An Assignment on

Case Study Analysis of Airbnb

Group:2
Case Title: The Successful Journey of Airbnb
Course Title: Strategic Management
Course Code: MGT251

Submitted To:
Submitted By:
Dr. Md. Zahangir Kabir
Md. Naymul Huda Limon
Professor
ID: 2003018
Faculty of Business Studies
Faculty of Business Studies
Department of Management
Department of Accounting

Hajee Mohammad Danesh Science and Technology

University, Dinajpur.
 The Successful Journey of Airbnb
• Introduction:
Airbnb or Air Bed & Breakfast an online platform that allows people to rent out
their properties or space rooms to travelers looking for short-term
accommodations. The company was founded in 2008 by Brain Chesky, Joe
Gebbia and Nathan Blecharczyk in San Francisco, California and has since
grown to become one of the largest hospitality companies in the world with
over 4 million listings in more than 190 countries and had an estimated
valuation of $31 billion.
Airbnb provides a way for people to book unique and personalized travel
experiences, while also allowing hosts to earn extra income by renting out their
homes or apartments. The platform offers a wide range of properties, including
apartments, houses, villas, cabins and even treehouses and castles.

• Background Overview:
The idea for Airbnb came about when Chesky and Gebbia were struggling to
pay rent on their apartment and noticed that a large design conference was
coming to town, but all the hotels were booked. They decided to offer air
mattresses and breakfast to attendees, and thus, the idea for Airbnb was born.
Initially, the company was called Air Bed & Breakfast, but it later changed its
name to Airbnb. The founders launched the website in 2008, and in the
beginning, they personally went door-to-door to convince people to list their
homes on the site.
• SWOT Analysis: From the SWOT analysis of Airbnb, we found these
strengths, weakness, opportunities and threats.
Strengths:
1. Strong Brand Image: Airbnb was already an established brand in 2016, with
a strong reputation for being a reliable and cost-effective platform for booking
accommodations.
2. Large User Base: By 2016, Airbnb had over 2 million listings in over 190
countries, and its user base was growing rapidly. This gave Airbnb a significant
advantage over its competitors.
3. Low Operating Costs: Airbnb's business model allows it to keep its
operating costs low. Unlike traditional hotels, Airbnb does not need to invest in
expensive infrastructure, staff, or amenities.
4. User Reviews: Airbnb's user review system has been instrumental in
establishing trust between hosts and guests. The platform's rating and review
system helps ensure that users have a positive experience.
Weaknesses:
1. Regulatory Challenges: Airbnb has faced regulatory challenges in several
cities around the world. Many cities have strict regulations on short-term
rentals, which has made it difficult for Airbnb to operate in those markets.
2. Liability: There have been instances where Airbnb hosts have caused
damage to property or engaged in illegal activities. As a result, Airbnb has faced
legal challenges and negative publicity.
3. Safety Concerns: Some guests have raised concerns about the safety of
staying in a stranger's home. While Airbnb has taken steps to address these
concerns, it remains a weakness for the platform.
Opportunities:
1. Expansion into New Markets: Airbnb has the opportunity to expand into
new markets, particularly in developing countries where there is a growing
demand for affordable accommodation.
2. Diversification of Services: Airbnb has already begun to diversify its
services, offering experiences and other activities in addition to accommodation.
This could help the company attract a broader customer base.
3. Partnership with Other Companies: Airbnb has the opportunity to form
strategic partnerships with other companies, such as airlines, car rental
companies, and travel agencies, to offer bundled travel packages.
Threats:
1. Competition: Airbnb faces competition from other online travel agencies, as
well as traditional hotels and lodging providers.
2. Economic Downturns: Economic downturns could reduce the demand for
travel, which would negatively impact Airbnb's business.
3. Political Instability: Political instability in some countries could lead to
decreased demand for travel, which would impact Airbnb's business.
Additionally, political changes could lead to increased regulatory challenges for
the company.
 • Porter 5 Forces of Airbnb:
The Porter's Five Forces framework is a widely used tool for analyzing the
competitive environment of a business. Here are the five forces and their
application to Airbnb:
1. Competitive Rivalry: The competition in the online marketplace for short-
term accommodation is intense, with several players vying for market share.
However, Airbnb has a significant market share, brand recognition, and first-
mover advantage, which gives it a competitive edge.
2. Threat of New Entrants: The online marketplace for short-term
accommodation is highly competitive, which makes it challenging for new
players to enter the market. However, there is a low barrier to entry for
homeowners who want to rent out their homes, which can increase the supply of
available listings.
3. Threat of Substitute Products or Services: Airbnb competes with
traditional hotels and other short-term rental platforms such as VRBO and
HomeAway. However, Airbnb's unique value proposition of providing a more
authentic and personalized travel experience makes it stand out from other
platforms.
4. Bargaining Power of Suppliers: Airbnb's suppliers are the hosts who rent
out their properties. There is a large pool of hosts available on the platform,
which reduces the bargaining power of any individual host. Airbnb also charges
a commission on each booking, which may reduce the bargaining power of
hosts.
5. Bargaining Power of Buyers: The bargaining power of buyers (or guests) is
relatively high as they have access to a large number of listings on Airbnb and
can easily switch to other platforms or traditional hotel accommodations.

