Airbnb: A Market Leader In Online Lodging And Vacation Rentals

Airbnb's Business Model

Airbnb Inc. is an American organization that operates and runs an online market for lodging, mainly homestays for tourism activities, and vacation meals. It is located in San Francisco, California, the stage is accessible via mobile app and website. The company was established in the year 2008 by Brain Chesky, Nathan Biecharczyk, and Joe Gebbia. Thus, the marketplace of Airbnb model links guests and hosts online or via mobile devices in order to book experiences and spaces around all over the world. Hence, its listings contain homes, boats, luxury villas, castles, treehouses, cabins, and castles. The company’s mobile applications and website deliver its guests with an involving way in order to book them. Generally, its hosts fall into two groups: professional and individual. By the end of FY 2021, the company generated a net income of around US$-0.67 billion and net revenue of around US$4.81 billion.

The primary purpose of the report is to evaluate and analyse the strategy of the company in order to alter its business model & turns out to be a realm in the hotel sector. The organization that has been selected for this report is “Airbnb”, thus the competitive five forces analysis have also been provided in the report. The VIRO framework and Porter Value Chain have been analysed and through this the strengths and weaknesses of the company have been recognized (Kim et al 2021). In addition, SWOT analysis and three corporate strategies has also been pursued and lastly the suggested strategies with respect to Airbnb’s history and culture have been evaluated in the report. Hence, a conclusion has been provided on the basis of overall discussion and analysis mentioned above.

1. Political Factors: Airbnb is an exclusive business. People propose to rent their apartments, rooms, or homes to the strangers. Whereas, this firm is also confronting some regulatory and legal issues in various countries. This business model disagreements with various state housing regulations and laws, but on the other hand, there are also people who buy distinct houses for the rental services of Airbnb.
2. Economic Factors: The company delivers a reasonable cost alternative to the middle-income facilities. The other primary reason for its achievement is that Airbnb is the only replacement to mainstream restaurant and hotels. As per the estimation, the company is providing the requirements of around 10 million individuals across the globe.
3. Social Factors: Airbnb is stage where it mixes societies and cultures from various parts around all over the world. Every tenant and host submit their experiences and expectations. In this situation, social media plays its role & spread the opinions of tenant and host, thus the company is running in 191 countries & in 3400 countries.
4. Technological Factors: Technology refers to a communication around all over the globe. The company is utilizing technology in order to connect people. Thus, visitor may download application and make use of website for the booking. Such business model is totally varying on rating and reviews(Festila and Müller 2017).
5. Legal Factors: As it has been mentioned above that the company runs its business operations in around 193 countries. Every state, country, and state have an exclusive set of the housing regulations and Taxation Laws. Thus, it is quite complex for the company to cover the regulations and laws of every count.
6. Environmental Factors: The home-sharing model of the company is an appropriate choice for guests, planet, and the hosts. By selecting it, one may decrease waste usage, wastes, and energy. Currently, the company has issued a report directed out that “home sharing has a favourable impact on environment”.

1. Threat of New Entrants:In pear-to-pear accommodation industry, the threat of entrants is low. In a husk, it is like that there are no such any barrier, thus, any website may explode & compete with Airbnb (Giannoni et al. 2021). However, the company is financed and operates in more than 200 countries around all over the world.
2. Rivalry Among Competitors:This force is considered to be the greatest and if a company follows a plan that delivers a competitive edge over the competitor companies, it will be successful. Thus, rivalry among available companies that deliver the similar services like Airbnb is either low or moderate.
3. Buyers Bargaining Powers:In the experiences and lodging industry, the buyer’s bargaining power is moderate because of broad variety of services they may select from such as price, host ratings, and location. Thus, economic development has played a major role in enhancing the hospitality and tourism industry across the country.
4. Suppliers Bargaining Powers:With respect to Airbnb, the supplier bargaining power is negligible meanwhile it controls the clients and the supplier. Thus, this makes it quite complex for persons attempting to rent out the rooms or apartments with no other replacement way to interact with clients utilizing the App or Airbnb website.
5. Threat to Substitute Products: Airbnb does not dissociate itself from substitute services or products it is probably to suffer with respect to profitability & eventually growth potentially. The threat of substitute products is high when the product proposes appealing price-performance to the current products.

The following VRIO Framework analysis of the company are discussed and mentioned below:

Airbnb’s value chain model is considered to be a significant tool in recognizing business activities that may create competitive advantage and value to the worldwide rental & experiences platform (Lee and Kim 2018). The following are discussed and mentioned below:

1. Inbound Logistics: These activities of the company are related with strong, disseminating and storing the products inputs. It may contain material handling, physical products warehousing, and architecture to obtain & store customer information with respect to digital media company. Presently, the company has subcontracted most of the inbound logistic activities(Joseph and Varghese 2019).
2. Operations: Operations include the raw materials transformation into finished products. With respect to Airbnb, operations include a variety of activities like keys handling, providing, and cleaning amenities within properties. Today, the company operates in 191 countries & regions globally & there are 100000 cities & 500 million guest arrivals of the company.
3. Outbound Logistics: It is related with distribution and warehousing of ready goods. Famous sources of the value creation for businesses contain direct deliveries to clients without intermediaries and cooperation with other companies in order to share technological integration and distribution costs into the process of distribution.
4. Marketing & Sales: The value proposition of the company for guests is related with enormous range & competitive costs of experiences and accommodations, and a chance for guests to living local in place where it operates. Thus, this value proposition is combined into marketing message connected to the target customer segment via variety of communication channels of marketing in an integrated way.
5. Service: Superior level of customer services is the solid sources of the company’s competitive advantage. The company’s customer service department consists hundred of agents exists via chat, email, phone, in each time zone, & in 30 various languages. Both guests and hosts rate each other once the stays completion and this practice motivates hosts to enhance the service level.

