Airbnb Inc.
Company Report
2019
Contents
1. Executive Summary..................................................................................................................... 1
2. Business Strategy......................................................................................................................... 2
3. Leadership ................................................................................................................................... 3
4. Organisational Structure .............................................................................................................. 4
5. Organizational Culture ................................................................................................................ 5
6. Airbnb and Ansoff Matrix ........................................................................................................... 7
7. SWOT Analysis ........................................................................................................................... 9
7.1 Strengths ................................................................................................................................ 9
7.2 Weaknesses .......................................................................................................................... 11
7.3 Opportunities .......................................................................................................................12
7.4 Threats ................................................................................................................................. 13
8. PESTEL Analysis ...................................................................................................................... 14
8.1 Political Factors ...................................................................................................................14
8.2 Economic Factors ................................................................................................................ 16
8.3 Social Factors ....................................................................................................................... 17
8.4 Technological Factors .......................................................................................................... 19
8.5 Environmental Factors ......................................................................................................... 20
8.6 Legal Factors ........................................................................................................................ 20
9. Marketing Strategy .................................................................................................................... 21
9.1 7Ps of Marketing .................................................................................................................. 22
9.2 Segmentation, Targeting & Positioning............................................................................... 24
9.3 Marketing Communication Mix .......................................................................................... 26
9.3.1 Print and Media Advertising .............................................................................................26
9.3.2 Sales Promotions............................................................................................................... 27
9.3.3 Events & Experiences .......................................................................................................27
9.3.4 Public Relations ................................................................................................................ 28
9.3.5 Direct Marketing ............................................................................................................... 28
9.3.6 Personal Selling ................................................................................................................ 29
10. Porter’s Five Forces Analysis .................................................................................................. 29
10.1 Threat of new entrants ....................................................................................................... 30
10.2 Bargaining power of buyers ............................................................................................... 32
10.3 Bargaining power of suppliers ...........................................................................................32
10.4 Threat of substitute products or services ...........................................................................33
10.5 Rivalry among existing firms ............................................................................................ 34
11. Value-Chain Analysis ..............................................................................................................35
11.1 Airbnb Primary Activities .................................................................................................. 36
11.1.1 Airbnb Inbound logistics .............................................................................................36
11.1.2 Airbnb Operations .......................................................................................................37
11.1.3 Airbnb Outbound Logistics .........................................................................................37
11.1.4 Airbnb Marketing and Sales ........................................................................................38
11.1.5 Airbnb Service.............................................................................................................38
11.2 Airbnb Support Activities .................................................................................................. 39
11.2.1 Airbnb Infrastructure. ..................................................................................................39
11.2.2 Airbnb Human Resource Management .......................................................................40
11.2.3 Airbnb Technology Development ...............................................................................41
11.2.4 Airbnb Procurement ....................................................................................................41
12. McKinsey 7S Model ................................................................................................................41
12.1 Hard Elements .................................................................................................................... 42
12.2 Soft Elements ..................................................................................................................... 43
13. Airbnb Ecosystem ................................................................................................................... 45
14. Corporate Social Responsibility .............................................................................................. 46
14.1 CSR Programs and Initiatives ............................................................................................ 46
14.2 CSR Criticism .................................................................................................................... 48
List of Figures
Figure 1 Airbnb organizational structure ........................................................................................ 5
Figure 2 Airbnb Ansoff Growth Matrix .......................................................................................... 8
Figure 3 Average room prices in selected major cities in January 2018 ....................................... 10
Figure 4 Annual Lobbying by Airbnb ........................................................................................... 15
Figure 5 Revenue potential across traditional and Sharing Economy sectors ............................... 18
Figure 6 Porter's Five Forces ......................................................................................................... 30
Figure 7 Number of sharing economy users in the United States from 2016 to 2021 (in millions)
....................................................................................................................................................... 34
Figure 8 Value chain analysis ........................................................................................................ 36
Figure 9 McKinsey 7S model ........................................................................................................ 42
Figure 10 Ethnicity representation at Airbnb in the US ................................................................ 47
List of Tables
Table 1 Airbnb SWOT analysis ...................................................................................................... 9
Table 2 Airbnb segmentation, targeting and positioning .............................................................. 25
Table 3 Services within broad Airbnb ecosystem ......................................................................... 46
1. Executive Summary
Airbnb Inc. is a global hospitality service brokerage company. It is an online marketplace for
peer-to-peer lodging, as well as, tourism and experiences services. Founded in 2008 in San
Francisco, USA, Airbnb has become a lodging colossus and travel industry disruptor with more
than 6 million listings in more than 191 countries and regions worldwide. 1 There are about
100000 cities with Airbnb listings and 500 million Airbnb guest arrivals all-time. 2 Moreover,
more than 2 million people on average stay on Airbnb each night and there are more than 30000
Airbnb experiences worldwide. 3 The company employs about 5000 employees worldwide. 4
Airbnb’s business has doubled almost every year of its existence. It became profitable in 2017,
with a profit of USD93 million on revenue of USD2.6 billion.5 This is a stark contrast from
heavily loss-making sharing companies such as Uber and Lyft. It is estimated that in 2018
Airbnb surpassed the performance of the previous year and by 2020, its revenue is projected to
be as much as USD8.5 billion.6 The peer-to-peer lodging company is valued at about USD 31
billion. 7 The company’s mission is to create a world where anyone can belong anywhere,
providing healthy travel that is local, authentic, diverse, inclusive and sustainable. 8
Airbnb business strategy effectively contributes to this mission. Airbnb business strategy is
associated with platform business model and accordingly, instead of owning the services it
offers, the company engages as a broker between suppliers and consumers, receiving a
commission of 9% to 15%. Moreover, increasing level of technological integration into various
aspects of the business can be specified as one of the critical features of Airbnb business
strategy. The global hospitality service brokerage company also places its community and trust
among organizational stakeholders at the forefront of its business strategy.
1
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
3
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
4
Melissa C. Thomas-Hunt Joins Airbnb as Head of Global Diversity and Belonging (2019) Airbnb Press Room,
Available at: https://press.airbnb.com/melissa-c-thomas-hunt-joins-airbnb-as-head-of-global-diversity-andbelonging/
5
Gmelich, K. (2019) “Airbnb Says It Made a Profit Again in 2018” Bloomberg, Available at:
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-says-it-made-a-profit-again-in-2018-as-ipo-loomslarge
6
Airbnb Statistics (2019) Property Management, Available at: https://ipropertymanagement.com/airbnb-statistics/
7
Gmelich, K. (2019) “Airbnb Says It Made a Profit Again in 2018” Bloomberg, Available at:
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-says-it-made-a-profit-again-in-2018-as-ipo-loomslarge
8
About US (2019) Airbnb, Available at: https://press.airbnb.com/about-us/
2
1
The travel industry disruptor has certain weaknesses as well. These include inability to control
the quality of services directly and vulnerability of the brand image to various scandals.
Moreover, Airbnb business model is replicable and absence of reception, housekeeping and
room service with Airbnb alienates certain customer segments.
2. Business Strategy
Airbnb, the lodging colossus, has been prudent from the financial point of view. It is important to
note that the company hasn’t raised any money from investors since March 2017, when it raised
USD448 million. CEO Brian Chesky has pledged to hold an IPO for the 10-year-old company
before 2020 when some employee stock grants expire. 9 At a close look, Airbnb business strategy
consists of the following three elements:
1. Following a platform business model. A platform business model can be defined as a
“business model that focuses on helping to facilitate interactions across a large number of
participants” 10 In case of Airbnb, participants are host who offer their properties or organize
experiences for guests and travellers who use their services. Airbnb does not own any real estates
it lists, not does it host events and experiences it offers. It serves as a broker between suppliers
and consumers, receiving a commission of 9% to 15%.
2. High level of technology integration into various business processes. Airbnb uniquely
leverages technology to economically empower millions of people around the world to unlock
and monetize their spaces, passions and talents to become hospitality entrepreneurs. 11
The travel industry disruptor currently uses machine learning to improve search, prevent fraud,
help hosts optimize pricing, match users with the most relevant listings and other practices vital
for the business. Moreover, Airbnb is exploring machine learning algorithms and AI to build a
deeper understanding of images, improve reviews using natural language processing (NLP) and
support more advanced search using NLP.
9
Gmelich, K. (2019) “Airbnb Says It Made a Profit Again in 2018” Bloomberg, Available at:
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-says-it-made-a-profit-again-in-2018-as-ipo-loomslarge
10
Platform Business Model explained…in under 100 words (2019) Deloitte, Available at:
https://www2.deloitte.com/ch/en/pages/innovation/articles/platform-business-model-explained.html
11
About US (2019) Airbnb, Available at: https://press.airbnb.com/about-us/
2
3. Focus on community and trust. Cultivating community and maintaining trust among
stakeholders is one of the solid bases of Airbnb competitive advantage. The global lodging
company maintains a community centre as a place to connect with other hosts, share stories, ask
for advice, and get updates from the Airbnb team. Moreover, the company aims to keep guests
and hosts safe via a wide range of measures such as risk scoring, background checks, 24/7 global
assistance, secure payments and account protection.
3. Leadership
Airbnb leadership practices are contradictory to leadership principles taught in famous business
schools worldwide. Nevertheless, the global success of the peer-to-peer lodging company is an
undisputed indication of high level of efficiency of Airbnb leadership by CEO Brian Chesky.
Airbnb leadership style is integrates the following elements
1. Going to the source. Airbnb founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk had
little or no traditional management experience when they founded the global hospitality service
brokerage company. Particularly, Brian Chesky had no business or entrepreneurial experience
whatsoever. He dealt with the challenge using the method he calls ‘going to the source’ that is
getting advice from top experts in the field.
Sources for Airbnb CEO included the likes of Mark Zuckerberg, Reid Hoffman, Marc
Andreessen, Jeff Weiner and Jony Ive. Going to the source remains a popular practice at Airbnb
to these days and is likely to remain so for the foreseeable future.
2. Managing by visibility. Hands-on approach can be specified as one of the main aspects of
Brian Chesky management style. For example, CEO is known to send emails to all employees
each Sunday with “whatever is on his mind, which leads to staff replying to him and opening
dialogues about various elements of the business” 12 Immersing himself into important details of
various business processes allows Chesky to address root causes of the problem and to find
innovative solutions to them.
12
Airbnb's success secrets revealed (2017) BIT, Available at: https://www.bit.com.au/guide/airbnbs-success-secretsrevealed-475471
3
3. Not leading in consensus during the crisis.
In 2011 a female host’s apartment was
destroyed, the renter took her valuables, and stole her identity while she was travelling for
business. 13 While the Chesky gave a response to the incident, the host rebutted in a blog post his
claims that the company had done everything it could to help her 14.
