Marketing Research Project Airbnb

Introduction:
This project is about a marketing research analysis of Airbnb. Airbnb is a company who
provides flat sharing which is part of the travel and tourism industry. The company is
founded in 2008 in Silicon Valley in California and has emerged to one of the biggest
companies worldwide when it comes to the flat sharing business. They don’t own the real
estate’s themselves and earn their money through commissions from the bookings as a
broker.

Chapter I Background of the industry

1. Industry sales of the past five years

A. Global
A highly valuable industry to the global economy, travel and tourism's contribution has
steadily increased for over a decade.
This graphic shows the direct and total economic impact of travel and tourism on the global
economy from 2006 to 2017.
To calculate tourism’s direct contribution to GDP, domestic business travel is subtracted
from tourism expenditures and treat as intermediate purchase, then the resulting
expenditures are used to calculate the direct contribution of tourism to GDP.
This graphic shows that the direct economic contribution of travel and tourism amounted to
approximately 2.57 trillion U.S. dollars in 2017 (+ 11,25% compared to 2016).

In addition, the graphic shows us the direct and total contribution of travel and tourism to
GDP worldwide from 2016 to 2017, by region.
North America makes the largest direct contribution in this area, closely followed by the
European Union and North East Asia. Due to their less developed tourism industries, regions
such as North and Sub Saharan Africa make a much smaller impact.
Looking at the total contribution, we can see that North East Asia makes the largest total
contribution. Indeed, Travel and tourism industry contributed approximately 1.79 trillion
U.S. dollars in total to the North East Asian economy in 2017.
It means that North East Asia has a largest amount of domestic business travel in their total
contribution to the economy that North America and the European Union.

Hungary:

1.Industry sales of the past five years:

The travel and tourism industry is an important contributor to the GDP and offers a
lot of opportunities in Hungary. But it is difficult the measure the exact sales
numbers. The measurement is divided in 3 Main parts. First of all, there is the direct
Travel and Tourism contribution for example accommodation, transportation etc.
Secondly the indirect contribution like Travel and Tourism investment spending for
example shareholders of T and T companies. Finally, we got the induced contribution
like spending money on food and clothing who are connected with the tourism
activities.
 HUF BN
Contribution to GDP in HUF BN

1400

1200

1000

800

600

400

200

0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2028

Contribution to GDP in %

3
2.5
Percentage

2
1.5
1
0.5
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2028

Years

(Source related to the Figure: TRAVEL & TOURISM ECONOMIC IMPACT 2017 WORLD - WTTC. (n.d.).
Retrieved from https://www.wttc.org/-/media/files/reports/economic-impact-research/regions-
2017/world2017.pdf )

As you can see in the statistic, the contribution to the GDP is constantly rising throughout
the past 5 years. And it is estimated to grow in the future as well. But it's crucial to consider
that we can only see the direct contributions and not the indirect, because it's hard to
measure them. So, in reality the contribution to the GDP is higher.
 2. Market shares of major competitors for the past five years

Global:

Leading lodging companies worldwide as of November 2016, by number of rooms or listings

(in 1,000s)

This statistic shows the leading lodging companies worldwide as of November 2016, by
number of rooms or listings. Marriott International was the leading lodging company in
terms of number of rooms or listings, with 1.1 million guestrooms worldwide

Only a portion of Airbnb’s listings are comparable to hotel rooms. To estimate the fraction of
hotel-comparable rooms within Airbnb’s global inventory, STR extrapolated based on data
pro. Within this dataset, STR calculated the fraction of Airbnb supply that comprises:
1) units not available for rent
2) shared rooms
3) private rooms and/or 4) units that can host large groups (seven or more people).
STR then applied this fraction to the total number of Airbnb listings globally to estimate that
only 1.08 million listings (35% of total Airbnb listings) are effectively available and reasonably
competitive with hotels. This estimate is just under the total number of Marriott rooms
divided by Airbnb for 13 markets.

Hungary:

The major competitors in this industry are:

  Airbnb
 Booking.com
 Couchsurfing
 Tripadvisor
 Hotels
 Hostels

There are no specific numbers for the market share of those major competitors.
Airbnb has a market share of 14.3 percent in 2017 rising about 4.1 percent from 2016 to
2017 making a serious competition to all kinds of accommodation and tourist companies
There are many other companies but it's hard to say which of them are real competitors to
Airbnb because there are a lot of companies who provides Travel and Tourism services, but
we think these are the 3 major ones. We don’t have really a source for it because there are
not in the internet, but these 3 sites are possible in Hungary.

