RentMe: Navigating Global Markets and Localizing the Accommodation Sharing Revolution

QUESTION

Accommodation Sharing Goes Global A New Way of Doing Business The sharing economy, in which people rent their underused assets, including cars, boats, bedrooms and basically anything you can think of, is a growing force in today’s market. Peer-topeer business, a large driver of the sharing economy, has been made accessible through the Internet, with online marketplaces, online payment systems, social networks and easily accessible GPS sites making it simple for anyone to become a retailer. There are many attributes that make the sharing economy a popular concept in today’s socially and environmentally conscious world. “Sharing” unused assets is an environmentally friendly practice that limits the amount of “things” in the marketplace. For example, if several individuals can share the use of one vehicle, each paying a fee to cover insurance and maintenance, there is no need for them to purchase their own individual vehicles. In addition, participating in the sharing economy provides people with an alternate source of income, using the things they already own. Typically, the cost of renting an apartment or a car in a peer-to-peer business model is less expensive than in a business-to-consumer one. As people are becoming increasingly comfortable with the trust aspect of renting from another individual rather than from a business, they are finding the cost savings extremely attractive. As a result, companies who organize peer-to-peer rentals and assist with making these sales happen are becoming more common and also quite successful. Peer-to-Peer Accommodation Sharing One such example is accommodation sharing service RentMe. Founded in Melbourne, Australia, in 2010, this forward-thinking start-up offers individuals the opportunity to rent their homes, or just a bedroom in their homes, on the RentMe website or mobile app. Begun by two women who started renting out a spare bedroom of their apartment after graduating from university, RentMe has grown exponentially in just four years and today offers over 350,000 listings in over 24,000 cities around the world. Module 2— Service Development 2 Globally, RentMe is seeing almost unprecedented success. It is in competition with large players in the hotel market and is reaching into countries that had previously been largely inaccessible, until RentMe came along and changed the way people think about accommodation. The allure of renting a house or apartment while on vacation is the ability to really immerse oneself in the culture. This is much more possible while staying in a condo owned by a local teacher and engineer than by taking a room at a major hotel chain for the week. Keeping It Local From the beginning, RentMe cofounders Alice Lachey and Nora Courtland had a global strategy in mind. As they grew and developed the service over time, they focused on creating a communitybased marketplace, one in which the users contribute to its development as much as the RentMe team does. The company generates 7 percent from every transaction that takes place on its website. For this fee, RentMe provides a user-friendly website where potential “hosts” can place their advertisements and potential renters can search for accommodation in the cities of their choosing. Localization of the website (i.e. developing a local version of the RentMe site) is a critical strategy used to make the search and list processes as user-friendly as possible. Alice and Nora believe this strategy contributes largely to their success. In many countries, there is not only a different language than the RentMe domestic market, but also different dialects throughout. The company’s web developers and translators work around the clock to translate offerings and tailor local versions of the website to its markets. This could mean changing a word, changing an accent or changing the type of alphabet used. For example, British English expressions differ to those of American English. A British person might typically use the phrase “going on holiday”, while an American may say “going on vacation”. Words can have a different meanings in each country. The RentMe team tries hard to address these nuances as it finds them. Marketing is another area where the Melbourne-based start-up localizes its efforts. As an example, in Spain, RentMe’s billboards and social media blasts were showing little effect on the uptake of the service. In response to this information, Alice and a few of the global sales team members travelled to Spain multiple times, met with key people, attended conferences, handed out flyers and began to spread the word. Before long, they saw an increase in usage in the country; through continued campaigns, they had gained a large enough following to rely on reputation and word of mouth as a main source of advertising. A creative way in which the entrepreneurs set themselves apart is through the photos placed on the website. For every listing, RentMe provides a professional photographer who travels to the accommodation being listed to take high quality photographs. This service is included in RentMe’s fee and, although it is an extremely costly offering, by avoiding the blurry and grainy images found throughout other accommodation rental websites, RentMe appears professional, clear and, by association, safe. Module 2— Service Development 3 Challenges Safety and security is an area in which the company has had growing pains within its short life. In the beginning, people were hesitant to use the service, fearing the unknown. The individuals sharing their homes were just people, not professional, regulated organizations, and this was relatively unheard of at the time. However, as more and more people tried the service, it became increasingly known as a safe way to find accommodation while travelling. There have been a few incidents where guests have damaged property while staying at a RentMe accommodation. Initially, there was an unwritten policy that the person offering the accommodation assumed all liability. Due to a situation where a lack of response generated bad press for the company, RentMe began offering a AUD 100,000 insurance policy on each rental transaction, assuring customers that RentMe is a responsible company that will assist with negative consequences should they occur. Another challenge currently facing the company is one of legality. Jurisdictions in which individuals are renting out their homes are concerned about the lack of regulation around this practice, as well as the “underground market” nature of it. Hotels are obliged to pay municipal accommodation taxes. Many argue that peer-to-peer rentals should also be required to pay this tax. RentMe’s stance is that the individuals listing their rentals on the website assume responsibility for meeting local laws and regulations. Over the last couple of years, the debate has turned into legal battles that are consuming RentMe’s resources and time. As a start-up taking advantage of the sharing economy phenomenon, RentMe is slowly changing the culture and norms surrounding vacation rentals around the world. Some argue the laws it may be breaking are ones that require revision to accommodate the reality of life today. Whatever the outcome, RentMe and its thriving, localized community marketplace are a strong force that will not easily be pushed out of the global market by what some see as outdated laws and a lack of forward thinking. Learning Outcomes This case study relates to the following learning outcomes from the module Service Development in the course Products and Services for a Global Market: • Describe the international trade considerations and their implications when developing or adapting services for international trade, including market entry strategies and market research regarding the services. • Develop service offerings based on appropriate design and development processes to enable service providers to make services more useful, usable and desirable for clients. • Develop service offerings which establish differentiation and profitability for the organization and are compliant with regulations in the target markets. Module 2— Service Development 4 1. Businesses taking advantage of the sharing economy, such as peer-to-peer rentals, are increasing in popularity. There are many differing legal implications from market to market. List strategies RentMe could employ to better comply with local regulations. 2. RentMe is very focused on localizing to each market and to the even smaller markets within those markets. A number of localization strategies were described in the case. Suggest other strategies the company could use to really localize their service. 3. To position itself at the top of the accommodation rental market and to reassure its marketplace that it is a professional and safe company, RentMe provides professional photographs for each accommodation listed on the site. This is done at an extremely high cost to the company. How would the RentMe team have analyzed this service offering to determine if it was a viable option? 4. Initially, when developing RentMe’s offerings, Alice and Nora didn’t provide any insurance to protect listers and their belongings. Eventually, as the case described, they took action to improve their offerings in this area. What could they have done while preparing to launch the company to avoid the negative attention they later received? Although based on research of actual events, organizations and/or individuals, this case study is fictional and is intended to support learning. Cases are not intended to serve as endorsements, sources of primary data or illustrations of effective or ineffective management