Opinions differed within Airbnb senior executive team regarding the response to the incident,
with the majority inclining towards company staying quiet. However, Brian Chesky made a
different decision accepting full responsibility for the incident and announcing implementation
of USD 50000 guarantee for hosts. Reflecting on this incident, Chesky concluded that finding
consensus about what to do is not usually the best strategy and in times of crisis, companies need
to be guided by principles, rather than consensus.
4. Organisational Structure
Since its founding in 2008, Airbnb organizational structure has been subjected to changes a
number of times to adapt to the growth of the business in at a rapid pace. Furthermore,
diversification of the business beyond home rentals to include experiences, adventures and
restaurant services necessitated massive changes in its organizational structure.
One of the main features of an effective organizational structure is to ensure a rapid flow of
information across the company. In order to achieve this, Airbnb CEO Brian Chesky turned to
executives from Apple, Facebook, Google and Amazon for advice on how to better organize the
company. 15 The latest corporate restructuring at the peer-to-peer lodging company gave more
decision making powers to its new business development teams. Holacracy is another important
feature of Airbnb organizational structure. Holacracy can be explained as a type of
organizational structure where “power is distributed throughout the organization, giving
13
Feloni, R. (2015) “How an Airbnb renter's horror story taught the company's CEO his greatest leadership lesson”
Business Insider, Available at: https://www.businessinsider.com/airbnb-ceo-brian-cheskys-greatest-leadershiplesson-2015-6
14
Gallagher, L. (2015) “The education of Airbnb’s Brian Chesky” Fortune, Available at:
https://fortune.com/longform/brian-chesky-airbnb/
15
Weinberg, C. (2017) “Airbnb Restructures to Grow Business Beyond Home Rentals” The Information, Available
at: https://www.theinformation.com/articles/airbnb-restructures-to-grow-business-beyond-home-rentals
4
individuals and teams more freedom to self-manage, while staying aligned to the organization’s
purpose.” 16
Airbnb organizational structure can be also branded as inter-supportive matrix structure. Airbnb
corporate structure integrates many small teams of up to 10 people. The global rental and
experiences company promotes the principle of village ecosystem in relationships between its
teams. Specifically, if team members need a capability or resource, they can ask other team that
has it ask them to share or cooperate. In other words, rather than operating as a separate
identities, individual groups within the global lodging company cooperate and support eachother to a great extent and this feature can be specified as one of the main advantages of Airbnb
corporate structure.
Figure 1 Airbnb organizational structure
16
What is Holacracy? (2019) Holacracy, Available at: https://www.holacracy.org/what-is-holacracy
5
5. Organizational Culture
Airbnb is a global hospitality service brokerage company that has more than 6 million listings in
more than 191 countries and regions worldwide. 17 Started in 2008, the company became
profitable in 2017, with a profit of USD93 million on revenue of USD2.6 billion. 18 Apart from
the business beings started at the right place on the right time, Airbnb organizational culture
plays an instrumental role in the success of the global accommodation and experience
marketplace.
Airbnb organizational culture integrates the following three key elements:
1. Inclusivity and acceptance.
Airbnb has a welcoming culture for employees, hosts and
guests regardless of gender, race, sexual orientation and political views. Inclusivity and
acceptance is placed at the core of Airbnb corporate culture.
Airfinity employee resource groups within the company facilitate employee relationships
through common cultures and backgrounds, as well as interests. There are twelve Airfinity
employee resource groups such as LGBTQ, African-American, Latinx, Women in Tech,
Veterans, and Parents.
2. Paramount role of company’s vision and mission. While almost all big companies like
Airbnb have their vision and mission statements, very few companies apply them on daily
business with the same intensity as Airbnb does. Airbnb has chosen a mission “to create a world
where anyone can belong anywhere, providing healthy travel that is local, authentic, diverse,
inclusive and sustainable”. 19
Regardless of their professional competencies, the global rental and experiences platform only
employs candidates whose personal values and worldview resonate well with Airbnb vision and
mission. Specifically, “every candidate that makes it through to an interview goes through a set
of interviews related to their role, and they have two additional interviews related to core
values.” 20
17
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
Gmelich, K. (2019) “Airbnb Says It Made a Profit Again in 2018” Bloomberg, Available at:
https://www.bloomberg.com/news/articles/2019-01-15/airbnb-says-it-made-a-profit-again-in-2018-as-ipo-loomslarge
19
About US (2019) Airbnb, Available at: https://press.airbnb.com/about-us/
20
How Airbnb is building its culture through belonging (2019) Culture Amp, Available at:
https://www.cultureamp.com/blog/how-airbnb-is-building-its-culture-through-belonging/
18
6
Moreover, the global rental and experiences platform illustrates its unquestioned commitment to
its ‘belong anywhere’ vision at all levels. For example, Airbnb offices are ‘belong anywhere
working environments” where employees do not have dedicated desks and they can work from
any numbers of work spaces in any room within the premises.
3. Connecting with employees. Communication of the company with employees and connection
between employees are important elements of Airbnb corporate culture.
During regular
company-wide meetings employees are encouraged bring up elephants, dead fish and vomit.
Elephants are the big things inside of most organizations that no one dares to bring up, dead fish
are the things that are in the past but the employees just can’t seem to forget about them and let
them go, and the vomit is the things we need to just get out into the open, the things we want to
vent about.
Airbnb employees are notified about birthdays, anniversaries and other notable dates related to
their colleagues through intranet to strengthen connection and internal networking among the
workforce. The intranet also informs employees about creative themed events based on holidays
or events- whether it’s Pride or the launch of their entry into Cuba.
Moreover, the global hospitality service brokerage company organizes “OneAirbnb” events once
a year, where employees share vision and strategy, get feedback, learn from each other and
participate in giving back to the community.
6. Airbnb and Ansoff Matrix
Airbnb Ansoff Matrix is a marketing planning model that helps the global hospitality service
brokerage company to determine its product and market strategy. Ansoff Matrix illustrates four
different strategy options available for companies. These consist of market penetration, product
development, market development and diversification.
7
Figure 2 Airbnb Ansoff Growth Matrix
Within the scope of Ansoff Matrix, Airbnb uses all four growth strategies in an integrated
manner:
1. Market penetration. Market penetration involves the sales of existing products to existing
markets. The accommodation and experience marketplace uses market penetration strategy
extensively. Airbnb marketing strategy and exceptional customer services play instrumental role
in engaging in market penetration by Airbnb.
2. Product development. This strategy is associated with developing new products to sell to
existing markets. Product development is one of the main growth strategies for the global rental
and experiences platform. Specifically, starting only as a short-term accommodation provider in
2008, Airbnb consequently increased its service portfolio to include experiences, adventures and
restaurants services.
3. Market development. Market development strategy refers to finding new markets for
existing products. The global rental and experiences platform aggressively engages in market
development. Airbnb started its operations in San Francisco, California and today it has more
than 6 million listings in more than 191 countries and regions worldwide. 21 Moreover, there are
about 100000 cities with Airbnb listings. 22
21
22
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
8
4. Diversification. Diversification can be explained as developing new products to sell to new
markets. The global lodging company has engaged in diversification business strategy a number
of times. Entering the industry as cost-effective accommodation provider for cost-conscious
travellers, Airbnb has diversified the business to also serve premium market segment with
respective offerings such as villas, mansions and even castles.
7. SWOT Analysis
SWOT is an acronym for strengths, weaknesses, opportunities and threats related to
organizations. The following table illustrates Airbnb SWOT analysis:
Strengths
1. First mover advantages
2. Cost attractiveness for customers
3. Impressive growth rate
4. Airbnb adventures
Weaknesses
1. Inability to control service quality
2. Vulnerability of brand image
3. Replicable business model
4. Absence of reception, housekeeping and room service
Opportunities
1. Brand extension
2. Further international market expansion
3. Further technological integration
4. Formation of new strategic alliances
Threats
1.
2.
3.
4.
More legal issues
Scandals
Emergence of new competition
Loss of key members of workforce
Table 1 Airbnb SWOT analysis
7.1 Strengths
1. Airbnb has a first mover advantage in peer-to-peer lodging industry. First mover advantage
has played an instrumental role for Airbnb in terms of establishing strong brand recognition and
9
achieving private brand valuation at USD 35 billion. 23 Thanks to first mover advantage coupled
by effective leadership by founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk, the word
Airbnb has become synonym for peer-to-peer lodging practices. Moreover, it can be argued that
first mover advantage immensely contributes to Airbnb brand loyalty by rapidly expanding its
customer base.
2. Airbnb is more cost attractive compared to traditional hotels and this is one of the major
strengths points of its customer value proposition. As it has been illustrated in Figure 3 below, as
of January 2018 average room prices per night are considerably lower at Airbnb compared to
average room prices of hotels and this difference is the biggest in New York at USD 119.
Operating rooms via Airbnb does not require 24 hours check-in desk, concierge, administration
office and management apparatus like hotels, therefore at Airbnb a part of the cost advantage is
passed to consumers.
Figure 3 Average room prices in selected major cities in January 2018 24
23
Schleifer, T. (2019) “Airbnb sold some common stock at a $35 billion valuation, but what is the company really
worth?” Recode, Available at: https://www.vox.com/2019/3/19/18272274/airbnb-valuation-common-stockhoteltonight
24
McCarthy, N. (2018) “Is Airbnb Really Cheaper Than A Hotel Room In The World's Major Cities?”Forbes,
Available at: https://www.forbes.com/sites/niallmccarthy/2018/01/23/is-airbnb-really-cheaper-than-a-hotel-room-inthe-worlds-major-cities-infographic/#146f178778ac
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3. Airbnb has been growing at impressive rates at the global scale for the past 10 years. The
travel industry disruptor has more than 6 million listings in more than 191 countries and regions
worldwide. 25 There are about 100000 cities with Airbnb listings and 500 million Airbnb guest
arrivals all-time. 26 Moreover, more than 2 million people on average stay on Airbnb each night
and there are more than 30000 Airbnb experiences worldwide. 27 Between July 1, 2018 and May
15, 2019 alone, Airbnb added more than 1 million listings. Such an impressive growth rate has
positive implications to the bottom line of the business and achievement of its primary objective
of profit maximization.
4. Airbnb adventures refer to hosted journey service packages offered by hosts to travellers on
Airbnb platform. Similar to peer-to-peer lodging, the company does not organize adventures and
trips and it merely provides Airbnb platform for hosts and guests to interact. Airbnb adventures
are versatile and they range from tracking lions on foot with Sabache Warriors in Kenya
to hunting for UFOs with Nate in Arizona, travelling around the world in 80 Days, searching for
Sasquatch or living with a nomadic tribe. Adventures services is a major point of strength for the
global hospitality service brokerage company due to the absence of direct competition for this
type of service, as well as, immense potential it offers.
