Industry Analysis of Airbnb- Indian Context

 Rivalry among Existing Competitors

Rivalry among existing organizations like Oyo, MMT, GoIbibo etc. give high competition to
Airbnb. They are working 24/7 to beat Airbnb. To deal with the risk from existing
contenders, Airbnb has changed its current business model by introducing different services
like adventure etc.

 The Threat of New Entries

The main sources of barriers for new entries include product differentiation, cost of changing
suppliers, economies of scale, indirect costs, capital requirements, and access to distribution
channels. The threat of new entries into the market is weak and flexible for Airbnb. There are
not many barriers to entry, therefore, any website can create its portal and compete with
Airbnb.

Besides, Airbnb has added an efficient operation across its platform to ease bookings and
stays, hence reducing the competition from new entrants.

 Negotiating Power of Customers

The negotiating powers of the customer is high due to the existence of a lot of competitive
companies offering similar products or its substitutes like hotels, motels, hospitality etc. with
a broad range of services across different locations. In comparison to the competition Airbnb
is a cheaper substitute which gives it an edge over the customers negotiating powers.

 Negotiating Power of Suppliers

The negotiating power of suppliers is very low since Airbnb manages both the supplier and
the clients. In Airbnb, the supplier is the host who provides an apartment or a room to
travellers; they are the individuals that run the business. On its part, Airbnb works efficiently
with the hosts so that they can minimise the problems faced by the customers.

 Threat of Alternative Products

The alternative products to Airbnb include traditional hotels, B&B, hostel etc. As such, the
threat of alternative products can be assessed by the market share captured by the indirect
competition. It can be said that the threat of alternative products is high because the switching
costs are non-existence for potential customers of Airbnb.