Professional Documents
Culture Documents
Airbnb: Analysis & Marketing Plan
Airbnb: Analysis & Marketing Plan
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TABLE OF CONTENTS
INTRODUCTION: .................................................................................................................... 5
Industry Analysis ..................................................................................................................... 6
Market Review..................................................................................................................... 7
Factors of Demand .......................................................................................................... 7
Five Force Analysis ......................................................................................................... 8
Competitive Review ........................................................................................................... 12
Brand Competitors ........................................................................................................ 12
Product Competitors ..................................................................................................... 13
Solution Competitors ..................................................................................................... 13
Total Budget Competitors.............................................................................................. 13
Three Most Significant Competitors .............................................................................. 14
Current and Past Strategies .......................................................................................... 14
Financial Performance .................................................................................................. 16
Strengths and Weaknesses .......................................................................................... 17
Future Strategies ........................................................................................................... 18
Impact on Airbnb ........................................................................................................... 19
Type of Competitive Market .......................................................................................... 22
Customer Review .............................................................................................................. 23
Potential Market ............................................................................................................ 23
Purchase Process ......................................................................................................... 24
Why customers buy and expectations ........................................................................... 26
Microenvironment Review ................................................................................................. 27
Legal and Regulatory .................................................................................................... 27
Economic ...................................................................................................................... 27
Social and Cultural ........................................................................................................ 28
Environmental ............................................................................................................... 29
Technological ................................................................................................................ 30
Firm Analysis ......................................................................................................................... 31
Key Information ................................................................................................................. 32
Size ............................................................................................................................... 32
Key Management .......................................................................................................... 32
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History ........................................................................................................................... 33
Primary Products/Services ................................................................................................ 35
Current Goals & Objectives ............................................................................................... 37
Current & Past Strategies .................................................................................................. 39
Performance ...................................................................................................................... 41
SWOT Analysis ................................................................................................................. 42
Strengths: ...................................................................................................................... 42
Weaknesses:................................................................................................................. 43
Opportunities: ................................................................................................................ 43
Threats: ......................................................................................................................... 44
Current Lifecycle Stage ..................................................................................................... 45
Current Branding Strategy ................................................................................................. 46
Core Competencies & Competitive Advantage...................................................................... 48
Core Competencies........................................................................................................... 49
Competitive Advantage ..................................................................................................... 52
Cost Advantage ............................................................................................................. 52
Differentiation Advantage .............................................................................................. 52
Segmentation ........................................................................................................................ 55
Segmentation ........................................................................................................................ 55
Convenience Seekers: ...................................................................................................... 56
Low-Budget Culture Seekers............................................................................................. 58
Event-Location Seekers .................................................................................................... 59
Experience Focused .......................................................................................................... 62
3 CIRCLES ............................................................................................................................ 64
Target Market and Competition ......................................................................................... 65
Target Market Segment: Low-Budget/Culture seekers ................................................. 65
Key Competitor: HomeAway ......................................................................................... 65
Context .......................................................................................................................... 65
Customer Perspective ....................................................................................................... 66
Firm Perspective ............................................................................................................... 66
3-Circle Map .................................................................................................................. 68
Opportunities for Growth ............................................................................................... 69
Features that can be Eliminated .................................................................................... 69
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INTRODUCTION:
economies have become more popular, giving rise to companies like Airbnb that utilize
sharing economies to create an online marketplace for the exchange of private products and
services. Sharing economies have complex dynamics in how they form relationships between
market participants. The lines between customer and seller become blurred, and trust has
become an increasingly important factor as this trend continues to grow. In the travel
industry, in particular, Airbnb has been utilizing this unique structure to create a new type of
This paper aims to provide a comprehensive review of Airbnb, its competitors, and the
travel industry as a whole. An analysis of the firm and industry are provided to determine
whether the vacation rental industry itself is favorable. Next, the paper examines core
strengths and competencies that Airbnb has developed in order to succeed in the industry.
Four key market segments were identified as: business travelers, low-budget culture seekers,
event-goers, and group/family travelers. Low-budget culture seekers were isolated as the
ideal segment based on its potential to further Airbnb’s overall goals. Lastly, the paper will
inspect how Airbnb fills the needs of its ideal segment in a way that is meaningful and
Industry Analysis
A key factor in determining the success of a company is analyzing the industry it resides in. No matter
the strength of an organization, if the industry it operates in is dying there is no way for it to continue. In this
section, the vacation rental industry is reviewed for opportunities and challenges that could be posed to Airbnb.