The following SWOT Analysis of Airbnb are discussed and mentioned below:

• Airbnb has increased its products or services outside its essential accommodations, thereby aspiring to set up a travel platform(Veverková 2021). Thus, it also increased its business operations into by enabling guest to book actions with influences such as cooking classes, meetups, and guided tours.
• Moreover, the company has been identified at the world-wide level, & they observe various users that contain guests and hosts.

• Airbnb faces issues from violating different housing regulations and laws.
• The business model of the company is simple to copy, & it is an enormous weakness for its achievements.
• The company has also organized a review scheme, where the hosts and guests may rate each other once they are done with their stay. Guests and hosts cannot observe reviews when both have assumed a review.

• The company may increase into developing markets devising less competition. Thus, this delivers an enormous business opportunity.
• Airbnb may increase its product mix, & offerings. This would assist them to provide the clients better. For instance, it may increase its product by delivering travel guides and car rentals.
• The company’s low price & personal touch-allowed them to obtain their visibility through & more net revenue.

• Airbnb’s services or facilities exists across in 192 countries. Every country and state have its regulations and laws to follow. Thus, the company must carefully vary on hosts and guests so that they can cover the local laws(Wisker, Kadirov and Bone 2019).
• There observes a lot of rivalry for Airbnb such as VRBO, tripping.com, and tripping. This may provide a complex time for the company.
• Airbnb is already confronting some lawsuits & fines throughout the world in locations such as Florida and New York. The authorities of Barcelona have fined the company with a round 30,000 Euros in order to disrupt the tourism laws.

The three corporate strategies that the company may pursue or sustain for the subsequent 5 years to Airbnb are discussed and mentioned:

1. Differentiating the Airbnb business from a contest in the packed market starts with the brand. Thus, an established brand refers to a foundation of efficient Airbnb marketing because this assists in building loyalty and trusts in the long-term(Mahajan 2018).
2. As per the data and figures, 52% of the travellers noticed for the recommendations on a social media while planning a trip. In order to make use Facebook in the Airbnb’s marketing strategy, commence by generating a Facebook page for the properties. Connect the made posts on the new page back to their citations on the vacation rental stages.
3. Airbnb’s primary objective is to improve the travel by delivering accommodations with nature. Thus, any ordinary property hold may list their home on the platform of a company, generating an enormous database of separate home rentals. Rather than living in the superior hotel rooms, one may relish the space with character and personality.

The following suggested strategies with respect to Airbnb’s history and culture, that may assist the company in accomplishing differentiation, and cost leadership strategies are discussed and mentioned below:

1. Differentiation:the company is not a place where one may book the hotels. By citation properties of ordinary individual, they set themselves separately by proposing the various experience to the travellers (Roma, Panniello and Nigro 2019). What the company offer is not a cheap area to sleep when one is in the holiday, thus it is a chance to experience the destination as the local. Hence, it is an opportunity to cover the locals and experience the market & obtain the non-touristy places.
2. Airbnb Plus:Many individuals like the concept of staying in another’s home; but on the other hand, not everyone does. Some individual value the luxury of living in the hotel, knowing one will obtain the professional facility, containing an appropriately maintained room. In order to counter this, the company generated a product named “Airbnb Plus”.

Conclusion 

On the basis of above discussion, it can be concluded that marketing strategy assists in emerging the goods & services with an efficient profit-making potential. Thus, marketing strategy also assists in determining the areas influence by an organizational growth & thus assist in generating an organizational plan in order to provide to the customer requirements.

References

378. Airbnb and taxation: Developing a seasonal tax system. Tourism Economics, 27(2), pp.365-378.

Festila, M. and Müller, S., 2017, January. The impact of technology-mediated consumption on identity: The case of Airbnb. In Proceedings of the 50th Hawaii International Conference on System Sciences.

Giannoni, S., Brunstein, D., Guéniot, F. and Jouve, J., 2021. Multichannel distribution strategy of Airbnb hosts. Annals of Tourism Research Empirical Insights, 2(1), p.100017.

Joseph, G. and Varghese, V., 2019. Analyzing Airbnb customer experience feedback using text mining. In Big Data and Innovation in Tourism, Travel, and Hospitality (pp. 147-162). Springer, Singapore.

Kim, S.Y., Sim, J.H. and Chung, Y.J., 2021. The Effect of Changes in Airbnb Host's Marketing Strategy on Listing Performance in the COVID-19 Pandemic. Journal of Intelligence and Information Systems, 27(3), pp.1-27.

Lee, S. and Kim, D.Y., 2018. Brand personality of Airbnb: application of user involvement and gender differences. Journal of Travel & Tourism Marketing, 35(1), pp.32-45.

Mahajan, P.S., 2018. Marketing strategy of a company using shared economy business model. The case of “Airbnb” (Master's thesis).

Roma, P., Panniello, U. and Nigro, G.L., 2019. Sharing economy and incumbents' pricing strategy: The impact of Airbnb on the hospitality industry. International Journal of Production Economics, 214, pp.17-29.

Veverková, M., 2021. The Analysis of Marketing Strategy of Airbnb and Their Current Business Model.

Wisker, Z.L., Kadirov, D. and Bone, C., 2019. Modelling P2P Airbnb online host advertising effectiveness: the role of emotional appeal information completeness creativity and social responsibility. International Journal of Culture, Tourism and Hospitality Research.