• Challenges faced & Solutions adapted by Airbnb:

In 2016, Airbnb faced several challenges related to legal and regulatory issues,
safety concerns, and competition from traditional hospitality providers. Some of
the key challenges and potential solutions are outlined below:
1. Legal and regulatory challenges: Airbnb faced legal and regulatory
challenges in various cities around the world, as authorities sought to impose
taxes, zoning regulations, and other restrictions on short-term rentals.
Solution: Airbnb worked with local authorities to develop new regulations
and tax policies, and also launched a campaign to educate hosts on their legal
obligations.
2. Safety concerns: There were concerns about the safety and security of
Airbnb rentals, particularly with regard to the risk of property damage, theft,
and personal injury.
Solution: Airbnb implemented a number of safety measures, including
verified ID requirements for both hosts and guests, insurance coverage for
hosts, and a 24/7 customer support team to address any issues.
3. Competition from traditional hospitality providers: Airbnb faced
increased competition from traditional hotels and other accommodation
providers, which had more established brands and infrastructure.
Solution: Airbnb expanded its services to include more premium and
business-friendly offerings, such as Airbnb Plus and Airbnb for Work, and also
invested in marketing and advertising campaigns to increase brand awareness.
4. Trust and reputation challenges: Airbnb faced challenges related to the
trust and reputation of its platform, with some hosts and guests engaging in
fraudulent or unethical behavior.
Solution: Airbnb implemented stricter verification and review processes, and
also launched a series of initiatives to promote responsible hosting and guest
behavior, such as its "One Host, One Home" policy.
Overall, Airbnb addressed these challenges through a combination of regulatory
compliance, safety measures, product innovation, and community-building
initiatives.

• Conclusion:
Airbnb is one of the business models that represents the expansion of the
sharing economy into digital environments. A sharing economy can be
described as an economic model in which goods and resources are shared by
individuals and groups in a collaborative way such that physical assets become
services. The sharing economy’s growth has been facilitated through advances
in big data and online platforms. The model offers several different benefits to
its own customers, who are guests and hosts.
Airbnb's success can be attributed to several factors. One of the most significant
was its ability to tap into the growing sharing economy, where people are
willing to rent out their homes or spare rooms to travelers. Airbnb's platform
made it easy for hosts to list their properties and for guests to find and book
them.
Another factor that contributed to Airbnb's success was its focus on providing a
unique and personalized travel experience. Unlike traditional hotels, Airbnb
allowed travelers to stay in homes that reflected the local culture and lifestyle.
This gave guests a more authentic travel experience and helped them connect
with the local community.
In conclusion, Airbnb's success was due to its ability to tap into the growing
sharing economy and provide a unique and personalized travel experience. The
platform's ease of use, wide range of listings, and affordable pricing made it a
popular choice for millions of travelers worldwide.

Thanks for your ttention.