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Market Review
In order to examine the firm’s current situation, it is helpful to start with external market
factors and then move inward. For this reason, the paper will begin with an overview of the
will be offered to better frame the external review. Each competitor will be examined based
on its relation to Airbnb’s unique solution. Each competitor’s current strategy will be explored
as well as the potential effects that each of those strategies might have on Airbnb’s strategic
decisions. Once the competitors have been thoroughly evaluated, the paper will shift to
internal factors focused on an analysis of Airbnb’s ability to compete in the current market.
Factors of Demand
The vacation rental industry is influenced primarily by the discretionary income of
individuals according to the 2017 IBIS World Reports.1 These reports also indicate that when
discretionary income increases, people tend to spend more money on traveling, particularly
on vacations and leisure trips. The price and variety of hotels, hostels, and other
accommodations also influence demand for vacation rentals.2 Individuals looking for a unique
experience or trying to get a better value for long-term stays, tend to be more interested in
vacation rentals than hotels. Last, but not least, the overall health of the tourist industry plays
a large part in the health of vacation rentals since a thriving tourist industry promotes travel to
1 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
2 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
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The threat of new entrants is high in the online, vacation rental industry. According to
the 2017 IBIS industry report for travel agencies and online booking services, the competitive
intensity is quite high.3 Since minimal capital is needed to set up a website for people to list
their home rentals online the barriers to entry are fairly low. One hindrance to new entrants is
the networking effect, since sites with a reputation and a larger user base tend to attract more
sellers and buyers. Homeowners that intend to list a rental will visit the site with the most
traffic, and buyers tend to prefer the sites that offer them the widest variety in terms of price
Buyer power is medium in the online vacation rental industry. There are alternatives
including hotels, hostels, or staying with friends or family. These, however, do not offer the
same benefits that a vacation rental would - such as privacy, price, or customization. For
example, staying in a hotel could be an alternative, but there is little privacy due to the close
proximity to other rooms, the prices are often astronomical, and, other than the number of
beds, there is little room for customization. Staying with friends and family is a much more
customized experience, but is not always an option that is readily available for travelers.
While there are options for vacation travelers, options for staying in relatively private,
3 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1481
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Supplier power in the vacation rental industry is usually low. While there are many
businesses that allow consumers to lease their own properties on a short-term basis, few
exist on a large scale since home-sharing is a new industry. This gives this small number of
businesses that offer a rental platform a greater power over the suppliers (those leasing
property/rooms). In order to reach the greatest number of people and optimize the chances
that their property will be leased, the suppliers rely on companies already operating on a
large scale. There are many smaller companies where the supplier power is higher. This is
because they are not only less established, they rely on suppliers to fill their portfolio of
rentals. Without rentals, the business would fail. Large companies are less impacted by this
phenomenon, because the company has an established base of suppliers and the power is
The threat of substitutes in the vacation rental industry is high. Rental agencies, hotel
services, hostels, and full-service vacation booking agencies are all well-established
industries.4 Consumers considering short-term vacation rentals might also have the option of
staying with family or friends, which is considerably less expensive. Short-term stay options
are widely available in other formats as well. There are camping services, bus rentals, and
The vacation rental industry provides a unique challenge since it intersects multiple
industries. The first of these, home-sharing, has a relatively high level of competitive intensity
4 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
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because the model is fairly easy to replicate.5 It is important to note that, while there are
several options, many of the new home-sharing businesses have not established notable
scale. The second industry, accommodation booking through third party services, is an older
industry with a reportedly high level of competitive intensity according to IBIS World’s Industry
Report.6 This industry includes travel agencies and similar full-service travel business. While
it seems that home-sharing hasn’t become completely established, despite the rush of new
entrants, the rental market is an established concept. For this reason, competitive intensity
The vacation rental industry relies heavily on other travel and vacation centered
by services such as Uber or Lyft. Access to local hot spots and tourist attractions also
be more attractive to renters looking for a vacation spot. Vacation rentals are also strongly
The most important force in the vacation rental industry is the threat of substitutes,
which is high. There are a lot of alternatives for places to stay. In many cases, price is a key
driver for which platform consumers decide to book through. According to IBIS World’s report
on Travel Agencies, “Travelers are increasingly booking directly with travel operators, or with
travel sites that provide side-by-side comparisons of hotel rates for various destinations.”7
5 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
6 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
7 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1481
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This makes it similar to the airline industry, where customers rent from whichever site can
give them the cheapest price for their desired accommodation. Airbnb is a sharing economy,
which allows it a far greater degree of diversity than many of its substitute options. This is the
key feature of a sharing economy. Offerings are less commoditized than a consumer would
The intersection between sharing economies and vacation rentals is where Airbnb
operates. The industry has become considerably less attractive since Airbnb opened its
service. The industry has just begun to saturate with new entrants, many of which are
attempting to emulate Airbnb’s business model. The hotel and vacation rental industries are
highly saturated and competitive. However, the sharing economy niche is still relatively new,
which means there is likely still some room to become better established.
