Analysis of Airbnb

Airbnb is well-known for its cheapest hotel alternative (Jasper, 2015). Therefore, average guests have been letting their rooms in exchange for cash. This generates income for the host as well as providing profits to the Airbnb. However, there have been some complications in the company. For instance, the global expansion of Airbnb has been faster, and this caused problems. Airbnb has been the economic benefit to most cities and their environment. Airbnb, Inc. continues to lead in the travelling sector. That is, the company has registered total sales of about $ 10 billion over the past three years. Therefore, the company is valued at $ 30 billion. Since the uptake is high in the travel industry, legislative issues are increasing and Airbnb has been experiencing mixed financial results while trying to fix the issues. As geographical and product expansion has been the top agenda of Airbnb, the company has remained at its core values by offering authentic as well as local experiences to the guests.

External Analysis of Airbnb

PESTLE

Political

There have been free housing laws in the hospitality industry. That is, Airbnb is operating in a unique business, and individuals have been leasing their homes, and rooms to guests. However, Airbnb has faced legal issues. For instance, some of the available locations for renting do not adhere to state housing rules and regulations in Los Angeles (Reyes, 2014). In some states, the owner of the house must live within the property in order to rent the rooms for a short period. Moreover, such areas are expected to pay tourist levies after renting their houses, particularly during holidays. Airbnb has been fined as a result of court rulings in Barcelona, and New York after failing to follow the rules and regulations of the local tourism. Therefore, the company should follow the housing guidelines in each state. Or else, the company will open up for further legalities.

Economic factors

Through the shared economy, Airbnb has been benefiting the host cities. It implies that Airbnb has been a leader in the travel industry. Furthermore, the company has been developing a trend where resources are shared among corporations as well as individuals. Airbnb has experienced tremendous growth. Hence, it has become the main competitor to hotels and motels. Consequently, Airbnb has exponentially increased its growth within a short duration. Currently, the company is serving more than 9 million individuals around the world.

Airbnb has provided job opportunities to the people who offer the properties to guests. Those cities with either no hotels or motels have been enjoying the service of Airbnb. Therefore, Airbnb has benefited countries through revenue generation and full-time employment. For example, New York accumulated economic activity of $ 600 million with over 4,000 employment opportunities.

Social aspects

Airbnb is a collective company as hosts provide apartments for renting in exchange for money. The company shares a new experience as visitors document their experiences through online platforms. Social media facilitate the spread of Airbnb’s stories which later grow through verbal communication. Furthermore, experience is shared among the hosts while reviews are left for the guests. The hosts also discuss the activities of the tenant. Airbnb has experience initiatives where users can book day experiences such as burlesque classes and the attended special events.

Technological factors

Airbnb, Inc. depends solely on technology. Therefore, visitors book rooms through the website. Also, guests share their views through the website where a poor review implies that the host may have face difficulties while making future bookings. Also, guests use computerization and in case there is no response from the hosts, the company will automatically send a message to the host on the Guests’ behalf. Therefore, without technology, booking of the rooms cannot go through.

Legal factors

Airbnb has been facing legal problems such as failing to comply with the housing regulations. According to information on the company’s website, it addressed the need for hosts to adhere to the housing rules. Meaning hosts have to agree to the terms and conditions provided by the company.

Environmental factors

Airbnb has reduced the use of energy of hotels within Europe and America. That is, the company reduced the greenhouse emissions, water consumption, and wastes as well as increasing environmental awareness. It seems that Airbnb is determined to lower the impacts of travelling and chemical usage.

Analysis of Internal Environment

SWOT Analysis

Concerning the strategic position, Airbnb is subject to a detailed SWOT analysis, capabilities, and core competencies (Pine and Gilmore, 2011). Moreover, the concept of collaborative consumption is significant while realizing the internet powered interaction at Airbnb (Euromonitor.com, 2017).

Strengths of Airbnb

The main strength of Airbnb is based on its business model since it describes cooperation among the peers. The advanced high-tech platform is also influential because it enhance trust among different players since it provides for sharing of resources among public members (Botsman, 2012). The company is enjoying a strong reputation and brand image. Besides, its presence is in all streets of European cities such Paris. This has increased the number of users over the past two years. Airbnb, Inc. is composed of a team of workers with good skills. The team is made of energetic business people who are innovative and industrious (Staycation.com, 2017). Airbnb has attractively fashioned online systems with unique designs. The focus of Airbnb on hospitality instead of many business ideas is another strength of the company (Sundararajan, 2014, pp. 2-3).

Weaknesses

Airbnb has been associated with numerous weaknesses. For example, the company has limited internal capabilities while handling legal matters as enshrined in the local and federal laws. Some of the legal problems are hospitality laws whose definitions were completed before the introduction of current technology. Airbnb is slow in sharing and exploiting the limited resources due to failure to focus on the environmental effects on the company. Some customers of Airbnb have been exposed to hefty fines for leasing their houses to the guests on the short-term basis. In most cities in Europe, this act is considered as illegal, and it is subject to heavy fines. Additionally, Airbnb lacks business differentiation, and this has affected the competitiveness of the organization especially in the expansion of new products and services. Also, Airbnb lacks strong customer service to allow consumers to receive services at their doorsteps.

