SWOT Analysis of Airbnb: Essay Example for Free

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Company Details

Founded:	August 2008, San Francisco, California, United States
CEO:	Brian Chesky (Aug 2008–)
Headquarters:	San Francisco, California, United States
Number of employees:	6,132 (Dec 2021)
Founders:	Brian Chesky, Joe Gebbia, Nathan Blecharczyk
Subsidiaries:	HotelTonight, Luxury Retreats International Inc.,…

Starting with the founders of the company inviting paying guests to sleep on air mattresses for the night to cover rents, Airbnb is not like any other company in the hospitality industry out there.

Before the pandemic, the company was considered to be one of the disruptive forces in the market, and then COVID-19 happened. The company’s value and share prices took a plunge and then surprisingly recovered in six months.

Airbnb is proof in today’s world that big ideas matter. Now, the brand has a global following and recognition with a market capitalization of over $97 Billion.

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SWOT Analysis of Airbnb

A SWOT Analysis is a research endeavor to gauge the real value of the brand through the perspective of internal and external factors. In this, four major determinants are considered, i-e, strengths, weaknesses, opportunities, and threats.

By taking a complete view of Airbnb’s standing, stakeholders and future investors understand the potential profits and risks in getting on with the venture.

Airbnb Internal Factors

The internal strategic factors of Airbnb that is either enabling the company to do better or hampering it from doing so are its strengths and weaknesses.

💪 Strengths

Any comparative advantage that Airbnb has over its competitors in terms of expertise or resources is known as strength.

Brand Recognition & Value

Since its inception, Airbnb has become more than just a brand. It is now synonymous with affordable yet personalized accommodations while traveling or working abroad.

Even before the pandemic, the overall industry was trying to make an impact. Even in that scenario, Airbnb was and still is, enjoying a strong position through its global brand presence.

As of current estimates, the brand value of Airbnb is over $100 billion.

Leader in its Field

Due to Airbnb business model in the micro hospitality segment, no competitor can come close to it. It offers affordable but tailored accommodation options to a wide array of destinations and commercial centers.

With consistent and reliable services, Airbnb is still bound to rule this market segment for years to come.

Affordable than Conventional

By all means, Airbnb remains to be cheaper or more affordable than its conventional counterparts. Since big or small hotels have to pay staff and need to do repairs and services no matter what, their overhead often goes through the roof.

Contrary to this, reservation is cheaper at Airbnb and guests will only have to pay for the duration they stay. The overheads and other expenses are almost non-existence in the case of Airbnb. This is another point of strength for the company.

Reliable Management Team

Airbnb is one of the rate start-ups in the vacation rental industry that became a multibillion-dollar company and yet managed to have all of its founders on the core management team. This allows the company to think afresh and take steps that are more in line with realities without being overshadowed by the big corporate egos.

From the beginning, the founders and leaders took care of the company in terms of innovation and profit generation through a unique Airbnb’s business model.

Cordial Work Culture

Another point of strength for Airbnb is its work culture. In the face of two polarizing extremes like Uber or WeWork, the company is a breath of fresh air. During the pandemic when 25% of the staff was to let go, one of the founders burst into tears while addressing the departing colleagues.

This makes Airbnb a company that employees want to work with.

High Gross Margins

Hotels incur too many costs, such as service fees, resulting in poor gross margins. Compared to them, Airbnb is a clear exception. The company does not have to maintain spaces or inventory. This is what the Airbnb hosts do, allowing high-profit margins for the company.

Access to Funding

Being a public company, Airbnb is in a position where it can access cheaper and instant funding for growth and expansion.

Diverse Services

From vacation to work from everywhere, Airbnb virtually covers all the bases for its guests which makes it a lucrative option over conventional ones.

Double-Edged Marketing

Through the same marketing stroke, Airbnb connects with both guests and Airbnb hosts which makes marketing endeavors less expensive but double effective.

🤒 Weaknesses

Airbnb, despite its simple yet effective business model, has a lot of weaknesses in its operations.

State Regulations

Many countries and states are now looking at the model of letting guests stay in the houses for money. New and tighter local laws under the legal and regulatory landscape will be affecting the model in terms of the trust.

Poor Quality Control

Airbnb is a tag where all things on the ground are managed by the hosts. This is poor quality control that often ends up with a sour experience for the guests.

