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Airbnb Competitive Analysis and Porter Generic Forces

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Airbnb Competitive Analysis and Porter Generic Forces

Airbnb is a great way to earn money renting out your spare room, but it's also an excellent option

for short-term vacations.

The travel website has become wildly popular in the last decade, with millions of new listings

discovered by travelers each year.

In fact, according to a 2015 report from GlobalWebIndex, the United States is the top market for

Airbnb lodgings. According to a recent Airbnb survey, Americans have been booking properties

at a rate of about 9.5 million annually (Yang et al., 2021).

The analysis of competitive forces reveals that the supplier power of the existing dominant

players is weak because of the presence of substitutes suppliers.

The substitute suppliers are lodging facilities with rates less than those offered by Airbnb.

Airbnb's power over price is substantial because it does not face rivalry among competitors,

rivalry among potential entrants into its market, or any effective substitutes outside its market.

Airbnb competitors include Vrbo, Booking.com, Agoda, Expedia, Tripadvisor, TUI Villas,

TravelStaytion, Google, HomeToGo, Plum Guide, and Google. Not all of them are vacation

rental marketplaces (Zekan et al., 2019).

HomeToGo, for example, is a free online directory of accommodations throughout the world.

Google is not a vacation rental marketplace but a travel search engine that provides links to other

travel websites.

Tripadvisor is also not a vacation rental marketplace but rather a travel website that reviews

hotels and other lodging types.

Vrbo is another travel website similar to Tripadvisor; only it emphasizes vacation rentals, bed

and breakfasts, hostels, guest houses, and so forth.

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The website is competitive because it has few suppliers in its market. Airbnb's market share in

the hotel industry is estimated to be more than 20 percent.

Porter's Generic Competitive Strategies

Porter's generic competitive strategies include Differentiation, Cost Leadership, and Focus ·

Differentiation. Airbnb has adopted a different and distinct pricing strategy. Airbnb Inc. is

aiming to position itself as the "differentiated" product in the market.

The differentiating factor is its image as personal, authentic, unique, culturally relevant, and

usually alternative to traditional hotels.

Airbnb's higher-end properties are called "super-hosts" because they have received high ratings

from past renters, which adds to their current offerings of an exceptional customer experience.

Airbnb also prides itself on its easy payment system, which facilitates transactions via

smartphone or credit cards.

Additional differentiation is its community-oriented approach.

By requiring hosts to be accepted by their local community, Airbnb has created several non-price

competing factors.

These factors include potential investments in social and environmental impacts, so Airbnb has

satisfied the "Cost Leadership" criteria for a new business model that focuses on a relatively low-

cost strategy of expansion (Claussen & Krahe-Steinke, 2019).

It is a proper "disruptive technology" in that it provides consumers with an opportunity to access

several different types of lodging at prices comparable to or lower than traditional hotels.

Airbnb's strategy is to be the lowest-cost option in the accommodation sector (Li & Srinivasan,

2019).
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The "focus" generic competitive strategy concentrates on a particular segment or geographic

location. Airbnb Inc has adopted the focus strategy. This strategy enables Airbnb to maximize its

bargaining power with suppliers of its inputs, mainly property owners and consumers because it

offers them a distinct value proposition that is narrowly directed at their specific needs.

In this sense, Airbnb takes a "marketing approach" to its business strategy. This "marketing

approach" is the focal point of Airbnb's focus strategy, with a two-way objective.

This allows Airbnb to set prices according to supply and demand conditions in what they refer to

as the "home" market (Li & Srinivasan, 2019).

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References

Claussen, J., & Krahe-Steinke, L. (2019). The impact of competition on Airbnb hosts’ effort to

provide quality. In Academy of Management Proceedings (Vol. 2019, No. 1, p. 19544).

Briarcliff Manor, NY 10510: Academy of Management.

Li, H., & Srinivasan, K. (2019). Competitive dynamics in the sharing economy: An analysis in

the context of Airbnb and hotels. Marketing Science, 38(3), 365-391.

Yang, Y., Nieto García, M., Viglia, G., & Nicolau, J. L. (2021). Competitors or Complements: A

Meta-analysis of the Effect of Airbnb on Hotel Performance. Journal of Travel Research,

00472875211042670.

Zekan, B., Önder, I., & Gunter, U. (2019). Benchmarking of Airbnb listings: How competitive is

the sharing economy sector of European cities? Tourism Economics, 25(7), 1029-1046.