Opportunities

The Airbnb Company has several business opportunities that can be turned into meaningful growth if properly used (Leung, 2017). First, the company has unique advantages as presented by the travelers who book for the best deals based on their position regarding culture and economic condition. Secondly, the company involve in the definition of rules and regulations safeguarding the business model of the company which advocates for sharing. Similarly, the increase in mobile services in Airbnb present good growth opportunities. The Internet also presents an opportunity to Airbnb as it can reach its potential clients around the globe. Due to the increasing demand for housing and accommodation in the present age, hosting Airbnb provides a platform for interaction between the homeowners and guests.

Threats

Airbnb faces threats to health, safety laws, and taxes. For example, Los Angeles had issued a warning to people remit hotel taxes (Samaan, 2015, pp. 9-11). Possibly, Airbnb was discredited through litigations. The company is facing competition from other firms which have decided to copy their business activities. Airbnb also faces threats about bad press, especially in the social media. That is entities often act in bad faith. Thereby, threatening the development process of the company (Guttentag, 2018, p.98). As a result, Airbnb faced criticism from the social media after changing its logo. Many people din like this move asserting that the logo was like a sexual organ (Kelion, 2014).

The competitive advantage of Airbnb

Airbnb, Inc. has been working in large scale. Ultimately, it can gain a competitive advantage over its business rivals (Northwestern Business Review, 2014). The effects of Airbnb’s network also present another biggest competitive advantage. That is, hosts that are listed on Airbnb is equivalent to the number of guests the company will have. So, bookings will be done by the guests through the company. In contrast, suppliers are created by the competitors, word of mouth, and peoples’ reviews on the given lists. This makes Airbnb company different from its competitors. There is no entry barrier in the travel and tourism industry. However, late entrants are facing challenges in competing Airbnb concerning geographical aspects. Therefore, the company needs to put in more effort in order to achieve the competitive edge particularly on the niche market and other complementary (Porter, 2001, pp. 62-65).

Airbnb is unique in the manner in which it helps customers concerning the reduction in transaction costs through ICT. The company also introduced a customer to customer model in a sector that used to operate with the contemporary B2C model. That is, it is a company which benefits from the global reach, economies of scale, and learner cost structure. This enables Airbnb to receive large volume in lower costs of business. Also, the company is unique in the provision of rental places. Hence, it is gaining the advantage over its cost structure.

Airbnb has grabbed the largest market share due to its attractive offers and quality services. The company is concentrating on the connectivity as well as networking which depends on the number of connected entities. The company is providing best services which are accepted by the customers.

Ethical issues in Airbnb

Business ethics is one of the delicate issues that has been the subject matter in the company. For example, Airbnb has been subjected to several claims of discrimination. That is, there is one lawsuit on Airbnb and other related institutions and government investigations (Pico, 2017). The major issue is that Airbnb allowed the users who were seeking for rentals to post their pictures, names, and describe themselves. This has led to a significant number of black users being denied for houses that were given only to the white users. However, other competitors such as VRBO do not promote this culture. Subsequently, it has been subjected to minimal complaints.

Discrimination in Airbnb is an ethical issue because it emanates from lack of diversity. Furthermore, it appreciates the need for the executive managers in Airbnb who have six white men who have attained degrees from elite institutions. The issue is that, if individuals belong to a dominant culture within the society, they are unlikely to experience discrimination as belonging to the minority group. Unless an experience is sought about discrimination to understand its effects on people, one may not be aware that it is a problem. That is, they are blind to it. Thereby, becoming a problem with many companies.

The business strategy of Airbnb

Airbnb Company uses blue ocean strategy which is based on the innovation processes since the company does not possess any house. However, it provides a platform where sellers and customers can service each other. Usually, people used depending on the lodging facilities such as hotels, hostels, and couch surfing sites that are preferred young tourists that look to party in the world cities. Airbnb created a recognized market where it offers suitable accommodations to the users at affordable prices. A combination and data and prediction may be the next step of the Airbnb’s localization (The Mediterranean Traveler, 2017). Airbnb identifies consumers who are frequent in its websites in order to win their trust. Since then, most of the strategies employed by Airbnb have proven to be extremely real in popularizing their worldwide services (Fowler, 2017). However, learned lessons like automation of translation are not always the best since localization encompasses several parameters, and the success of Airbnb has largely depended on serving a variety of currencies.

Evaluation

Suitability

Consumers always benefit from Airbnb in terms of costs, and it’s preferred and suitable geographical location. Besides, Airbnb provides many locations with innovative experiences in any place. The business model of Airbnb is unique. Hence, the company is hugely creating innovative, and new markets which are advantageous to the travelers and even the ordinary hotel industry has been adopting the similar model.

Acceptability

The blue ocean strategy of Airbnb partly increases sales revenues through the provision of featured products to the customers. The organization represents innovation in the hospitality sector which attracts families, business, and new travelers. Airbnb acts as an alternative to hotels in the saturated marketplace, particularly for events.

Feasibility

Regarding another aspect, Airbnb has created other new sources of supply in the hotel industry which has never existed as travelers wee accessing the inventory of travel accommodation that comprises houses of city dwellers. In the beginning, these new supply sources were less sophisticated than the established hotel business based on quality pricing and services.

Conclusion

Regarding the sharing economy, Airbnb has been the leader. The company offers job opportunities for the people who rent rooms and the home guest. Since every country has different housing rules, licenses and tax laws depend on location. Since Airbnb Company has not addressed these problems, it has faced criticism and legal issues. Currently, Airbnb ensures that the hosts should follow rules and regulations before accepting terms and conditions of the company. The organization depends heavily on technology for booking rooms, communicating with hosts and guests. Therefore, customers of Airbnb like staying in cities that will otherwise engage be occupied by the company.

References

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