Djumaev Firdavsbek

20192965
Engineering and Management
Term Project

As travel demand has increased over the past year, Airbnb has seen a dramatic increase in its
business. The business said that more rooms and activities were booked on the platform than
ever in the first quarter. One of the biggest companies in the tourism business, Airbnb has
grown from its humble beginnings in the bedrooms of its founders. The business brought in
close to $6 billion in sales in 2021 alone.

To put it mildly, there are several factors contributing to Airbnb's spectacular rise. The
competitive advantages it has developed over the course of its history can, however, account
for some of it.

Network economies are by far and beyond the most significant component of any online
marketplace. Each new user who enters the network increases the value of the service. As a
result, a platform's overall user experience improves as more users join it. This law also applies
to Airbnb, a two-sided internet marketplace that connects guests and travelers. In actuality, the
network effects it has accumulated are by far and away the most significant factor in its
continued supremacy. More specifically, cross-border network effects are advantageous to
Airbnb. The product becomes more valuable for travelers all over the world with one additional
rental unit. Over 4 million hosts and 6 million active listings are currently found on Airbnb,
according to data the company has made available. Additionally, the platform is operational in
more than 220 nations and 100,000 cities and towns.
In contrast, Airbnb's rivals, which include online travel agencies like Booking.com and Expedia
as well as hotels directly, can only partially compete with its enormous supply. The reviews
posted on the website are another area where Airbnb's network effects are at work. A traveler
is more likely to reserve a certain property the more positive evaluations it receives. In order to
better assess the value of a particular listing and make more pertinent recommendations,
Airbnb has expanded the quantity of traveler data it gathers during the length of its existence.
Additionally, a few of those data may be significant competitive advantage. As more passengers
started to utilize the platform to stay longer at a particular location, Airbnb, for example,
started tracking the Wi-Fi speed of its listings in August 2021. No other accommodation site has
started to display or even gather said data. As a result, many remote workers and
entrepreneurs who work while traveling are probably using Airbnb as their preferred platform.

Strong branding is the second advantage that has allowed Airbnb to stand out from the
competitors. When compared to equivalent offerings, a company with strong branding might
charge higher prices due to its higher perceived value. 1,000 persons were surveyed by Clever
Real Estate, and the results showed that 60% of leisure travelers preferred the platform to
hotels. Additionally, Airbnb itself questioned its own hosts in August 2022. Globally, 45% of
them said that they were able to stay in their homes in 2021 thanks to the platform's additional
revenue.
But how did Airbnb develop such a recognized brand? When the business introduced a fully
new corporate identity in 2014, business picked up steam. The goal of the branding was to
promote a stronger sense of community. While other platforms marketed themselves as just a
cheap and convenient choice, Airbnb started to capitalize on people's aspirational tendencies.
With the phrase "Belong Anywhere" as its marketing tool, Airbnb began to emphasize the lives
of its users who utilized the website to fully immerse themselves in the locations they visited. It
would do the same in the interim for the hosts using its platform. For instance, there are
numerous films on Airbnb's YouTube channel that demonstrate the advantages that hosts
receive from using the service. Additionally, Airbnb has reacted quickly to situations that are
external to its industry. After the United States withdrew its armed forces from Afghanistan in
2021, the firm built housing for 20,000 refugees from that nation. It did the same for 100,000
Ukrainian war refugees a few months later. Additionally, there is some research that suggests
that those measures have increased brand equity. Customers' perceptions of Airbnb have
increased as a result of Airbnb's social initiatives, according to a YouGov study that surveyed
close to 14,000 users.

Designers, software engineers, and product managers are in high demand in the tech industry.
Comparably reports that Airbnb ranks higher than companies like Booking.com, Tripadvisor,
Expedia Group, KAYAK, and other similar websites in terms of staff retention, coming in at
number two among its rivals. Among its big IT rivals, Airbnb employees are some of the most
devoted, staying with the company for an average of 2.6 years (data from 2018, though). For
the 900 available positions, Airbnb received 180,000 applications in the same year. In 2015,
Airbnb replaced Google as the greatest place to work on Glassdoor. Despite a minor decline in
the company's Glassdoor rating since then, 85% of employees say they would still suggest
working at Airbnb to a friend. As a point of reference, it is 76 percent for Booking.com and 58%
for VRBO. The leadership of the company, most specifically CEO and founder Brian Chesky, is
where it all begins. Chesky, a trained designer, has played a key role in promoting the
importance of brand, design, and usability. Research has repeatedly demonstrated that
founder-led businesses do better than those that hire external leadership. To this day, all of
Airbnb's founders are still very much involved in running the business. The leadership group
frequently pays attention to the requirements of its workers. For instance, Airbnb declared in
April 2022 that it will become a totally remote workplace and allow staff members up to 90
days of annual international work and travel.
The Covid pandemic, the company's largest catastrophe, was also characterized by its
unwavering commitment to treating its employees fairly. Of the 7,200 employees working for
Airbnb, 1,900 had to be let go, or 25% of the total staff. CEO Chesky made sure that each
departing employee will have a one-on-one, personal interaction with a senior leader at the
company in addition to generous leave packages. Chesky also revealed the terrible decision in a
personal message. While some would unavoidably be unhappy about the layoffs, they
ultimately demonstrated how to treat your employees well, which is one of the factors
contributing to Airbnb's continued leadership.
In summary, network economies, strong branding, and the capacity to recruit and retain the
top talent in the world are three different competitive advantages that benefit Airbnb.