Week 2 Case Study: AirBnB
Q1a
Economy:
“In late 2020, the company revealed plans or an initial public offering which had been initially
delayed due to the COVID-19 pandemic. The pandemic had taken a massive toll on the travel
industry which consequently brought about major challenges for Airbnb.”
Pandemic  decrease in tourism  lower demand for hospitality & tourism services  decrease in
Airbnb revenue and profits
Technology:
“Since they do not own any properties listed on the platform, Airbnb is able to save on costs
involving acquiring, building and maintenance of a property. Instead, they can focus more on
developing their platform. This is especially crucial when developments in technology often
necessitate continuous updates and improvements to maintain a more modern and efficient, yet
user-friendly platform. As such, Airbnb has spent heavily on upgrading the technology of its platform
with an estimated cost of $100 million a year (Eaglesham, Farrell & Grind, 2020)”
By avoiding the overhead costs of property ownership and maintenance, Airbnb can allocate
resources to enhancing its platform's technology. The $100 million annual investment in technology
underscores the significance of technological innovation in providing a seamless and convenient
booking experience, robust security measures, and personalized recommendations for users.
Legal & Regulations:
1. “Singapore where short-term rentals of less than three months are illegal”
o Cannot cater to tourists who are intending to stay in Singapore for a short period
2. “The company also faced issues in Japan when a new law requiring Airbnb hosts to register
their listing and display a license number on their listing page forced the company to cancel
existing bookings that were not in compliance (Deahl, 2018).”
o New changing laws  requires changes to Airbnb website, backend systems and
communication with hosts
o Cancellation of bookings  customer dissatisfaction  financial losses due to
required refunds and compensation
o Makes the processing longer and more tedious  less convenient services 
Japanese hosts less inclined to use the service
Demographics:
1. “they found that the users who chose shared room accommodation types were typically
more likely to be described as males, low income, single travelers and large groups, low
concern with cleanliness, and open to social interaction. On the other hand, those who
rented entire homes tended to be high income, high education, travel with a partner/spouse,
and not too comfortable with unfamiliar social interactions.”
Different periods of the years may lead to changes in demographics of Airbnb customer base
to control the listing and pricing in order to regulate the supply of hospitality services.
o School holidays, summer breaks  more families
o Start and end of fiscal year / quarterly meetings  more business trips
o Host country festivals/events  higher demand for services
2. Airbnb reliance on technology and focus on unique experiences  attract more younger
travellers
3. Budget accommodation  for students, backpackers and individuals looking for more
affordable options
Social Issues:
Natural Environment:
“As presented in Figure 3, the number of Airbnb users in the United States (US) has been projected
to grow at a steady rate. This is because there are three types of home-sharing options available on
their platform, namely: shared room, private room, and entire home.”
Countries with more supply of housing and wider variety of housing choices due to more land and
resources to build housing, compared to countries like Hong Kong and Singapore
Affordability of housing also impacts the prices on Airbnb.
Q1b
Rivals:
“rivals that provide similar services such as Booking.com, Expedia, and Klook”
Airbnb acquires smaller competitors to reduce competition in the market. The acquisition also helps
them to reach a larger consumer base and helps them in competing against rivals.
More rivals 
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more resources poured into publicity for brand image to retain competitiveness
lowered prices to maintain price competitiveness
Innovation and R&D (create new, unique experiences for users / market research via Data
Science
Suppliers:
Housing supply in various countries
“As presented in Figure 3, the number of Airbnb users in the United States (US) has been projected
to grow at a steady rate. This is because there are three types of home-sharing options available on
their platform, namely: shared room, private room, and entire home.”
USA has more housing options available compared to countries which lack land and resources for
building accommodation (e.g. Hong Kong, Singapore)
Buyers:
Internet allows customers to find information more easily and compare Airbnb against its
competitors. Buyers would demand lower prices, higher quality, unique product specification or
better service.
New entrants:
“Since Airbnb is already a well-established brand, acquiring smaller competitors may be a strategy
that they use in order to minimize the threats of new entrants”
Cost disadvantages: Since the market for accommodation services do not require organisations to
source for large amounts of resources such as raw materials, there may be lower BTE for new
entrants into the market. Similarly to Airbnb, new entrants do not need to spend resources for
accommodation maintenance but only need to work on their online platform.
Substitutes & complements:
Substitutes
“Airbnb’s business model provides a substitute for those who wish to book hotel rooms. In terms of
their rivalry with traditional hotels, a study by Dogru, Mody and Seuss (2019) found that a 1% growth
in Airbnb supply across 10 key hotel markets in the United States (U.S.) between 2008 and 2017
caused hotel revenue per available room to decrease 0.02% across all segments.”
