrived at a destination and had to wait to meet the host to get the key, or
. had any other inconveniences with key pickup / drop-off?
Yes No

13 What has been the most memorable "extra" a host has provided to you during your stays?

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.
_______________________________________________________________________

14 Do you have any comments on what services could add to improve the host/guest
. experience?

_______________________________________________________________________

15 Finally, please select the top 2 reasons you enjoy homestays?

.
The experience of hospitality and community More affordable than hotels
Access to specific neighborhoods and locations More unique accommodations

ABOUT YOU

GENDER MALE FEMALE

MARITAL STATUS SINGLE MARRIED SEPARATED DIVORCED WIDOWED

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