7.2 Weaknesses
1. Due to its platform business model Airbnb is not in the position to control the quality of
accommodation, experiences and adventure services provided by hosts to users of Airbnb
services. The global rental and experiences platform can only encourage hosts to provide quality
service to guests. If guests fail to provide quality service they can get low score and negative
reviews from guests, meaning that it will be more difficult for them to attract new guests. Such a
quality control system sounds fair, however, the absence of tools that Airbnb can use to ensure
high quality of service proactively, rather than reactively, remains as one of the major
weaknesses associated with Airbnb operations.
2. Airbnb brand image is highly vulnerable to various scandals. In most cases, the root cases of
potential scandals are outside of control of the global lodging company. The list of the most
notable scandals include but not limited to hosts putting cameras on rooms where guests sleep,
25
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
27
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
26
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discrimination by hosts towards guests, properties being used as brothel by guests and properties
being trashed by guests. Such cases have inevitable negative impact on Airbnb brand image.
Vulnerability of the company to these and similar incidents is one of the main weaknesses of
Airbnb.
3. Airbnb has a replicable business model and competitors can replicate its website and overall
business model claiming their share on the growing peer-to-peer lodging industry. Although
Airbnb is a technology company, technological know-how of its business model is not highly
sophisticated and it is not efficiently protected from replication by existing and potential
competitors.
The emergence of growing numbers of competitors such as tripping.com,
HomeToGo, FlipKey, HomeAway, VRBO, HouseTrip, VayStays, VacayHero and many others
can be mentioned to illustrate this point.
4. Airbnb has no reception, housekeeping and room service. The global hospitality service
brokerage company is able to offer accommodation for competitive prices due to the absence of
these facilities and conveniences. At the same time, the absence of reception, housekeeping and
room service alienates certain customer segment among potential customer base such as business
people for whom these attributes are important. This is a noteworthy weakness for Airbnb that is
difficult to address or compensate for.
7.3 Opportunities
1. Airbnb has an opportunity to engage in brand extension through building upon unique value
offering and success of the business. Currently, Airbnb is a market leader in peer-to-peer lodging
in the global scale and the company has achieved this position thanks to first mover advantage,
sophisticated app and website, efficient and inspirational leadership and inspiring organizational
culture. The lodging colossus can use the same experience and competencies to establish its
presence in other sharing economy businesses such as warehouse rentals and car rentals.
2. Airbnb can engage in international market expansion strategy to accelerate its growth.
Currently, the travel company has more than 6 million listings in more than 191 countries and
regions worldwide. There are about 100000 cities with Airbnb listings and 500 million Airbnb
guest arrivals all-time. Moreover, more than 2 million people on average stay on Airbnb each
night and there are more than 30000 Airbnb experiences worldwide. Nevertheless, international
12
market expansion potential is far from being fully utilized by the peer-to-peer lodging company.
Specifically, Airbnb can enter growing markets in Asia and former USSR-bloc countries.
3. There is an opportunity for the travel industry disruptor to increase its competitiveness via
increasing the level of technological integration into various business processes. Innovating in
service provision and increasing the level of technological integration into business processes
can play an instrumental role for the global hospitality service brokerage company in terms of
decreasing the costs of operations and increasing competitive advantage of the business.
4. Formation of strategic alliances can be specified as another noteworthy opportunity for
Airbnb. The accommodation and experience marketplace can enter into strategic alliances with
other companies operating in travel and hospitality industries such as airlines and travel
agencies. Engagement in strategic alliances can help Airbnb to reduce the cost of marketing and
it can contribute to the bottom line in many other ways.
7.4 Threats
1. As it has been discussed throughout this report, Airbnb had to deal with a wide range of legal
issues since the company has been established in 2008. Taking into account the fact that the root
reasons of the emergence of legal cases against the global hospitality service brokerage company
have not been addressed yet, there is a threat of new legal issues against Airbnb. Potential legal
cases against Airbnb can be local in the US or they can emerge in international markets. Such a
cases can have detrimental impact on Airbnb in terms of finances and damaging the brand image
of the global rental and experiences platform.
2. Similar to point above, there is a threat of new scandals associated with consumption of
services provided on Airbnb platform. Range of Airbnb-related scandals in the past include hosts
placing cameras on places where guests sleep, hosts discriminating against guests, guests
trashing and damaging the places of hosts, guests using accommodation as brothel etc. It is
difficult for Airbnb to ensure itself against such or similar scandals in the future and emergence
of such a scandals remains as one of the biggest threats for the global lodging company.
3. A new niche of peer-to-peer lodging attracted a wide range of competitors. For example,
Flipkey focuses on group bookings in popular tourist destinations, another competitor, TurnKey
offers freedom to busy travellers by giving them door code instead of a key, meaning that
travellers can rock up and leave whenever they want. Similarly, HomeAway positions itself as a
13
more refined and more polished competitor to Airbnb targeting a slightly older crowd, whereas
Vrbo is for kid-friendly vacations with listings that are bigger and have backyards. Taking into
account increasing size of sharing economy in the global scale, it can be argued that threat of
new competition for Airbnb is going to intensify in short-term and long-term perspectives.
4. Another noteworthy threat for Airbnb is associated with the loss of key members of
workforce. Airbnb founders Brian Chesky, Joe Gebbia and Nathan Blecharczyk have proved to
be highly effective leaders credited for the current success of the company, despite absence o
their formal management education. Particularly, Brian Chesky is highly praised for his effective
leadership style based on the principles of going to the source, managing by visibility and not
leading in consensus during the crisis. The departure of these leaders from the Airbnb helm for
any reason is a permanent threat to Airbnb long-term growth perspectives.
8. PESTEL Analysis
PESTEL stands for political, economic, social, technological, environmental and legal factors
effecting businesses. It is an important analytic tool used to analyse external factors affecting
businesses for strategy development.
8.1 Political Factors
There are some political factors at the local and global scales that affect Airbnb revenues in
direct and indirect manners. Issues with governments over the taxes and opposition from local
governments and residents are the most important political factors for the peer-to-peer lodging
company.
Issues with governments over the taxes
In the US, there is a dispute between a number of local governments and Airbnb over the
allocation of responsibility to collect and pay occupancy taxes. A number of local and foreign
governments have criticised Airbnb for not paying housing and/or other relevant taxes and they
14
have been trying to take action with varying levels of success. It has been noted that in the US,
“from Nashville to New Orleans to Honolulu, Airbnb is battling local officials over requests to
collect occupancy taxes and ensure that the properties listed on its site comply with zoning and
safety rules.” 28
The company lobbies its interest hiring firms such as KDCR Partners and Fulcrum Public Affairs
in attempt to decrease government oppositions to the business. As illustrated in Figure 4 below,
Airbnb annual lobbying budget is not massive though, compared to other multinational
companies and in 2018 it amounted to USD 540,000.00.
Figure 4 Annual Lobbying by Airbnb
Opposition from local governments and residents
Airbnb has faced opposition from local governments and protests from local residents due to
perceived negative impact of the global hospitality service brokerage company to
neighbourhoods. One of the major points of concerns in local communities relates to negative
impact of the travel industry disruptor on local housing prices. There are evidences to support
this viewpoint.
For example, a study conducted in Los Angeles found that in 2014, “almost half of Airbnb
listings were clustered in seven neighbourhoods, where rents increased a third more quickly than
28
Martineau, P. (2019) “INSIDE AIRBNB’S ‘GUERRILLA WAR’ AGAINST LOCAL GOVERNMENTS” Wired,
Available at: https://www.wired.com/story/inside-airbnbs-guerrilla-war-against-local-governments/
15
the city average. The wider US study suggested a 10% increase in Airbnb listings led to a 0.42%
increase in rents and a 0.76% increase in house prices.” 29
Another cause of opposition from local governments and residents towards Airbnb relates to a
phenomenon known as overtourism. Overtourism is associated with a situation whereby too
many tourists visit a particular place and Airbnb is often criticized for causing overtourism via
decreasing the overall costs of tourism. Specifically, it has been noted that with the increasing
popularity of peer-to-peer lodging, “thousands of beds have suddenly been made available to the
tourism market in towns and cities around the world, without being subject to any kind of
planning, permits or – in many cases – taxes.” 30
8.2 Economic Factors
The peer-to-peer lodging industry is affected by a wide range of economic factors directly, as
well as, indirectly. Range of economic factors affecting the travel industry disruptor includes the
overall macroeconomic climate in the country, inflation and interest rates, currency exchange
rates and tax rates. Moreover, unemployment rate, availability of credit, cost of labour and
changes in disposable incomes of consumers also represent important economic factors for
Airbnb. Particularly, the importance of changes in currency exchange rates and availability of
credit for the global lodging company is paramount.
Changes in currency exchange rates
Airbnb has more than 6 million listings in more than 191 countries and regions worldwide. 31
There are about 100000 cities with Airbnb listings and 500 million Airbnb guest arrivals alltime. 32 Due to the international scope of its business operations Airbnb is affected by changes in
currency exchange rate to a great extent. Starting from early 2015, the peer-to-peer lodging
company started charging a 3% currency conversion fee for bookings made on its platform. This
move is intended to hedge against earnings being negatively impacted by changes in currency
exchange rates to a certain extent.
29
Guttentag, D. (2018) “What Airbnb really does to a neighbourhood” BBC, Available at:
https://www.bbc.com/news/business-45083954
30
Leve (2019) Available at: http://leve-global.com/is-airbnb-to-blame-for-overtourism
31
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
32
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
16
Availability of credit
Availability of credit to potential and existing hosts is another economic factor that affects the
bottom line of the global hospitality service brokerage company directly. Specifically,
availability of mortgages to finance properties to let on Airbnb can be specified as external
economic factor that is important for the rental platform. For example, in the UK established
mortgage lenders such as Barclays, HSBC, Nationwide and Yorkshire Building Society will
refuse to finance properties that are planned to be made available for Airbnb. At the same time,
nowadays specialist lenders are emerging to purchase or remortgage of short-term letting
properties, with loan-to-value starting at 65%. 33
8.3 Social Factors
Airbnb is also greatly impacted by a range of social factors such as demographic changes,
changes in family values, changes in the level of education of customers and changes in
consumer attitudes and opinions towards sharing economy. Furthermore, media perception of the
brand and health and welfare of the target customer segment also represent noteworthy social
factors impacting Airbnb. Arguably, increasing popularity of sharing in the global scale and
demographic factors are among the most important factors affecting the rental platform.
Increasing popularity of sharing
A social trend of increasing popularity of sharing in the global scale is an important social factor
that is set to benefit Airbnb in the long-term perspective. As it has been illustrated in Figure 5
below, by the year of 2025 total revenue for five sharing economy sectors in the global scale are
expected to reach USD 335 billion. Such an increasing popularity of sharing has two
implications for Airbnb. Firstly, increasing popularity of sharing is expected to have positive
implications on Airbnb revenues globally. Secondly, this tendency also attracts new players into
the market that will cause intensification of competition in the global sharing economy.