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Competitive Review
Competitors are an essential piece of the external review. This paper breaks down
Airbnb’s competitors based on the solution they provide. Brand competitors are those with a
similar product and price. Product competitors are those with different products that are very
similar in nature and fulfill the same need. Solution competitors are those with a very different
product that can be used to fulfil a similar need. Total budget competitors can be considered
competitors whose goods fall within the same “mental budget.” Total budget competitors do
not necessarily fill the same need, but exist in a similar category. In the case of Airbnb, total
Brand Competitors
Tripping.com provides a meta-search site for users to compare rates across platforms.
Rather than providing its own listings, Tripping.com offers a one-stop shop to compare deals
from multiple rental sites. It partners with HomeAway, VRBO, Housetrip, FlipKey, and others
to show consumers what the different sites have to offer all in one place. FlipKey is a
subsidiary of TripAdvisor, founded in 2007 and bought in 2008. FlipKey connects consumers
to over 300,000 international rentals.8 Much like Airbnb, anyone can post their property on the
site for rental. HomeAway is a subsidiary of Expedia, Inc. and is based in Austin, Texas.
8 https://www.flipkey.com/pages/about_us/
9 https://www.homeaway.com/info/about-us/company-info
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Product Competitors
Staying with friends and family is one example of a product competitor. It is a similar
alternative to Airbnb in that it is a potential place to stay during travels; however, the usage is
different in that it is not booked online and uses strangers instead of friends and family.
Another product competitor is Craigslist. Craigslist is another online/app company that allows
strangers to connect and share goods and services, however the focus of Craigslist primarily
on goods rather than lodging. Another product competitor is Real Estate agencies, apps, and
websites. These also allow people to find homes, but the focus of Real Estate agencies is
Solution Competitors
Marriott is the biggest hotel chain in the world, with over 5,800 properties and 1.1
million rooms that cover 110 different countries.10 As is common in the hotel industry, Marriott
owns a small portion of its rooms, and instead franchise their brands to individual owners.
This has reduced Marriott’s liability as a company as they are not heavily invested in
properties that may be hard to liquidate. Hostels are a cheaper alternative to hotels, often
with dormitory style housing. Hostels target students and people traveling on a very low
budget, as they offer much less amenities and often require visitors to help with chores.
vacation. Travel expenses can include plane rides, food, and other transportation. Vacation
expenses can include tours, local activities, and souvenirs. These costs have a large impact
10 https://www.cnbc.com/2016/09/23/marriott-buys-starwood-becoming-worlds-largest-hotel-chain.html
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on what lodging options are used during travel. Large purchases such as cars and TV’s also
are a competitor because of their impact on vacations. People who spend their disposable
income on material things instead of taking a trip, are obviously less likely to use Airbnb.
Marriott. These are the most significant competitors because they each pose as different
HOMEAW AY
According to VRM Intel, a site dedicated to providing up-to date news in the vacation
rental industry, HomeAway’s past strategy was to give travelers a “one-stop shop for whole
home vacation rentals in leisure travel markets.”11 Its current strategy is fairly similar. It
focuses on resort locations and emphasizes treating its landlords like business owners. On
average guests pay a higher price, but typically stay longer at its locations.12 One key
distinction is HomeAway’s pricing strategy. Rather than charging guests extra fees, it charges
the host either a 13% fee per booking or an $349-$999 annual subscription for its services.13
This makes it more attractive for guests but offers slightly less incentive for hosts.