Substitutes include traditional hotels which may offer cleaner and safer accommodation compared to
Airbnb.
Complements
Complements include travel insurance, transportation services, local experiences, and guided tours.
Q2
Environmental scanning:
“One method that the company is already engaging with is using data science to improve their
product and marketing. For instance, the company uses data to improve users’ search experience on
their platform and to determine host preferences (Jacob, n.d.). Hence, the company should continue
leveraging upon their data science capabilities to better understand the current climate, forecast the
industry’s future direction, and make the necessary adjustments to their business mode”
Competitive intelligence: Better quality services allows Airbnb to remain competitive.
Scenario development:
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Pandemic Preparedness: Develop contingency plans for scenarios like travel restrictions due
to pandemics, ensuring Airbnb can adapt quickly and offer value to users even during
challenging times. “Airbnb have also started developing a portfolio of online experiences
where customers can watch live videos of concerts, cooking classes, and other such
activities”
Market Expansion: Create scenarios for entering new markets and tailor strategies for each
scenario, allowing Airbnb to seize opportunities efficiently.
Forecasting:
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Demand forecasting: Different periods of the years may lead to changes in demographics of
Airbnb customer base to control the listing and pricing in order to regulate the supply of
hospitality services.
o School holidays, summer breaks  more families
o Start and end of fiscal year / quarterly meetings  more business trips
o Host country festivals/events  higher demand for services
Benchmarking:
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Organization Practices: “Co-Founder and CEO Brian Chesky had realized that he had to turn
culture into a key priority at Airbnb and thus built the company into a culture-first
organization.” This leads to higher employee satisfaction and thus higher work output.
Increased communication between employees builds rapport and trust between leadership
and workforce, aligns goals and interests of the employees.
Q3a
Culture:
Values:
‘They have four core values: (1) Champion the Mission, (2) Be a Host, (3) Embrace the Adventure,
and (4) Be a “Cereal” Entrepreneur.’
(1) Champion the mission
a. Creates a sense of shared purpose that drives productivity and dedication
b. Creates a sense of meaning and fulfilment in employees’ work
(2) Be a host
a. Means to treat one another with care and respect like a host
b. Promotes positive relationships among employees and reduces conflict that slow
down workflow
(3) Embrace the adventure
a. Encourages employees to embrace change and take calculated risks to seek
improvement
b. Fosters dynamic and adaptable workforce, encourages employees to solve problems
using creativity and innovation
(4) Be a “Cereal” Entrepreneur
a. Encourages employees to think like entrepreneurs, taking ownership of multiple and
wide varieties of projects and ideas.
Climate:
Airbnb has open communication between supervisors & their employees: “At Airbnb, there is also a
strong emphasis on communication. According to Culture Amp (n.d.), there is an unrelenting belief at
the company in honest, two-way communication. Employees have a bi-weekly world meeting and
each country or city office also conducts a more informal meeting towards the end of every week.”
Increased communication between employees builds rapport and trust between leadership and
workforce, aligns goals and interests of the employees. Employees are able to easily voice out issues
they face for everyone to come together to resolve.
Q3b
Adhocracy
Flexible oriented:
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(3) Embrace the Adventure – innovation, encourages employees to solve problems with
innovation and creativity.
Airbnb's organizational culture leans more towards being flexible rather than controloriented. This flexibility is in line with the company's emphasis on innovation, adaptability,
and the empowerment of hosts and guests. While there are certainly guidelines and
standards to ensure quality and safety, Airbnb's model relies on the flexibility of hosts to
offer unique accommodations and experiences, and guests to explore a diverse range of
options.
However, flexibility doesn’t mean no regulation: policies and guidelines are implemented to
ensure the safety and quality experience of both the hosts and guests.
External Positioning:
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The company's success and growth have largely been driven by its strategic approach to
positioning itself in the external market and adapting to changing customer demands.
o Global expansion: Airbnb has expanded its presence to numerous countries and
cities worldwide, aiming to position itself as a global platform for travel and
accommodations. “The company is headquartered in the United States of America
and operates in various countries across the world including China, India, Japan,
Australia, South Korea, Austria, Germany, Switzerland, Belgium, Denmark, France,
Italy, Norway, Portugal, Russia, Spain, Sweden, the United Kingdom, Mexico, and
Brazil.”
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Customer-centric approach: Prioritizes delivering quality customer experience to
distinguish themselves from competitors. “They also have plans to grow its
“Experiences” service where users can book unique activities to do with local hosts,
and implement a loyalty program.”