33
HOW TO GET AIRBNB BUY TO LET MORTGAGE FINANCE (2019) Clifton Private Finance, Available at:
https://www.cliftonpf.co.uk/blog/22052019194140-how-to-get-airbnb-buy-to-let-mortgage-finance/
17
Figure 5 Revenue potential across traditional and Sharing Economy sectors 34
Demographic factors
Demographic factors can be specified as one of the most important social factors impacting
businesses operating in sharing economy, including Airbnb. The following has been noted by
industry analysts:
“In 2019 and beyond, the sharing economy will be driven increasingly by demographics that
have played a (mostly) supporting role to date: the emerging middle class, women and the
elderly.
For the first time in human history, the middle class represents the majority of the global
population – and it is projected to double in the next 10 years, to 5.2 billion people. Women are
expected to be responsible for ⅔ of the rise in all disposable income in the next decade.
Meanwhile, there are larger numbers of ageing residents in the US, Japan across Europe and
beyond.
Each of these demographics will play a bigger role within the sharing economy. The sharing
economy enables people to access things they might not otherwise be able to afford, providing
34
Source: PWC – The Sharing Economy
18
an onramp to greater economic participation. Women are already among the most ardent
sharing-economy customers, and the growth of the “she-conomy” is likely to further boost this.
And the sharing economy may gradually reshape retirement: as more people seek to age in
place, need extra income or want to stay engaged in their communities, platforms such as
SilverNest and GoGoGrandparent are designed to meet such needs.” 35
8.4 Technological Factors
Airbnb is a technology company and as such it is subjected to a wide range of technological
factors. Generally, prominent technological factors that impact Airbnb include industry-specific
technological innovations and breakthroughs, decreasing life cycle of technology, changes in
energy consumption practices, shifts in manufacturing maturity and capacity and others. Airbnb
duly recognizes the importance of technological factors and commits to relevant investments in a
regular manner.
Technological innovation in tourism and hospitality industry is an important technological factor
affecting Airbnb. The company aims to address the impact of this factor proactively, rather than
reactively. Specifically, the global rental and experiences platform first began building machine
learning models in 2013 to strengthen its search and discovery capabilities.
On the guest side, for example, this includes matching people with the most relevant listings,
experiences, and services around the world. When guests visit Airbnb, it’s no longer about just
finding a home or experience, but about finding the perfect one for them. 36
Every reservation made on Airbnb interacts with machine learning or AI technology the
company has developed. Airbnb uses AI to reduce the friction that is inherent to its platform –
for everything from improving search, to preventing fraud, to helping hosts optimize pricing.
35
Rinne, A. (2019) “4 big trends for the sharing economy in 2019” World Economic Forum, Available at:
https://www.weforum.org/agenda/2019/01/sharing-economy/
36
Sharing More About the Technology That Powers Airbnb (2018) Airbnb Newsroom, Available at:
https://press.airbnb.com/sharing-more-about-the-technology-that-powers-airbnb/
19
8.5 Environmental Factors
The performance of Airbnb can be indirectly impacted by a set of ecological factors such as
global warming, air pollution, thickening of ozone layer and others. Moreover, the impact of
environmental factors on Airbnb performance can be direct as well in cases of environmental
disasters such as earthquakes, flooding, tornados etc.
For example, in UK a “natural capital” stress test found that flooding in 2050 on a similar scale
to the winter of 2013/14 would affect more than twice as many homes. 37 Such a natural disasters
can have negative implications for Airbnb via damaging its host’s properties in UK and reducing
the numbers of listings.
Similarly, air pollution is a serious environmental factor that can effect Airbnb via decreased
employee performance. It has been estimated that air pollution is responsible for 656,900 sick
days a year in Central London. Employee productivity across 190 Chinese cities would rise by
about 4 per cent per year if the amount of fine-particle pollution in the air was cut to fall within
World Health Organization standards. 38
Any company of a size of Airbnb is expected by stakeholders in general, general public and nongovernmental organization in particular to behave in a socially responsible manner and to
illustrate commitment in dealing with a wide range of environmental issues. Neglecting this
expectation may result in damage to the brand image via negative online and offline press
coverage.
8.6 Legal Factors
Airbnb is directly impacted by a set of legal factors such as trade regulations, anti-trust rules and
regulations, data protection regulations and others. Additionally, there is a wide range of rules
and regulations related to employee health and safety, consumer protection laws, employment
laws, and competitive rules and regulations that need to be fully adhered to by Airbnb. Changes
37
Johnston, I. (2017) “Extreme weather to cost UK billions and leave 2.5m homes at risk of flooding unless
ministers take action, warns WWF” Independent, Available at: http://www.independent.co.uk/environment/climatechange-global-warming-extreme-weather-flooding-homes-drought-uk-economy-a7964851.html
38
Phillips, R. (2017) “Air pollution: The business concern” Eco-Business, Available at: http://www.ecobusiness.com/opinion/air-pollution-the-business-concern/
20
in these rules and regulations are most likely to impact Airbnb performance in direct and indirect
manner and in ways that are difficult to predict.
Legislators and regulators may make legal and regulatory changes, or interpret and apply
existing laws or policies, in ways that make Airbnb products and services less useful to its users,
require the company to incur substantial costs, expose it to unanticipated civil or criminal
liability, or cause it to change its business practices.
Airbnb is consistently facing various legal and regulatory restrictions in international business
because of the disruptive nature of its business. Some cities have laws that restrict hosting of
paying guests for short periods and in other cities people must register, get a permit, or obtain a
license before they can list their property or accept guests. Airbnb works with governments
around the world to clarify these rules so that everyone has a clear understanding of what the
laws are. In some cities such as Los Angeles, New York City, Santa Monica, Las Vegas and San
Francisco the services of Airbnb is still illegal 39.
9. Marketing Strategy
Airbnb brand proposition is rooted in travel, communities, people and experiences and this
proposition is placed at the core of Airbnb marketing strategy. Moreover, Airbnb marketing
strategy is based on the following three principles:
1. Successful brand partnerships. The travel company has engaged in a number of mutually
beneficial partnerships with other brands in order to achieve global brand exposure and create a
buzz on the social media. The list of successful Airbnb partnerships include KLM Royal Dutch
Airlines, UK bookstore chain Waterstones and even the French government. 40
2. Celebrity endorsement and social influencers. The peer-to-peer lodging company has been
quick to leverage the use of its services by celebrities. The list of celebrities who contributed to
spread the word about Airbnb include Mariah Carey, Grande, Lady Gaga, Britney Spears,
Channing Tatum and others.
39
Hamed, E. (2019) “5 CITIES WHERE AIRBNB IS ILLEGAL IN 2019” Mashvisor, Available at:
https://www.mashvisor.com/blog/5-cities-where-airbnb-is-illegal-2019/
40
Bellissimo-Magrin, M. (2017) “6 things we can learn from Airbnb’s marketing strategy” CEO Magazine,
Available at: https://www.theceomagazine.com/business/marketing/6-things-can-learn-airbnbs-marketing-strategy/
21
The company has been also effective in initiating publicity stands to attract the attention of social
media influencers such as journalists, bloggers, YouTubers, podcasters and Instagram stars. For
example, Airbnb has sailed a full-size floating size along the Thames River in 2015 to celebrate
new rules to support home sharing in London. 41 This particular campaign generated hundreds of
press coverage in the UK with positive implications on the level of Airbnb brand awareness.
3. Developing and strengthening the community. From early on, the global hospitality service
brokerage company focused on developing its community consisting of both types of customers
– hosts, as well as, guests. Airbnb encourages regular communication, detailed profiles and
strong reviews in the community.
9.1 7Ps of Marketing
The concept of marketing mix (also known as 7Ps of marketing) comprises elements of the
marketing mix that consists of product, place, price, promotion, process, people and physical
evidence. Airbnb marketing mix (Airbnb 7Ps of marketing) below involves the analysis of these
elements for the global hospitality service brokerage company.
Product
Airbnb can be used to find places to stay and various tourism experiences around the globe. It is
important to note that Airbnb does not own places or does not host the experiences it offers. It is
only a platform between service providers and consumers.
The global hospitality service brokerage company has been increasing the range of its services
regularly. Started only as s website that can be used to find bed and breakfast type of
accommodation in 2008, today Airbnb offers a wide range of hospitality services. These include
places to stay for various tastes, purposes and budgets, concerts, adventures, experiences and
restaurants.
Place
There are more than 191 countries and regions and about 100000 cities with Airbnb listings 42.
Airbnb offices are located in 34 cities worldwide. 43 The listings of the accommodation and
41
Coldwell, W. (2015) “Airbnb float a house on the Thames in London” The Guardian, Available at:
https://www.theguardian.com/travel/2015/may/18/airbnb-float-a-house-on-the-thames-in-london
42
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
22
experience marketplace are not concentrated in any single market. Less than 3% of all active
listings are in New York City, London, and Paris. No one city accounts for more than 1% of our
listings worldwide. 44
Price
Airbnb pricing strategy can be described as economy pricing. Airbnb is widely recognized as the
most affordable option of finding an accommodation. The global lodging company charges hosts
only 3% booking fee and guests are also charged a service fee (which Airbnb collects directly),
and it may collect a VAT (value-added tax) in some jurisdictions.
Guests usually have access to common facilities such as their kitchen and laundry and this
further increases value perception of service from consumer viewpoint. At the same time,
compared to traditional hotels Airbnb has a pricing disadvantage in a way that customer have to
pay the full amount in advance during booking the place.
Promotion
Airbnb uses a range of elements of the marketing communication mix such as print and media
advertising, sales promotions, events and experiences and public relations in an integrated
manner in order to communicate the marketing message to the representatives of the target
customer segment. The marketing message attempts to associate using Airbnb with the
perceptions of sharing, costs-saving, exploring and enjoying life to the full extent.
Process
The range of processes critical to Airbnb success include employee recruitment and selection,
marketing research, new product research and development, sales, product return, customer
service processes and others. The company attempts to gain efficiency in relation to each of
these processes.
43
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
Airbnb’s Growth and Summer Travel Updates (2019) Airbnb Press Room, Available at:
https://press.airbnb.com/airbnbs-growth-and-summer-travel-updates/
44
23
People
There are about 5000 Airbnb employees worldwide. 45 The lodging colossus aims to recruit the
best talent and once recruited, employees enjoy a wide range of perks and benefits. These
include competitive payment packages, annual stipend of USD2,000 to travel and stay in an
Airbnb listing anywhere in the world 46 and free breakfast, lunch and dinner. The short-term
rental platform also offers employees stock options, medical, dental and vision insurance and
frequently organizes tech talks and happy hours.