3. Growth rate Trends

Global:

Global Total Tourist arrivals (2015-2018) 2015 2016 2017 2018

Total Global Tourist arrival (trillion) 10.45 11.12 11.88 12.67

Ratio of global tourist arrivals to global population 1.4 1.5 1.6 1.7
(100%)

The total global tourist arrivals have steadily increased since this past 4 years.
In 2017, the total global tourist arrivals reached nearly 11,9 billion, which equals to 1.6 times
as many as the total global population (7.55 billion in 2017).
 Global Total Tourist Revenue (2015-2018) 2015 2016 2017 2018

Total Global Tourist revenue (trillion) 4.9 5.0 5.3 5.6

Percentage to global GDP (%) 6.6 6.7 6.7 6.8

The Global Total Tourist Revenue and its contribution to the global GDP keep increasing
since 2015.
In 2017, the Global Total Tourist Revenue reached 5.3 USD trillion, it represents around 6,7%
of global GDP in 2017 (79 865.48 billion in 2017).

2016 2017 2018

Growth rate of global tourist arrivals (%) 6.4 6.8 6.7

Growth rate of global tourist revenue (%) 2.6 4.3 5.9

Global Tourism Arrivals growth rate increased in 2017 but is expected to decrease a bit in
2018, but the global Tourism Revenue growth rate keep increasing since 2016.

Hungary:

The trend of tourist taking accommodation in Airbnb has risen significantly over the last
years and the trend is still going up but the growth rate per year is decreasing since Airbnb
started in Budapest. In 2017 there were around 1,5 million people using Airbnb in Budapest.
So, in total 35 percent more than 2016. Because of the lack of information concerning
Hungary we will use Budapest as representative city.

4. General Industry Information

The travel and tourism industry is one of the world’s largest industries with a global
economic contribution (direct, indirect and induced) of over 7.6 trillion U.S. dollars in 2016.

 The direct economic impact of the industry, including accommodation,

transportation, entertainment and attractions, was approximately 2.3 trillion U.S.
dollars that year.

Several countries, such as France and the United States, are consistently popular tourism
destinations, but other, less well-known countries are quickly emerging in order to reap the
economic benefits of the industry. (Attached 1)

All around the world, the tourism industry has experienced steady growth almost every year.

 International tourist arrivals increased from 528 million in 2005 to 1.19 billion in
2015. Figures were forecasted to exceed 1.8 billion by 2030.

Each year, Europe receives the most international tourist arrivals. (Attached 2)

It also produces the most travellers: with approximately 607 million outbound tourists in
2015, the region had more than double that of the second largest tourist origin, the Asia
Pacific region.

In 2015, global international tourism revenue reached approximately 1.26 trillion U.S.
dollars, having almost doubled since 2005. That year, China had the largest international
tourism expenditure, followed by the United States and Germany.

The leading city in international visitor spending was Dubai, where tourists spent more than
31.3 billion U.S. dollars in 2016.

Annual growth of travel and tourism's direct contribution to GDP

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0%
Namibia 9.1%
Montenegro 8.6%
Zambia 7.3%
Angola 7.3%
China 7.3%
Gabon 7.3%
Burma 6.9%
Cambodia 6.9%
Thailand 6.7%
Cape Verde 6.5%
India 6.4%
Vietnam 6.3%
Mongolia 6.3%
St. Kitts and Nevis 6.3%
Kuwait 6.2%
(Source related to the figure: Fastest emerging tourism destinations worldwide 2024 | Statistic.
(n.d.). Retrieved from https://www.statista.com/statistics/303381/fastest-emerging-tourism-
destinations-worldwide/ )

“Fastest emerging tourism destinations worldwide for 2014 to 2024” (Attached 1)

North America Asia Pacific
International arrivals in millions

1400 Middle East Europe

1200
670.6
619.5
1000 605.1
580.2
566.4
534.4
516.1
800 487.7
485.4 487.6
463.9 461.7
452.7
600

55.6 58.1
400 58.1 323.1
52.4 284.1 306
51.7 48.4 264.3
55.4 54.7 249.8
46.9 56 52.8 218.6 233.5
40.9 184 208.2
200 33.7 166 182 181.1
154.1

110.2 120.9 127.6 130.9 134.8

89.9 90.6 95.3 97.7 93 99.5 102.1 106.4
0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
(Source related to this figure: International tourist arrivals worldwide by region 2017 | Statistic.
(n.d.). Retrieved from https://www.statista.com/statistics/186743/international-tourist-arrivals-
worldwide-by-region-since-2005/ )

Number of international tourist arrivals from 2005 to 2017, by region (in millions)

Chapter 2: Company Background

1. Background and description of the Company

Background and description of the company.