11 http://www.vrmintel.com/airbnb-vs-homeaway-winning-race-top-vacation-rental-industry/
12 http://www.vrmintel.com/airbnb-vs-homeaway-winning-race-top-vacation-rental-industry/
13 https://www.tripping.com/industry/rental-companies/homeaway-vs-airbnb
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FLIPKEY BY TRIPADVIS OR
Previously FlipKey focus on vacation rentals near resorts and tourist destinations. In
addition, it had more of a domestic focus, in 2012 50% of its listings were in the U.S.
market.14 FlipKey initially offered annual subscription or short-term subscriptions for its hosts
to list properties on its site.15 After getting bought by TripAdvisor in 2008, FlipKey updated its
strategy to integrate with TripAdvisor’s larger goals. Currently it aims to provide a holistic
traveling experience through both FlipKey and TripAdvisor’s online travel community. 16 In
2013, it switched from subscriptions to a fee-based model for homeowners looking to list on
its site. Now it charges a 3% booking fee per accommodation. Recently it has also expanded
MARRIOTT
accommodations and destinations at different price points. Their motto was, and still is, “One
company many brands.”18 Marriott was the first international company to offer a vacation
sharing program in 1984.19 Through timeshares or vacation sharing, customers can own the
room for a specific week of the year. Programs like this have led to a whole new marketplace
where individuals exchange and sell their “weeks” for weeks at other Marriott Timeshare
14 https://skift.com/2012/07/06/how-flipkey-plans-get-back-game/
15 https://books.google.com/books?id=59xpBAAAQBAJ&pg=PA140#v=onepage&q&f=false
16 https://www.forbes.com/sites/petertaylor/2016/12/07/watch-out-homeaway-airbnb-heres-why-tripadvisor-may-
be-your-biggest-competition/#4f33018c736d
17 https://skift.com/2014/06/16/apartment-rentals-are-flipkeys-fastest-growing-category/
18 http://www.marriott.com/about/culture-and-values/history.mi
19 https://www.buyatimeshare.com/marriott-timeshare-history.asp#
20 https://www.marriottvacationsworldwide.com/downloads/presskits/Company-Facts.pdf
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Marriott’s current strategy is to attract more than just customers looking for a short-
term stay through its timeshares and other hotel-sharing programs.21 In 2010 Marriott
changed its timeshares to a point-based system that allowed its members to travel to any
Marriott hotel location in the world.22 It continues to focus on leveraging its properties and
multiple brands to create a unique, yet consistent experience for its customers around the
world.
Financial Performance
HOMEAW AY
HomeAway within the vacation rental industry was 2.7% in 2014,24 which was .6% higher
than it was the previous year.25 The net profit margin for HomeAway in 2014 was 2.9%, which
FLIPKEY BY TRIPADVIS OR
TripAdvisor had a revenue of $1,480,000,000 in 2014.26 This is more than double that
of HomeAway in the same year. TripAdvisor had a 9.1% market share of the vacation rental
21 http://www.marriottvacationclub.com/
22http://www.marriott.com/Multimedia/PDF/CorporateResponsibility/Marriott_Sustainability_Report_Update_201
0.pdf
23 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1366684&accession_number=0001193125-15-
062554&xbrl_type=v#
24 https://www.statista.com/outlook/268/109/vacation-rentals/united-states#
25 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1526520&accession_number=0001564590-17-
001783&xbrl_type=v#
26 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1526520&accession_number=0001564590-17-
001783&xbrl_type=v#
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industry. This market share was a .1% decrease from the previous year’s market share.
TripAdvisor has a net profit margin of 8.1% which is relatively average for this industry.
MARRIOTT
Marriott had a revenue of $17,072,000,000 in 201427 and a 27% market share of the
hotel industry. The company saw a .5% growth in market share the following year. 28 The
Marriott had a net profit margin of 8.01%, which is also relatively average for the hotel
industry.