Physical evidence
Physical evidence refers to items related to Airbnb brand recognition. There is a little physical
evidence associated with Airbnb due to purely online nature of its business model. Airbnb brand
logo, named as Bélo, by the company is intended to be a symbol of “belonging.” It has been
noted that “the symbol itself is a combination of four simple symbols: a head to represent people,
a location icon to represent place, a heart for love and then an A for Airbnb.” 47
9.2 Segmentation, Targeting & Positioning
Airbnb segmentation, targeting and positioning consists of a set of consequent activities that
divide customers into different groups and identify specific groups to be targeted.
The
accommodation and experience marketplace positions its services in a way that best appeals to
the needs and wants of members of this group.
Airbnb uses the following types of positioning:
1. Multi-segment positioning. The global lodging company uses multi-segment type of
positioning targeting more than one segment with different service packages. For example, the
company lists cost-effective apartments for rent for cost-conscious customer segment, whereas
45
Melissa C. Thomas-Hunt Joins Airbnb as Head of Global Diversity and Belonging (2019) Airbnb Press Room,
Available at: https://press.airbnb.com/melissa-c-thomas-hunt-joins-airbnb-as-head-of-global-diversity-andbelonging/
46
Gillett, R. (2018) “Free food may become a thing of the past in Silicon Valley — but there are plenty of other
incredible perks companies like Facebook and Google offer their employees” Business Insider, Available at:
https://www.businessinsider.com/incredible-perks-companies-like-airbnb-facebook-and-google-offer-theiremployees-2016-2?_ga=2.229042709.804047418.1563671150-2036672807.1563671150
47
Clifford, C. (2014) “Airbnb, Why the New Logo?” Entrepreneur, Available at:
https://www.entrepreneur.com/article/235709
24
Airbnb Plus package targets customers who value advanced quality and design and are willing to
pay more. Recently, the platform launched its Airbnb Luxe line of premium apartments that has
been positioned as ‘extraordinary homes with five-star everything’ targeting premium customer
segment.
2. Anticipatory positioning. Airbnb uses anticipatory positioning, launching services for a
market segment that has low turnover with the anticipation that the turnover will increase in the
future. Adventures services such as ‘Around the World in 80 Days’ and experiences of
“Becoming a Beekeeper” can me mentioned as examples of Airbnb services with anticipatory
positioning.
The following Table 2 illustrates Airbnb segmentation, targeting and positioning:
Type of Segmen
segment tation
ation
criteria
Region
Geographic
Density
Age
DemoGender
graphic
Lifecycle
stage
Behavioral
Psychographic
Occupation
Degree
of
loyalty
Benefits
sought
Personal
ity
User
status
Social
class
Lifestyle
49
Airbnb target customer segment
Accommodation
More than 191 countries and regions
and about 100000 cities
Urban/rural
18-45
54% Females & 46% Males 48
Bachelor Stage
Newly Married Couples
Full Nest I
Full Nest II
Full Nest III
Empty Nest I
Empty Nest II
Students, employees, professionals,
Experiences & Adventures
More
than
30000
experiences
worldwide
Urban
18-60
Males & Females
Bachelor Stage
Newly Married Couples
Full Nest I
Full Nest II
Empty Nest I
'Hard core loyals'
'Soft core loyals'
'Switchers'
Cost advantage, variety
Students, employees, professionals,
senior manager, executives
'Hard core loyals'
'Soft core loyals'
'Switchers'
Uniqueness, variety
Easygoing, determined,
Easygoing, ambitious
non-users, potential users, first-time
users, regular users,
Lower class, working class, middle
class, upper class
Resigned, Struggler, Aspirer, Explorer,
Reformer
non-users, potential users, first-time
users, regular users,
Working class, middle class, upper
class
Mainstreamer, Aspirer, Succeeder,
Explorer, Reformer
Table 2 Airbnb segmentation, targeting and positioning
48
49
Airbnb Statistics (2019) Property Management, Available at: https://ipropertymanagement.com/airbnb-statistics/
According to Cross Cultural Consumer Characterization by Young & Rubican
25
9.3 Marketing Communication Mix
9.3.1 Print and Media Advertising
Despite the purely online nature of its business model, Airbnb uses print and media advertising
extensively. The accommodation and experience marketplace launched Airbnb Magazine in May
2017 distributed in the U.S., with the exception of a small number of copies that will be available
for sale in London priced at USD 3,99. 50 Airbnb magazine is a highly dynamic print media
platform that responds to the interests of the company’s target customer segment. It has been
noted that if Airbnb “algorithms see that users are increasingly searching for ‘Paris’, it notifies
the magazine’s editorial staff to whip up a story or two on the French capital.” 51
It has also been speculated that the global hospitality service brokerage company has plans to
create its own TV shows in order to encourage people to travel more. As a starting point “Airbnb
has reportedly worked on a TV show called Home for Apple’s new TV Plus subscription service;
the show focuses on unearthing unique living spaces around the world and the people who reside
there” 52
Although Airbnb did not use celebrity endorsements up to date, the global rental and experiences
platform effectively uses the use of its services by celebrities as a part of its marketing strategy.
For example, the lodging company promotes luxury mansions and villas where celebrities such
as Arianna Grande, Lady Gaga, Britney Spears and Channing Tatum have stayed using Airbnb.
Viral marketing is also used by Airbnb as one of the integral parts of its marketing strategy.
Specific viral marketing campaigns such as “We Accept”, “Vice Experiences”, “Marnie the
Dog” and “Live There” can be mentioned as examples for most successful Airbnb viral videos.
50
Trachtenberg, J.A. (2017) “Airbnb Teams With Hearst on Magazine Guided by Travel Site’s Data” The Wall
Street Journal, Available at: https://www.wsj.com/articles/airbnb-teams-with-hearst-on-magazine-guided-by-travelsites-data-1493892000
51
Airbnb, Uber, Facebook… why are tech giants venturing into print? (2019) The Renewable Materials Company,
Available at: https://www.storaenso.com/en/newsroom/news/2019/6/why-are-tech-giants-venturing-into-print
52
Statt, N. (2019) “Airbnb wants to create TV shows to convince people to travel more” The Verge, Available at:
https://www.theverge.com/2019/4/24/18514907/airbnb-original-video-tv-studio-travel-marketing
26
9.3.2 Sales Promotions
Airbnb uses the following sales promotions techniques either directly or indirectly. Indirect
usage of sales promotions techniques involves efforts by the global hospitality service brokerage
company to guide and assist its hosts to use these techniques.
1. Discounts. Airbnb offers discounts indirectly. In other words, the accommodation and
experience marketplace does not offer discounts to its hosts or guests for its service fee, but it
has required functionalities in place to allow hosts to offer discounts to guests for quiet periods
of time.
2. Free gifts. The global rental and experiences platform occasionally sends free gifts to some
hosts. These include a wide range of inexpensive items such as notebooks, socks with Airbnb
logo on them, kitchen towel etc. Some hosts also receive smoke detectors free of charge.
3. Loyalty program. Airbnb grants Superhost badge to hosts that receive positive feedbacks
from their guests and do not cancel reservation for the last 12 months. Benefits offered to
Superhosts include USD 100 coupon that can be used for Airbnb travel and faster access to
Airbnb customer services.
At the same time, the global lodging company has no loyalty program for guests. Airbnb has
discussed launching a loyalty program for guests in the past but it has yet to get off the ground.
9.3.3 Events & Experiences
Airbnb is famous for sponsoring and hosting various events and experiences that promote its
service and the brand in general. The list of the most noteworthy events sponsored by the peerto-peer lodging company include the TCS New York City Marathon, Sundance Film Festival,
FYF Fest in Los Angeles and the Australian Boomers, the Australian men’s national basketball
team.
Airbnb events and experiences are aimed at increasing the level of brand awareness among the
public in general and the target customer segment in particular. Moreover, Airbnb attempts to
communicate the brand value offer to the target customer segment in indirect manner via such
events.
27
9.3.4 Public Relations
Public relations can be defined as a “discipline which looks after reputation, with the aim of
earning understanding and support and influencing opinion and behaviour. It is the planned and
sustained effort to establish and maintain goodwill and mutual understanding between an
organisation and its publics.” 53
Airbnb runs its public relations practices via online press releases, annual reports, speeches and
seminars. An annual CSR report is also used by Airbnb as an effective PR tool. The manner in
which Airbnb engages in PR activities has been criticised by a number of business analysts. As
discussed above, the company is often attacked by local governments and local politicians for
causing the increase of housing prices. Such a criticism is often fuelled by Airbnb’s main
competitors – transitional hotel chains that suffer the most from the activities of the global
hospitality service brokerage company.
There is a consensus among business analysis and practitioners that Airbnb PR team has been
ineffective in addressing such a criticism. Specifically, it has been noted that “rather than
defending itself, the Airbnb PR team should be explaining how the company is helping the
community. Contrary to the narrative that is being pushed on the cable news airwaves, profits
from Airbnb are not going to corporate giants”. 54
9.3.5 Direct Marketing
Direct marketing can be defined as “a marketing strategy to build stronger, more personal
relationships between the buyer and selected customers directly.” 55 In other words, in direct
marketing there are no intermediaries between the buyer and the seller in terms of promotion and
distribution.
Airbnb uses email marketing type of direct marketing. According to George DiGuido, the former
head of Email Marketing at the global HQ of Airbnb, email marketing plays a key role at Airbnb.
The company focuses its email program on retention and helping its users have meaningful
53
Chartered Institute of Public Relations (n.d.) Available at: http://www.cipr.co.uk/content/careers-advice/what-pr
Macias, M. (2018) “Under siege, 5 PR mistakes that Airbnb continues to make” Luxury Daily, Available at:
https://www.luxurydaily.com/under-siege-5-pr-mistakes-that-airbnb-continues-to-make/
55
Moore, K. & Pareek, N. (2010) “Marketing: The Basics” 2nd edition, Taylor & Francis, p.168
54
28
experiences using Airbnb. Email is the channel that helps Airbnb to facilitate the conversation
between the hosts and the guests who would like to travel. With transactional email, Airbnb
notifies both hosts and guests when they have a new message and bring them back to the
platform.
9.3.6 Personal Selling
Personal selling is “person-to-person communication with a prospective customer in order to
develop a relationship, identify customer needs, match goods/services with those needs,
communicate benefits to customers, and gain commitment to purchase goods/services that satisfy
customer needs” 56 Airbnb does not use personal selling element of the marketing communication
mix.