ANSWER

RentMe: Navigating Global Markets and Localizing the Accommodation Sharing Revolution

Introduction

The sharing economy has revolutionized the way people conduct business, with peer-to-peer rentals gaining popularity worldwide. RentMe, a successful accommodation sharing service founded in Melbourne, Australia, has emerged as a global player in this market. This essay explores the strategies RentMe could employ to comply with varying local regulations, suggests additional localization approaches, analyzes the viability of their professional photography service, and discusses how they could have proactively addressed insurance concerns during the company’s launch.

Strategies for Complying with Local Regulations

As RentMe expands into new markets, complying with diverse local regulations becomes crucial for its sustainable growth. To better align with local laws, RentMe could:

Establish Legal Partnerships: Collaborate with local legal firms or industry experts in each target market to ensure compliance with regional laws and regulations.

Conduct Thorough Market Research: Understand the unique legal requirements in each country and municipality to adapt the platform accordingly.

Implement Regional User Agreements: Develop user agreements tailored to each market, outlining specific legal obligations and responsibilities for hosts and guests.

Adopt Localization in Platform Content: Translate the website’s terms and conditions, policies, and guidelines into the local language to ensure clarity and legal adherence.

Comply with Taxation Laws: Collaborate with local authorities to implement a system for hosts to pay appropriate taxes, easing concerns about potential tax evasion.

Additional Localization Strategies

RentMe’s success can further be amplified by implementing additional localization strategies:

Cultural Customization: Tailor the platform’s user interface, images, and messaging to reflect cultural preferences and sensitivities in each market.

Multilingual Customer Support: Offer customer support in multiple languages, ensuring seamless communication and assistance for users from different linguistic backgrounds.

Regional Marketing Partnerships: Collaborate with local tourism boards, travel agencies, and hospitality associations to gain credibility and promote the platform within each market.

Payment Methods: Integrate localized payment methods and currencies to provide convenience and familiarity for users during transactions.

Accommodation Recommendations: Use localized algorithms to suggest accommodations based on cultural preferences and local attractions.

Analyzing the Viability of the Professional Photography Service

RentMe’s provision of professional photography elevates the platform’s image and reinforces trust among users. To assess the viability of this service, RentMe could have conducted:

Cost-Benefit Analysis: Evaluate the direct costs of providing professional photographers against the potential increase in bookings and user satisfaction.

User Surveys: Gather feedback from hosts and guests to understand the impact of high-quality photographs on their booking decisions.

Market Research: Analyze competitors’ offerings and determine if professional photography sets RentMe apart in the market.

Return on Investment (ROI): Track the financial returns generated from the service, taking into account its impact on attracting and retaining users.

Proactive Approach to Insurance Concerns

To avoid negative attention concerning insurance issues, RentMe could have taken the following steps during its launch:

Risk Assessment: Conduct a comprehensive risk assessment to identify potential liabilities for both hosts and guests.

Insurance Partnerships: Collaborate with reputable insurance providers to offer optional insurance coverage for hosts and guests.

Transparent Policies: Clearly communicate insurance coverage details to users during the booking process, instilling confidence in RentMe’s commitment to their safety.

Conclusion

RentMe’s innovative approach to accommodation sharing has made it a global success, but navigating local regulations and fostering localization are essential for sustained growth. Adapting to legal requirements, customizing the platform for local markets, and analyzing service offerings’ viability demonstrate RentMe’s commitment to excellence and user satisfaction. By continuously addressing challenges and embracing localization, RentMe can maintain its position as a top player in the accommodation rental market and drive positive change in the sharing economy landscape worldwide.