Transparent Business Model

It does not matter how unique the business model of Airbnb is, it is transparent and imitable to its core. That’s why new players are emerging in the market on the same footing.

Lack of Pricing Control

Affordability is one of the strongest suits of Airbnb. But cases were registered where hosts charged extortionist pricing. This resulted in a lost advantage and a poor reputation for the company.

Lackluster SEO

It is hard to imagine a multibillion-dollar company struggling with SEO but it is true. Users often get Airbnb options when they specifically search online for Airbnb. Most of the time, the top results are occupied by big hotels and travel agencies.

Lack of Targeted Marketing

The double-edged marketing can cut the company too. In this case, most of the time, the message becomes ambiguous, and targeting hosts and guests seems like a bad idea.

Airbnb External Factors

The external strategic factors that are affecting and can affect the business and sustainability of Airbnb are stated under opportunities and threats.

🤑 Opportunities

By utilizing these opportunities, Airbnb can best its vulnerabilities to achieve both short and long-term goals.

Expansion in services and geography as well as the development of tailored accommodations will allow the company to reap higher profits and ensure steady growth.

Expansion of Airbnb Experience

Airbnb sells its experience as part of the travel and makes it as enjoyable and memorable as possible. This is its unique advantage and it should continue to expand.

Diverse Services

Branching out from the accommodations competitive industry, Airbnb can also add car rentals, air travel, guided tours, and so on to its services portfolio to diversify revenue and growth.

Work from Anywhere Plans

Instead of mainly providing accommodations during holidays, Airbnb can take advantage of digital nomads who want community support to work from anywhere by offering long-stay options with competitive pricing.

Global Expansion

In some markets, such as India and Africa, Airbnb is yet to break the ceiling with its guest community. Through targeted marketing and lead generation, the company can further expand globally.

Tailored Accommodation

Airbnb’s success mainly lies in offering accommodations as part of the experience. The company can further explore this niche by offering tailored options where guests can notify in advance how they want their place to be tailored according to their needs.

😨 Threats

These looming threats, if gone unchecked, can cause serious damage to the company’s survival and sustainability.

Uncertainty of Legal Status

The housing laws are still unclear for property owners to rent out their spaces. Now, states and countries are discussing a new legal framework that will endanger the whole business model of Airbnb.

Stiff Competition

From direct competitors to big hotels and resorts in the travel and tourism industry, everyone is catching up slowly to the offerings of Airbnb by tweaking their services according to the needs of the guests.

If the company fails to compete, it will have a hard time sustaining long-term sustainability.

Rising Lawsuits

Airbnb is now facing periodical lawsuits from hosts for their outstanding grievances. In the same way, many cities and county governments are trying to get tourism taxes out of Airbnb just as they extract that from big hotels.

Flawed Safety & Wellbeing Model

Airbnb has virtually no physical control over the safety and well-being of the guests at its locations. Many incidents have maimed the company’s reputation.

Apart from this, many of its locations are allegedly void of necessary safety equipment including first aid kits, smoke and CO detectors, fire extinguishers, etc.

Vanishing Millennial Appeal

In a bid to oust Airbnb as the undisputed king of the segment, many hotels and accommodations companies are addressing the needs and specifications of millennials. When they get succeeded in their endeavors, Airbnb will be in big trouble.

Airbnb SWOT Table

Strengths

💪 Brand Recognition & Value
💪 Leader in its Field
💪 Affordable than Conventional
💪 Reliable Management Team
💪 Cordial Work Culture
💪 High Gross Margins
💪 Access to Funding
💪 Diverse Services
💪 Double-Edged Marketing

Weaknesses

🤒 State Regulations
🤒 Poor Quality Control
🤒 Transparent Business Model
🤒 Lack of Pricing Control
🤒 Lackluster SEO
🤒 Lack of Targeted Marketing

Opportunities

🤑 Expansion of Airbnb Experience
🤑 Diverse Services
🤑 Work from Anywhere Plans
🤑 Global Expansion
🤑 Tailored Accommodation

Threats

😨 Uncertainty of Legal Status
😨 Stiff Competition
😨 Rising Lawsuits
😨 Flawed Safety & Wellbeing Model
😨 Vanishing Millennial Appeal

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