10. Porter’s Five Forces Analysis
Porter’s Five Forces analytical framework developed by Michael Porter (1979) 57 represents five
individual forces that shape an overall extent of competition in the industry. These forces are
illustrated in Figure 6 below:
56
57
Siguaw, J.A. & Bojanic, D.C. (2004) “Hospitality Sales: Selling Smarter” Cengage Learning, p.2
Porter, M. (1979) “How Competitive Forces Shape Strategy” Harvard Business Review
29
Bargaining
power of
buyers
Threat of new
entrants
Bargaining
power of
suppliers
Rivalry
among
existing
firms
Threat of
substitute
products or
services
Figure 6 Porter's Five Forces
10.1 Threat of new entrants
The threat of new entrants into pear-to-pear lodging industry is low. Theoretically, setting up a
website should suffice to enter the industry. However, in practice there is a number of barriers to
potential new entrants into peer-to-peer lodging industry. These include the following:
1. The time of entry. In e-commerce the role of the first mover advantage is usually paramount
and it is usually very difficult if at all possible for the followers to even get close to the market
disruptor. Once their business model proved to be viable, internet-based market disruptors such
as Amazon, Facebook and Uber were able to gain large market share in the global marketplace in
a short amount of time. Funding from investors, word-of-mouth, effective management and hype
usually play an instrumental role in assisting e-commerce disruptors to secure their niche and
strengthen their position in international markets.
This was the case with Airbnb as well. Founded in 2008, the company became a leading global
hospitality service brokerage company within a matter of a few years. As of summer 2019,
Airbnb boasts More than 6 million listings in more than 191 countries and regions worldwide. 58
58
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
30
The word Airbnb became a synonym for peer-to-peer lodging, leaving little room and market for
potential new entrants.
Nevertheless, it would be naive to claim that the threat of new entrants does not exist. There is
no limit on the numbers of times that a market can be disrupted and as such, any new company
with another innovative idea can re-organize the market, given the idea resonates with the wants
and needs of the target customer segment.
2. Capital requirements. Ability to raise capital is critical success factor for a start up such as
rental and experiences platforms. After raising the first USD 20,000 capital from Y Combinator
in 2009, the founders were able to raise USD 600,000 from Sequoia in 2009, USD 119,20
million from various early investors in 2010 and USD 450 million from TPG Capital in 2014.
This was followed by raising more than 2,5 billion during the next few years. Since its founding
in 2008, the company attracted the total funds of 59 more than USD billion.
While it can be easy for any company or even individual to build a website to start a peer-to-peer
lodging business, it will be extremely difficult to secure funding from investors. In this case,
investor scepticism would be totally understandable, because the niche is already taken by
Airbnb.
3. Legal and regulatory barriers. Airbnb is consistently facing various legal and regulatory
restrictions in international business because of the disruptive nature of its business. Some cities
have laws that restrict hosting of paying guests for short periods and in other cities people must
register, get a permit, or obtain a license before they can list their property or accept guests.
Airbnb works with governments around the world to clarify these rules so that everyone has a
clear understanding of what the laws are. In some cities such as Los Angeles, New York City,
Santa Monica, Las Vegas and San Francisco the services of Airbnb is still illegal 60. While
Airbnb has resources and experience to deal with a wide range of legal matters, new market
entrants will be limited in both, resources and experience and this can serve as a significant entry
barrier.
59
Dealroom.Co (2019) Airbnb. Available at: https://app.dealroom.co/companies/airbnb
Hamed, E. (2019) “5 CITIES WHERE AIRBNB IS ILLEGAL IN 2019” Mashvisor, Available at:
https://www.mashvisor.com/blog/5-cities-where-airbnb-is-illegal-2019/
60
31
10.2 Bargaining power of buyers
Bargaining power of buyers in the lodging and experiences industry is moderate. The following
factors play significant role in limiting buyer bargaining power:
1. No direct substitution. Although, there is a indirect substitution such as traditional hotels and
hostels for global rental and experiences platform, there is no direct substitution for peer-to-peer
lodging services. In other words, peer-to-peer lodging services offer a wide range of advantages
such as having kitchens and amenities, location in neighbourhoods and more space for less price.
Traditional hotels and hostels are not able to match these advantages, and therefore, they cannot
be substitute for those travellers for whom these advantages are important.
2. Size and concentration of buyers compared to suppliers. There are hundreds of millions of
travellers around the world, but only a few dozen global hospitality service brokerage companies
that are trusted by both, hosts and guests. Therefore, it can be argued that the size of buyers is
significantly greater compared to the size of supplier and such a situation imposes certain limits
on buyer bargaining power.
3. Buyer’s propensity to go for substitute products and services. As mentioned above, the
advantages of peer-to-peer lodging include having kitchens and amenities, location in
neighbourhoods and more space for less price. Substitute services such as traditional hotels and
hostels do not offer these advantages, and therefore, buyers’ propensity to go for substitute
services may be limited.
10.3 Bargaining power of suppliers
The bargaining power of suppliers in the global hospitality service brokerage industry is low. It
worth to be specified that the main suppliers in accommodation and experience marketplace are
hosts, who provide their places to guests or organize various experiences for travellers. The
following factors among others decrease supplier bargaining power:
1. Global nature of the business. Rental and experiences platforms such as Airbnb operate in
the global scale, and as such, they are not dependent on suppliers on any specific region or
32
location. For example, for Airbnb, less than 3% of all active listings are in New York City,
London, and Paris. No one city accounts for more than 1% of Airbnb listings worldwide. 61
2. Great number of suppliers. There are about 650,000 hosts on Airbnb 62. The lodging
colossus has more than 6 million listings worldwide. 63 The presence of great numbers of
suppliers can be interpreted in a way that each individual supplier has low bargaining power in
relation to Airbnb. In other words, the greater are the numbers of suppliers supplying identical
resources, the lower the bargaining power of each individual supplier.
3. Size of suppliers compared to the size of Airbnb. Airbnb is a lodging giant that boasts more
than 500 million guest arrivals all-time in more than 191 countries and regions and more than
100000 cities. 64 Airbnb is usually greater more than 100 times than many of its suppliers.
Accordingly, due to their smaller sizes compared to the size of the global hospitality service
brokerage company, suppliers have limited bargaining power in negotiations with the company.
10.4 Threat of substitute products or services
The threat of substitute services in the global rental and experiences platform is significant. The
significance of this threat is caused by the following factors:
1. Presence of indirect substitutes. There is a wide range of indirect substitutes for peer-to-peer
lodging and experiences services. These include traditional hotels and hostels. In terms of
experiences, substitutes for Airbnb include the services of wide range travel agencies.
2. The absence of switching costs for substitution. There is no switching cost for customers to
opt for substitute services mentioned above, instead of using Airbnb. The absence of switching
costs for customers increases the threat of substitute products and services.
3. Performance and quality of substitute services. It can be argued that the performance and
quality of substitute products and services cannot match Airbnb. Specifically, traditional hotels
and hostels usually are not able to offer advantages provided by Airbnb such as having kitchens
and amenities, location in neighbourhoods and more space for less price.
61
Airbnb’s Growth and Summer Travel Updates (2019) Airbnb Press Room, Available at:
https://press.airbnb.com/airbnbs-growth-and-summer-travel-updates/
62
Airbnb Statistics (2019) Property Management, Available at: https://ipropertymanagement.com/airbnb-statistics/
63
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
64
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
33
10.5 Rivalry among existing firms
Rivalry among existing firms in peer-to-peer lodging industry is fierce. The following set of
factors fuel rivalry among existing firms in this industry:
1. Rate of growth of the industry. Airbnb has enjoyed global compound growth rate of 153%
since 2009. The projected number of Airbnb users in Europe by 2020 is 24 million.65
As it has been illustrated in Figure 7 below, the numbers of sharing economy users have been
consistently increasing in the US to reach 73,7 million in 2019 and this tendency is forecasted to
continue. Not only in the US, the popularity of sharing economy is on the rise in the global scale.
Impressive rate of growth in the industry is going to attract new market players, further
intensifying rivalry among existing firms.
Figure 7 Number of sharing economy users in the United States from 2016 to 2021 (in
millions) 66
2. Diversity of competitors. Following the popularity of Airbnb, a wide range of competitors
emerged positioning themselves as niche service providers in the industry pioneered by Airbnb.
65
66
Airbnb Statistics (2019) Property Management, Available at: https://ipropertymanagement.com/airbnb-statistics/
Statista (2019) Available at: https://www.statista.com/statistics/289856/number-sharing-economy-users-us/
34
For example, Flipkey focuses on group bookings in popular tourist destinations, another
competitor, TurnKey offers freedom to busy travellers by giving them door code instead of a
key, meaning that travellers can rock up and leave whenever they want.
Similarly, HomeAway positions itself as a more refined and more polished competitor to Airbnb,
targeting a slightly older crowd, whereas Vrbo is for kid-friendly vacations with listings that are
bigger and have backyards. It is important to note that while Airbnb is an undisputed global
leader in peer-to-peer lodging industry, niche competitors such as the ones mentioned above
present increasing threat to the lodging colossus.
3. The role of brand equity. The role of brand equity in the global rental and experiences
industry is paramount. Brand equity can be defined as “a brand's power derived from the
goodwill and name recognition that it has earned over time, which translates into higher sales
volume and higher profit margins against competing brands.” 67 Airbnb has been privately valued
at USD 35 billion 68 and such a high level of equity is a clear indication of the brand as the
leading lodging colossus at the global scale.
11. Value-Chain Analysis
Airbnb value chain analysis is an analytical framework that assists in identifying business
activities that can create value and competitive advantage to the global rental and experiences
platform. Figure 8 below illustrates the essence of Airbnb value chain analysis.
67
Brand Equity (2019) Business Dictionary, Available at: http://www.businessdictionary.com/definition/brandequity.html
68
Schleifer, T. (2019) “Airbnb sold some common stock at a $35 billion valuation, but what is the company really
worth?” Recode, Available at: https://www.vox.com/2019/3/19/18272274/airbnb-valuation-common-stockhoteltonight
35
Figure 8 Value chain analysis
11.1 Airbnb Primary Activities
11.1.1 Airbnb Inbound logistics
In traditional businesses inbound logistics involve receiving and storing raw materials to be used
to manufacture products. Inbound logistics is different in service industry in general and online
service in particular due to differences between products and services that include inseparability,
intangibility, perishability and heterogeneity.
From this perspective, Airbnb inbound logistics can be divided into two groups:
1. Inbound logistics related to core services. Core services for the company comprise peer-topeer listings of accommodation, experiences and adventures. Airbnb inbound logistics for its
core services takes a few minutes thanks to purely online nature of its business. Specifically,
hosts can list their properties or experience services on the website of the lodging colossus on a
matter of a few minutes. Therefore, inbound logistics of each new addition to its website comes
for no extra cost for Airbnb.
2. Inbound logistics of resources and items that are used to aid the facilitation of core
services. The global hospitality service brokerage company also uses a range of physical
resources such as stationary items for its offices. Moreover, products like pillows and mugs,
distributed to hosts occasionally to motivate them can also be mentioned as resources acquired
by the travel industry disruptor to aid the facilitation of core services. Economies of scale can be
36
specified as the main source of value addition in Airbnb inbound logistics of items that aid in
facilitation of core services.