HOMEAW AY
HomeAway’s primary weakness is that it is more expensive on average for hosts to list
their accommodations on, the prices are generally more expensive for guests as well which is
a drawback. HomeAway’s strength is it can tap into economies of scales due to its ownership
of multiple vacation rental sites. This allows it to leverage its core competencies across
FLIPKEY BY TRIPADVIS OR
FlipKey by TripAdvisor struggles since it is does not have a strong brand. Its
connection to TripAdvisor is beneficial, but at the same time it is also detrimental. FlipKey is
just viewed as supporting TripAdvisor whereas its competitors have a more narrowly defined
focus on providing unique vacation rentals for customers. Its advantage is that it only charges
27 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1048286&accession_number=0001628280-17-
001506&xbrl_type=v#
28 https://csimarket.com/stocks/competitionSEG2.php?code=MAR
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MARIOTT
Marriott has less flexibility to its highly efficient system of operations it has established
over the years. Because of this it is less agile and cannot take advantage of the sharing
economies since it is already heavily invested in its own properties. The fact that it owns its
own resorts and rentals gives it an advantage though. Location is key and owning property in
highly sought-after destinations gives it an edge over its competitors who are merely acting
as a broker. Lastly, its brand is globally recognized and trusted which is a huge asset since
guests feel less apprehension about committing to stay for a week at a Marriott versus in a
stranger’s home.
Future Strategies
HOMEAW AY
HomeAway is likely to follow the same format as many of its previous marketing
strategies. This means that the company is likely to release many print ads as well as many
video ads. Most of the company’s advertisements are humor centered and involve the use of
celebrities, most notably and frequently Nick Offerman. HomeAway will likely continue to
follow this format for their ads as well as keeping the motto: “Get away, Get HomeAway.”
TRIPADVISOR
TripAdvisor will likely continue to emphasize trust and use brand recognition and
sincerity in their marketing efforts. They will probably continue to use a variety of different
media vehicles such as print, video, digital/online, and TV ads. The company has recently
begun to use an owl in a bathrobe29 as its spokesperson, and that will likely continue in future
29 https://skift.com/2017/06/13/tripadvisor-returns-to-tv-advertising-with-bathrobe-clad-owl-as-spokesperson/
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marketing strategies. The main personality that the company has been, and will likely
continue to, try to convey in its marketing efforts is a fun and trustworthy personality.
MARRIOTT
Marriott will likely follow a different approach to the previously mentioned companies in
its marketing strategies in the future. Marriott has taken to a more content-based marketing
strategy in which the company puts out information not only about themselves, but also
information and content that its customers would be interested in.30 The company has been
on a mission to establish itself as the authority in the travel lifestyle and it will convey this
Impact on Airbnb
HOMEAW AY
HomeAway’s strategies are most likely to directly impact Airbnb. This is because they
operate in the exact same niche of the vacation rental industry, sharing economies. Airbnb
and HomeAway use similar strategies to reach their consumers, humor and vacation appeal.
HomeAway also has a strong parent in Expedia, which has allowed it’s successful use of
celebrity endorsements.
Airbnb capitalizes on “fun” and “cool.” Often, marketing strategies are centered toward
building a close-knit and trendy community of travelers. In 2015, Airbnb hosted a ‘floating
house’ publicity stunt that on the Thames River in London, which was attended by several
important social influencers.31 The resulting coverage and brand engagement that followed
30 http://adage.com/article/cmo-strategy/marriott-a-content-marketing-mecca/308365/
31 https://www.theceomagazine.com/business/6-things-can-learn-airbnbs-marketing-strategy
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were immense. Airbnb has also paid for a few celebrity trips in return for social media
acknowledgement, but it has yet to make any lasting relationships with celebrity endorses. 32
Because HomeAway appeals to a similar demographic, it’s also important that Airbnb
maintains its online communities. Currently, it hosts a large online community with detailed
profiles, communication options, and a strong review focus.33 The Airbnb Community even
offers “Meetups,” which allow you to meet new people in Airbnb hosted events all around the
world. A local function allows Airbnb users to find clubs and events that they can attend
nearby, even if they’re not currently paying customers.34 HomeAway does not currently have
the same set up, but it could easily be emulated by a business in their position. For this
reason, Airbnb should focus on better integration to continue to support the digital hub it’s
started.
