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SWOT Analysis – Airbnb STRENGTHS
- Large selection of available properties
- Marketing/Social Media
- Funding
- Cheaper than hotels
WEAKNESSES
- Home owners discrimination cases
- Airbnb doesn’t have control over services offered by homeowner
- Illegal listings OPPORTUNITIES
- Opportunity to be publicly traded
- Expansion opportunities are nearly unlimited
- Charitable donations
THREATS
- Legal Issues
- Bad press
- Similar businesses
STRENGTHS – What does Airbnb do well?
Undoubtedly Airbnb has become the largest peer-to-peer rental company since its inception in
- With over 3 million listings worldwide they have rental coverage in over 191 countries and have had over 200 million guests to date. (Airbnb, 2017) This large selection of properties increases choices for potential users not only based on price but also location.
The timing of Airbnb’s startup was paramount to their high rise to success. Airbnb started to gain marketing strength on the cusp of the social media revolution. People began sharing their lives, travel, adventures and life experiences online. Airbnb capitalized on this free marketing by increasing their marketing efforts on social media platforms. It was pure luck that this tied in to the very start of Airbnb. “Luck is often as important as smarts because larger forces in the environment, typically unseen by managers, allow some firms to succeed and others to fail.” (Daft, R., pp.195.)
Another strength of Airbnb is their ability to raise funding. Their work model is strong and everyone is jumping at the chance to invest before they go public. “Airbnb has raised more than $3 billion in funding and they have secured a $1 billion line of credit. They are the 2 nd^ most
valuable private company in the United States.” It should be noted that they don’t need the capital to fund operations. (Benner, 2017) However this begs the question, what do they need all this money for? There is no public articles regarding why but they do seem to be on the verge of an initial public offering although Airbnb’s CEO has denied this claim.
As an individual who has used this service, the major strength and reason this company has grown in popularity is the cost. For the most part Airbnb is cheaper than a hotel room however in some regions Airbnb rentals may be higher in cost due to demand or state and/or country taxes. Airbnb also gives you the option of shared rooms, private rooms or renting an entire home or apartment. I rented a property in Dubai that had 3 bedrooms and it ended up being substantially cheaper than a single hotel room. Airbnb gives the user the option to pick and choose dependent on their requirements. (Busbud Blog, 2017) If you can’t afford a pricy hotel in the popular districts you can search for housing just outside of the hotel zones and receive a substantially lower rate. In addition, the Airbnb property may offer a larger footprint, kitchen and seating area that aren’t available with a basic hotel room.
WEAKNESSES – What could you improve?
Airbnb has dealt with several legal battles after allegations of discrimination from home-share owners were brought to light. In one example, an “African American filed a complaint because his Airbnb host denied him accommodations when booking under his personal profile which included a photo, but accepted the booking when he applied using two fake profiles of white men.” (King, 2016) Earlier this year another user’s reservation was cancelled hours before her scheduled arrival. The reason, because she was Asian. In a disastrous turn for Airbnb, she posted a video of the confrontation online. In addition, a news crew happened to be covering a winter
OPPORTUNITIES – What trends can you take advantage of? How can you turn your strengths into opportunities?
Airbnb has been mentioned as an I.P.O. candidate however, CEO Brian Chesky has stated that although he is not opposed to a public offering, the company has no immediate plans for one. (Benner, 2017) The option of going public is another way they can create visibility not only on a national level but worldwide.
Recently Airbnb has been placing a focus on underserved countries and populations. Currently China’s number one home sharing site is used 5 times more than Airbnb. Airbnb rebranded itself to “Aibiying,” which translates as “welcome each other with love” as part of its efforts to reach a wider audience in China. They are also targeting Japan’s aging population and rural areas by marketing a host’s ability to use their home as an income source which can be used for education and food expenses. (Shaffer, 2017) In addition to regionally expanding, Airbnb has begun expanding their products. They’ve recently introduced Airbnb Trips which focus on giving travelers the real world experience of what it’s like to live in a day of the local. A 2017 survey states that 86% of millennials want to experience new cultures and 75% want to tick places off their bucket list. (Peirano, 2017) Airbnb has perfect timing considering their recent introduction of the Trips product which has these two particular goals in mind.
Airbnb has a charitable division called AirbnbCitizen. Their mission is to leverage the company’s unique assets for social good. They provide employees with 4 hours monthly for community services. They also have a global program called “Open Homes” which provide free or low-cost, short-term stays for individuals or families during times of need or celebration such as medical travel or low-income students traveling to universities. (Airbnbcitizen, 2017) They
have also built a tool that enables hosts to open their homes in times of need such as Hurricane Katrina and Harvey. Even more recently Airbnb has teamed up with NAACP to target communities that could benefit from the home-sharing concept. The overall goals are to boost the economy stream for black Americans and help increase the diversity of hosts to curb discrimination. (Statt, 2017)
THREATS – What threats could harm you? What is your competition doing? What threats do your weaknesses expose you to?
Airbnb faces a potential influx of new competitors due to the low barriers to enter this type of market. New competitors will use Airbnb’s business model enabling them to avoid the costly oversights Airbnb has made. Some of their competition has taken note of Airbnb’s discrimination claims and have created peer-to-peer rental companies that cater to a demographic niche. Mister B&B was founded in 2013 and specifically caters to gay travelers. Noirbnb was founded just this year and will target travelers of color. (Glusac, 2017) Airbnb will continue to lose niche markets as more discrimination issues come to light.
Bad press is a threat to any company especially companies that are internet based that rely on browser searches to gain more users. Companies should be proactive in monitoring reviews. Last year a user posted a photo and a comment alluding to Airbnb’s discrimination of blacks on Twitter. That tweet had 3,000 shares and became headline news. Another guest revealed that they were transgendered which resulted in their reservation being cancelled. In both cases Airbnb only responded after these negative reviews went viral. Airbnb invited both guests to their headquarters to discuss the issue and potential resolutions but the point was that Airbnb needed to be proactive. The end result was an update to Airbnb’s nondiscrimination policy and
Peirano, J. (2017). What Millennial Travelers Actually Do on Vacation. [online] The Cheat Sheet. Available at: https://www.cheatsheet.com/culture/activities-millennial-travelers-would- rather-do-than-party.html/?a=viewall [Accessed 20 Sep. 2017]. Shaffer, L. (2017). To expand in China, Airbnb is eyeing Japan and its aging population. [online] CNBC. Available at: https://www.cnbc.com/2017/05/04/to-expand-in-china-airbnb-is- eyeing-japan-and-its-aging-population.html [Accessed 20 Sep. 2017]. Statt, N. (2017). Airbnb teams up with the NAACP to fight racism on its platform. [online] The Verge. Available at: https://www.theverge.com/2017/7/26/16037492/airbnb-naacp-partnership- racism-diversity-hosts [Accessed 20 Sep. 2017]. Wang, A. (2017). Technology News - Los Angeles Times. [online] Latimes.com. Available at: http://www.latimes.com/business/technology/ [Accessed 19 Sep. 2017].