11.1.2 Airbnb Operations
Generally, operations involve the transformation of raw materials into finished products in
manufacturing industry. In service industry, operations relate to the process of providing the
service. Specifically for Airbnb, operations involve a range of activities such as handling of keys,
cleaning and providing amenities within properties. Thanks to Airbnb’s platform business model,
these activities are done by hosts, not the company and platform business model allows the
company to scale the business worldwide. Accordingly, today Airbnb operates in more than 191
countries and regions worldwide and there are about 100000 cities with Airbnb listings and 500
million Airbnb guest arrivals all-time. 69
New start-ups are emerging within Airbnb ecosystem with an increased rate of frequency and
they assist in various aspects of peer-to-peer lodging industry. Guest check-in services provider
Urban Bellshop, on-demand dry cleaning services company FlyCleaners and temperature
controlling company Nest can be mentioned as a few examples to illustrate this point.
To summarise, online platform business model is a main source of value creation in Airbnb
operations in a way that the majority aspects of operations are undertaken by hosts. The global
hospitality service brokerage company only has to maintain the attractiveness of the system to
both types of its customers – hosts and guests via technological integration and other means.
11.1.3 Airbnb Outbound Logistics
Outbound logistics is associated with warehousing and distribution of ready goods. Popular
sources of value creation in outbound logistics activities for businesses include direct deliveries
to customers without intermediaries, cooperation with other businesses to share distribution costs
and technological integration into the distribution process.
69
Fast Facts (2019) Airbnb Press Room, Available at: https://press.airbnb.com/fast-facts/
37
Outbound logistics relates to service industry to a much lesser extent compared to manufacturing
industry because in services production and consumption takes place at the same time.
Moreover, outbound logistics relates to Airbnb operations to even lesser extent because the
services of accommodation, experiences and adventures are provided to guests by hosts, not the
company.
11.1.4 Airbnb Marketing and Sales
Marketing and sales activities relate to the formulation and application of marketing strategy.
Airbnb value proposition for guests is associated with huge range and competitive costs of
accommodation and experiences, as well as, the opportunity for guests to live like local in any
place where the company operates. This value proposition is integrated into Airbnb marketing
message communicated to target customer segment through a range of marketing communication
channels in an integrated manner.
Airbnb marketing strategy integrates the principles of successful brand partnerships, celebrity
endorsements and benefiting from social influencers. Moreover, the global hospitality service
brokerage company has its own community that benefits the company as customer loyalty
platform, source of marketing intelligence and many other ways.
11.1.5 Airbnb Service
Service primary activity within the framework of value chain analysis relates to the level and
extent of support customers get after the sale. High level of customer services is one of the solid
sources of Airbnb competitive advantage. Airbnb customer service team comprises hundreds of
agents available via phone, chat and email, 24/7, in every time zone and in 30 different
languages. 70
Both, hosts and guests rate each other after the completion of stays and this practice encourages
hosts to improve the level of the service. The most highly rated hosts are awarded the title of
Superhosts, to be aspired to by other hosts and superhosts have greater earning potential.
70
Edwards, J. (2013) “Check Out The Extreme Lengths Airbnb Will Go To In Order To Please Customers”
Business Insider, Available at: https://www.businessinsider.com/insane-lengths-airbnb-will-go-to-in-order-toplease-customers-2013-8
38
There are cases of Airbnb going to extreme lengths in order to please their customers. These
include but not limited to sending a guest Pearl Jam T-shirt after learning she had booked with
Airbnb in Seattle to see a Pearl Jam concert, sending a host a stroller after she tweeted that she
wished she had a stroller for their upcoming guests and sending a user a bed tray and a get well
card upon user cancelling her reservation because she needed to look after her sister, who hurt
her leg.
11.2 Airbnb Support Activities
11.2.1 Airbnb Infrastructure.
Airbnb infrastructure includes its wide range of support systems and functions such as finance,
planning, quality control and general senior management. Moreover, Airbnb infrastructure
relates to physical and organizational structures and facilities that the company uses to achieve
its primary objective of profit maximization.
Data infrastructure is a critical business component for Airbnb. The global hospitality service
brokerage company uses the following principles in dealing with its data infrastructure 71:
1. Look to the open source world: there are a lot of good resources for data infrastructure
in the open source community and we try to adopt those systems. Furthermore, if we
build something useful ourselves and it is feasible to give it back to the community, we
reciprocate.
2. Prefer standard components and methods: There are times when it makes sense to
invent a completely new piece of infrastructure, but often times this is not a good use of
resources. Having intuition about when to build a unique solution and when to adopt an
existing solution is important, and that intuition must properly account for the hidden
costs of maintenance and support.
3. Make sure it can scale: we have found that data doesn’t grow linearly with the business,
but grows superlinearly as technical employees begin building new products and logging
new activities on top of the growth of the business.
4. Solve real problems by listening to your colleagues: empathizing with the data users
around the company is an important part of informing our roadmap. In adherence with
71
Mayfield, J., Puttaswamy, K., Jagadish, S. & Long, K. (2016) “Data Infrastructure at Airbnb” Medium, Available
at: https://medium.com/airbnb-engineering/data-infrastructure-at-airbnb-8adfb34f169c
39
Henry Ford’s mantra, we must balance making faster horses vs. building the automobile
— but listen to your customers first.
5. Leave some headroom: we oversubscribe resources to our clusters in order to foster a
culture of unbounded exploration. It is easy for infrastructure teams to get wrapped up in
the excitement of maximizing resources too early, but our hypothesis is that a single new
business opportunity found in the warehouse will more than offset those extra machines.
11.2.2 Airbnb Human Resource Management
Airbnb employs about 5000 employees worldwide. 72 The global lodging company offers an
attractive package of tangible and intangible benefits to employees at all levels. These include
competitive payment packages, annual stipend of USD2,000 to travel and stay in an Airbnb
listing anywhere in the world 73 and free breakfast, lunch and dinner. The short-term rental
platform also offers employees stock options, medical, dental and vision insurance and
frequently organizes company-sponsored tech talks and happy hours.
Moreover, the global hospitality service brokerage company is known to focus on employee
experience. In fact, Airbnb rankes #6 in Employee Experience Index after Facebook, Google,
LinkedIn and Ultimate Software. 74 The index ranks and scores 252 organizations worldwide
against 17 criteria across three environments which are: culture, technology, and the physical
workspace.
It has been noted that “instead of following the traditional business model, Airbnb creates change
and empowers employees at all levels, which has a huge effect on the success of the company,
both monetarily and culturally”. 75 The existence of the role of global head of employee
experience at Airbnb is a further indication of the importance of employee experiences for the
rental and experiences platform.
72
Melissa C. Thomas-Hunt Joins Airbnb as Head of Global Diversity and Belonging (2019) Airbnb Press Room,
Available at: https://press.airbnb.com/melissa-c-thomas-hunt-joins-airbnb-as-head-of-global-diversity-andbelonging/
73
Gillett, R. (2018) “Free food may become a thing of the past in Silicon Valley — but there are plenty of other
incredible perks companies like Facebook and Google offer their employees” Business Insider, Available at:
https://www.businessinsider.com/incredible-perks-companies-like-airbnb-facebook-and-google-offer-theiremployees-2016-2?_ga=2.229042709.804047418.1563671150-2036672807.1563671150
74
The Employee Experience Index (2019) The Future Organization, Available at:
https://thefutureorganization.com/employee-experience-index/?source=post_page--------------------------75
Morgan, J. (2017) “3 Lessons from Airbnb on Creating an Amazing Employee Experience” Medium, Available
at: https://medium.com/jacob-morgan/3-lessons-from-airbnb-on-creating-an-amazing-employee-experience4a6d2a205db7
40
11.2.3 Airbnb Technology Development
Technology Development is rightly understood by Airbnb as one of the critical success factors to
survive in the contemporary marketplace. At a time when technology is displacing and replacing
people in the workforce, Airbnb provides a way to empower people economically. By enabling
new travel experiences, hosts are able to earn more and help sustain their local communities.
Technology is at the core of this. You may not realize, but every reservation made on Airbnb
interacts with machine learning or AI technology the company has developed. Airbnb uses AI to
reduce the friction that is inherent to its platform – for everything from improving search, to
preventing fraud, to helping hosts optimize pricing.
The global rental and experiences platform first began building machine learning models in 2013
to strengthen its search and discovery capabilities. On the guest side, for example, this includes
matching people with the most relevant listings, experiences, and services around the world.
When guests visit Airbnb, it’s no longer about just finding a home or experience, but about
finding the perfect one for them. 76
11.2.4 Airbnb Procurement
Procurement activity within Airbnb chain of support operations relates to the ways resources are
acquired for the business. Due to the size and scope of Airbnb business operations, the company
runs complex procurement activities in the global scale, aiming to adhere to fair business
practices. Gaining cost advantage due to high volume can be specified as the main source of
value related to Airbnb procurement activities.
12. McKinsey 7S Model
Airbnb McKinsey 7S model illustrates the ways in which seven elements of businesses can be
aligned with positive implications on the overall effectiveness of the business. According to this
76
Sharing More About the Technology That Powers Airbnb (2018) Airbnb Newsroom, Available at:
https://press.airbnb.com/sharing-more-about-the-technology-that-powers-airbnb/
41
framework strategy, structure and systems are grouped as hard elements, whereas shared values,
skills, style and staff are considered soft elements.
According to McKinsey 7S model, there are strong links between individual elements.
Specifically, a change in one element causes changes in others. As it is illustrated in Figure 9
below, shared values are positioned at the core of Airbnb McKinsey 7S model; they guide
employee behaviour with implications on their performance.
Figure 9 McKinsey 7S model
12.1 Hard Elements
Strategy. Airbnb business strategy is associated with platform business model and accordingly,
instead of owning the services it offers, the company engages as a broker between suppliers and
consumers, receiving a commission of 9% to 15%. Moreover, increasing level of technological
integration into various aspects of the business can be specified as one of the critical features of
Airbnb business strategy. The global hospitality service brokerage company also places its
community and trust among organizational stakeholders at the forefront of its business strategy.
42
Structure. Airbnb organizational structure can be classified as matrix. The workforce is divided
into teams of up to 10 people. Importantly, teams support each-other to a great extent. Team
leaders and members feel free to ask other teams if they need resources or capabilities. Airbnb
organizational structure can be also branded as holocratic, because decision making power is
given to teams throughout organization to a great extent and majority of teams are self-managed.
The corporate structure of Airbnb is highly dynamic due to rapidly increasing scale of the
business worldwide.
Systems. Airbnb business operations depend on a wide range of internal systems such as
employee recruitment and selection system, team development and orientation system and
transaction processing systems. Moreover, customer relationship management system, business
intelligence system and knowledge management systems are of a great importance for the global
hospitality service brokerage company.
Host insurance system can also be specified as one of the critically important systems for the
accommodation and experience marketplace. All Airbnb hosts have the protection of liability
insurance of up to USD1 million to protect against third party claims for personal injury or
property damage. The control of host insurance and claims system is conducted by Airbnb
administrators according to relevant internal rules and regulations.