Airbnb was founded in 2008 and is available today in 191 countries which includes 65000
cities in total.
Airbnb is a platform for individuals to rent out their primary residences as lodgings for
travellers. Renters who use the website typically seek accommodations with a homey feel
that hotels cannot provide, and most hosts are individuals who want to rent out their homes
to supplement their income.
 2. Company sales for the past five years (both global and
Hungary)

GLOBAL

Hungary:

According to Hungary today there are about 1,48 million people booking accommodation
with Airbnb in 2017 in Budapest with approximately around 9000 flats working with Airbnb.
Most of the flats compete with the level of 3- and 4-stars hotels.

3. Growth rate trends (both global and Hungary)

 Growth rate trends global

9
8
7
6
In billion $

5
4
3
2
1
0
2016 2017 2020
Profit Revenue

Global:
The trend in Hungary concerning the market share of Airbnb is rising significantly between
2016 and 2017. According to Hungarytoday Airbnb has grown around 35 percent between
2016 and 2017 making some serious competition particularly to 3 Stars hotel in the centre of
the City of Budapest. The Trend is still going upward but compared to the annual 70 percent
growth in Hungary since the start of Airbnb entering Hungary the growth will be slower in
the future. The reason for the high difference is the significant huge growth airbnb has
achieved in their first years in Budapest

The information about task 4 and 5 are not available, because Airbnb wants to keep the
internal data about consumer behaviour and competition secret.

References:

 Travel & tourism: Total contribution by region 2016-2017 | Statistic. (n.d.). Retrieved
from https://www.statista.com/statistics/311948/travel-and-tourism-total-
contribution-to-gdp-worldwide-by-region/

 TRAVEL & TOURISM ECONOMIC IMPACT 2017 WORLD - WTTC. (n.d.). Retrieved from
https://www.wttc.org/-/media/files/reports/economic-impact-research/regions-
2017/world2017.pdf
 Leading lodging companies by rooms or listings worldwide 2016 | Statistic. (n.d.).
Retrieved from https://www.statista.com/statistics/753195/lodging-companies-
worldwide-by-rooms-listings/

 Airbnb & Hotel Performance - STR, Inc. (n.d.). Retrieved from

http://www.str.com/Media/Default/Research/STR_AirbnbHotelPerformance.pdf

 Airbnb Stays in Budapest Increased by 35 Percent Last Year. (2018, September 26).
Retrieved from https://hungarytoday.hu/airbnb-stays-in-budapest-increased-by-35-
percent-last-year/

 Report on World Tourism Economy Trends (2018). (n.d.). Retrieved from

https://www.itb-
kongress.de/media/itbk/itbk_dl_all/itbk_praesentationen2018/ITB_City_Tourism_Fo
rum_Introduction_Of_WTCF_Research_Dr._Song_Rui.pdf

 Airbnb Stays in Budapest Increased by 35 Percent Last Year. (2018, September 26).
Retrieved from https://hungarytoday.hu/airbnb-stays-in-budapest-increased-by-35-
percent-last-year/

 The Explosive Growth of Airbnb - An Infographic for Hoteliers. (2018, October 31).
Retrieved from http://www.vizlly.com/blog-airbnb-infographic/

 Nath, T. (2018, October 22). How Airbnb Makes Money. Retrieved from
https://www.investopedia.com/articles/investing/112414/how-airbnb-makes-
money.asp

 Airbnb expects $2.8B in 2017 revenue, $8.5B by 2020. (n.d.). Retrieved from
https://pitchbook.com/news/articles/airbnb-expects-28b-in-2017-revenue-85b-by-
2020

 Winkler, R. (2015, November 20). Airbnb Raises Over $100 Million as It Touts Strong
Growth. Retrieved from https://www.wsj.com/articles/airbnb-raises-over-100-
million-as-it-touts-strong-growth-1448049815

 Bort, J. (2018, February 06). Airbnb made $93 million in profit on $2.6 billion in
revenue, but an internal clash sent the CFO out the door. Retrieved from
https://www.businessinsider.com/airbnb-profit-revenue-2018-2

 Airbnb, Inc. Company Profile | Key Contacts, Financials ... (n.d.). Retrieved from
http://www.hoovers.com/company-information/cs/company-
profile.airbnb_inc.94f8339bb0144a15.html
 Airbnb, Inc. Company Profile | Key Contacts, Financials ... (n.d.). Retrieved from
http://www.hoovers.com/company-information/cs/company-
profile.airbnb_inc.94f8339bb0144a15.html
 How much revenue is Airbnb making? - Quora. (n.d.). Retrieved from
https://www.quora.com/How-much-revenue-is-Airbnb-making

 The Explosive Growth of Airbnb - An Infographic for Hoteliers. (2018, October 31).
Retrieved from http://www.vizlly.com/blog-airbnb-infographic/

 Report: Airbnb listings up to 8,000 in Hungary. (n.d.). Retrieved from

http://www.bbj.hu/business/report-airbnb-listings-up-to-8000-in-hungary_102248