12.2 Soft Elements
Skills. The range of skills and competencies required to be successful at Airbnb is vast and
include interpersonal skills, leadership skills, teamwork and ability to work under pressure.
Furthermore, in potential candidates, Airbnb looks for communication skills, customer
orientation, creativity, analytical thinking, forward thinking, conceptual thinking, strategic
thinking and technical expertise. Ability to embrace change, ability to take initiative and
entrepreneurial orientation skills are also important to be successful in Airbnb.
Staff. Airbnb employs about 5000 employees worldwide. 77 The global lodging company offers
an attractive package of tangible and intangible benefits to employees at all levels. These include
competitive payment packages, annual stipend of USD2,000 to travel and stay in an Airbnb
77
Melissa C. Thomas-Hunt Joins Airbnb as Head of Global Diversity and Belonging (2019) Airbnb Press Room,
Available at: https://press.airbnb.com/melissa-c-thomas-hunt-joins-airbnb-as-head-of-global-diversity-andbelonging/
43
listing anywhere in the world 78 and free breakfast, lunch and dinner. The short-term rental
platform also offers employees stock options, medical, dental and vision insurance and
frequently organizes company-sponsored tech talks and happy hours.
Moreover, the global hospitality service brokerage company is known to focus on employee
experience. In fact, Airbnb ranks #6 in Employee Experience Index after Facebook, Google,
LinkedIn and Ultimate Software. 79 The index ranks and scores 252 organizations worldwide
against 17 criteria across three environments which are: culture, technology, and the physical
workspace.
Style. Managing by visibility and hands-on approach mark the main leadership principles at
Airbnb. CEO Brian Chesky has proved to be a strong leader, despite his lack of any formal
business and management training whatsoever. Chesky simply ‘hacked’ the lack of his training
using the method he calls ‘going to the source’ that involves getting the advice of top experts in
relevant fields. His sources include, but not limited to Mark Zuckerberg, Reid Hoffman, Marc
Andreessen, Jeff Weiner and Jony Ive.
The application of the same principle is utilized through the organization in a way that
employees at all levels are encouraged to get advices and competencies they need, internally, as
well as, externally. Chesky’s hands-on leadership style is coupled with his tendency to grant
autonomy in operations and decision-making to teams.
Shared values. Airbnb strategic level management attempt to promote the values of community
and trust among the workforce at all levels. Airbnb shared values are well aligned with its
following corporate mission:
To create a world where anyone can belong anywhere, providing healthy travel that is local,
authentic, diverse, inclusive and sustainable 80
There are many companies that have mission statement because stakeholders expect them to
have one. For Airbnb, on the other hand, mission statement and corporate values are of a
paramount importance guiding its overall business strategy. During recruitment process all
candidates are interviewed by non-technical experts to assess the fit between their personal
78
Gillett, R. (2018) “Free food may become a thing of the past in Silicon Valley — but there are plenty of other
incredible perks companies like Facebook and Google offer their employees” Business Insider, Available at:
https://www.businessinsider.com/incredible-perks-companies-like-airbnb-facebook-and-google-offer-theiremployees-2016-2?_ga=2.229042709.804047418.1563671150-2036672807.1563671150
79
The Employee Experience Index (2019) The Future Organization, Available at:
https://thefutureorganization.com/employee-experience-index/?source=post_page--------------------------80
About US (2019) Airbnb, Available at: https://press.airbnb.com/about-us/
44
values and Airbnb corporate values. In case there is no fit, candidates are not recruited despite
their previous experiences and the level of their expertise.
13. Airbnb Ecosystem
People-to-people platform of Airbnb benefits all its stakeholders, including hosts, guests,
employees and the communities in which it operates. According to its CEO, Airbnb is “a more
vertically integrated, end-to-end, full-stack ecosystem powered by people.” 81 Generally, Airbnb
ecosystem can be divided into two groups: narrow and broad.
Narrow Airbnb ecosystem comprises services that directly generate revenues for Airbnb, while
broad ecosystem contributes to the development of peer-to-peer lodging, travel and experiences
industry in general. Airbnb ecosystem in a narrow level integrates the following types of
services:
•
Accommodation
•
Experiences
•
Adventures
•
Restaurants
The travel industry disruptor supports stakeholders in its narrow ecosystem in various manners.
For example, in a rare event of accidental damage, the property of every Airbnb host is covered
up to a million dollars. 82
Airbnb has caused an ecosystem of new start-ups that produce products and services for peer-topeer lodging industry. This can be specified as broad Airbnb ecosystem and includes a range of
products and services. Table 3 below illustrates the most popular types of such services referring
to notable examples:
81
Menze, J. (2018) “Interview: Airbnb CEO says it's now "100%" battling online travel agencies” PhocusWire,
Available at: https://www.phocuswire.com/Interview-Airbnb-Brian-Chesky-hotels
82
Airbnb Statistics (2019) Property Management, Available at: https://ipropertymanagement.com/airbnb-statistics/
45
Products and services within Airbnb ecosystems
Cleaning services of properties
Property management for hosts
Analytics
Notable examples
FlyCleaners: On-Demand Dry-Cleaning App
Proply: Full-service cleaning, key delivery,
welcome gifts and restocking
Porter: laundry, cleaning, restocking
Guesty: responding to guest inquiries, screening
potential guests, coordinating key exchange etc.
Urban Bellshop: check-in, listing management,
cleaning
Nest: controlling temperature,
Beyond Pricing: automated pricing suggestions
Smart Host: pricing advice
Everbooked: pricing suggestions based on a wide
range of factors
Table 3 Services within broad Airbnb ecosystem
Additional products and services within Airbnb broader ecosystem include automating check-in
process, providing keyless entry around the clock, concierge services and welcoming guests and
software products such as data presentation and analytics. Moreover, physical products such as
toiletries, remote locks, and noise signallers and financing services for Airbnb hosts have also
emerged as new businesses to join the ecosystem. It can be stated with a high level of confidence
that with the accelerating development of sharing industry in the global scale, Airbnb broad
ecosystem is expected to further expand in short-term and long-term perspectives.
14. Corporate Social Responsibility
Airbnb corporate social responsibility is closely associated with business model of the travel
industry disruptor. It can be argued that travelling via Airbnb instead of hotels results in
significant reduction in energy and water use, greenhouse gas emissions, and waste, and
encourages more sustainable practices among both hosts and guests.
14.1 CSR Programs and Initiatives
Airbnb Supporting Local Communities
•
Airbnb employees receive four hours of paid time off every month to volunteer in their local
communities.83
83
Social Impact (2019) Airbnb Citizen, Available at: https://www.airbnbcitizen.com/social-impact/
46
•
Global Citizenship Champion program launched in 2013 involves organizing charitable
contributions to causes important to their local communities in 20 cities around the world
•
Champions within the scope of Global Citizenship Champion program completed more than
17000 hours of service in 2016.
•
Airbnb runs Open Homes program that provides homes for free to those affected by
conflict, disaster, or critical illness. The program has helped more than 25,000 people in
need to find temporary housing and in 2019 the company is investing USD 20 million to
grow the platform. Airbnb aims to house 100,000 people by 2022. 84
Airbnb and Gender Equality and Minorities
•
Diversity is one of the core values at Airbnb. 48.94% and 43.85% of employees are
female, globally and in the US respectively. The figure 10 below illustrates race and
ethnicity representation at Airbnb in the US.
Figure 10 Ethnicity representation at Airbnb in the US
•
Airbnb has “Diverse Candidate Slates” rule. For every open position, women and
underrepresented minorities must be included on candidate slates before those slates are
84
Airbnb Launches Donations Feature to Support Communities in Times of Need (2019) Airbnb Press Room,
Available at: https://press.airbnb.com/airbnb-launches-donations-feature-to-support-communities-in-times-of-need/
47
presented to hiring managers and the manager is allowed to proceed with filling the
position. 85
•
The peer-to-peer lodging company has a wide range of Airfinity groups that create more
awareness and advocacy around the issues employees value. Airfinity employee groups
include Able@ for employees with disabilities, AirPride@ for LGBTQ people, Asians@,
Black@, Foreignairs@, Juntos@, Natives@ and others.
Airbnb other CSR Initiatives and Charitable Donations
•
The company runs Airbnb Open Homes a global program that provides free or low-cost,
short-term stays on our platform for individuals and families during times of need or
celebration such as medical patients travelling for treatment, low-income students travelling to
visit universities, or social entrepreneurs travelling to change the world. 86
•
After Superstorm Sandy in US in 2012, Airbnb built a tool that enabled 1,400 Airbnb hosts in
New York to open their homes to displaced neighbours.
14.2 CSR Criticism
Along with CSR initiatives and programs as illustrated above, Airbnb has faced criticism on
various ethical grounds in the past years. The company is often criticized for doing a poor job of
educating its hosts about the Fair Housing Act in the US.
A report UnfairAirbnb conducted by Corporate Europe Observatory sees Airbnb and other
online renting platforms as a threat to affordable housing in Europe. Key findings of the
report include
the
following:
- The European Commission is consistently working to interpret EU rules in favour of the tourist
accommodation
platforms.
- The Commission’s department for internal market and industry (DG GROW) is in regular
contact with all main lobby groups for the sector, which are allowed to follow its every step.
- Significant concessions have already been made to AirBnB and its lobby association, the
European Holiday Home Association, which has filed a complaint to the Commission against
Berlin, Paris, Barcelona and Brussels that could end up in front of the European Court of Justice.
- The Commission’s own report on platforms like AirBnB features a significant commercial
85
86
Diversity at Airbnb (2017) Airbnb, Available at: https://press.airbnb.com/diversity-at-airbnb/
Social Impact (2019) Airbnb Citizen, Available at: https://www.airbnbcitizen.com/social-impact/
48
element,
calling
into
question
the
platforms’
claim
to
a
grassroots
image.
- Within two years, the EU lobby spending of AirBnB has increased from less than €100,000 to
just under EUR500,000. (2015-2016, latest available figures). The lobbying expenditure of other
similar companies, such as Expedia, owner of HomeAway, follow the same pattern.
Airbnb has also been criticised for abandoning CSR values by acquiescing to anti-Israel BDS
campaign in 2018. Specifically, Airbnb executives acquiesced to pressure from the BDS
(“Boycott, Divestment, and Sanctions”) campaign by removing roughly 200 Jewish rental
listings in the West Bank. 87 Apart from incidents mentioned above, Airbnb had to deal with a
number of other CSR-related issues during the past years.
87
Airbnb Abandons CSR Values by Acquiescing to Anti-Israel BDS Campaign (2019) CSR Wire, Available at:
https://www.csrwire.com/press_releases/41577-Airbnb-Abandons-CSR-Values-by-Acquiescing-to-Anti-IsraelBDS-Campaign
49