TRIPADVISOR
The greatest danger of TripAdvisor is the easy comparison of prices, and the fact that
businesses and users can use TripAdvisor for free.35 Unfortunately, the nature of Airbnb
gives it very little control over price. TripAdvisor’s strategy of building consumer trust and
comparing prices across channels appeals primarily to consumers whom might be less
comfortable with traveling and searching for accommodations. TripAdvisor doesn’t seem to
be targeting the same young and trendy demographic that Airbnb has focused on, but
TripAdvisor does offer a wide variety of listings from multiple sites and could compete with
32 https://www.theceomagazine.com/business/6-things-can-learn-airbnbs-marketing-strategy
33 https://community.withairbnb.com/t5/Community-Center/ct-p/community-center
34 https://community.withairbnb.com/t5/Cities/ct-p/cities
35 https://www.tripadvisor.com/
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Airbnb on diversity. As Airbnb moves forward, it might need to consider new ways to highlight
its diversity, or even consider a partnership that might allow Airbnb listings to appear on
MARRIOTT
Marriott is the least similar to Airbnb of the chosen competitors, but it does have an
extraordinary content strategy.36 In 2014, Marriott founded its own global content studio.37
Marriott content efforts focus primarily on “storytelling.” In 2015, it created its own TV show
(The Navigator Live), a short film (The Two Bellmen), a personalized online time travel
magazine, and even a few short programs for the Oculus Rift.38
Airbnb has also attempted to produce some content, but content offerings are often a
public response to legal issues. For example, in 2012 Airbnb sponsored an Economic Impact
Study in San Francisco that was meant to highlight its positive impact on the area.39 It has
since used its proprietary data to support similar studies in other cities, but these studies
have usually been packaged into “feel good” campaigns following legal battles.
Airbnb has also participated in traditional content marketing campaigns geared toward
social media movement. In 2013, it produced the first crowd sourced Vine.40 At the same
time, it produced short films meant to tell short stories about Airbnb hosts.41 However, Airbnb
has never produced content on the scale that the Marriott currently does, and Airbnb may
need to commit to creating more content in the future in order to compete. Marriott has just
36 http://adage.com/article/cmo-strategy/marriott-a-content-marketing-mecca/308365/
37 https://contently.com/strategist/2015/11/05/were-a-media-company-now-inside-marriotts-incredible-money-
making-content-studio
38 https://contently.com/strategist/2015/11/05/were-a-media-company-now-inside-marriotts-incredible-money-
making-content-studio
39 https://contently.com/strategist/2014/12/05/how-airbnb-is-using-content-marketing-to-stay-on-top/
40 https://contently.com/strategist/2014/12/05/how-airbnb-is-using-content-marketing-to-stay-on-top/
41 https://contently.com/strategist/2014/12/05/how-airbnb-is-using-content-marketing-to-stay-on-top/
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begun the shift into providing short, virtual experiences as well. It might be difficult to compete
with VR marketing on high end rentals without creative marketing efforts in the future.
firms that command the majority of sales and business within the industry. However, due to
very low barriers to entry, the industry has begun to shift toward monopolistic competition.
The firms within the industry sell somewhat differentiated but similar products, which might
Only brand awareness and scale have allowed the current market leaders to maintain
Customer Review
The customer review is an excellent place to start the internal analysis of the firm. A
successful firm examines a potential market and looks for holes in consumer needs that can
be filled with a new firm’s offerings. The potential markets for both travelers and hosts are
wide and extraordinarily diverse. This review will begin with an overview, then identify key
segments. Later in the paper, a more specific Three-Circle analysis will identify the target
most advantageous for Airbnb. Each segment will be identified based on the primary needs
of consumers within the segment and evaluated based on Airbnb’s potential to meet those
Potential Market
The existing and potential users of the Airbnb can be broken into two different
categories: hosts and guests. The hosts are generally people who have extra space and
42 https://www.gfkmrismartsystem.com/UniversityReporter/Report.aspx
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most common occupation for users of Airbnb is a position in an office or business setting. This
could be in part because of the amount of travel often necessary for business, thus increasing
the demand for vacation rentals in that occupation. Typical business trips place employees in
standard hotels. It is possible that individuals who normally go on business trips are looking for a more
unique experience when they travel, since typical hotels are something they could find commonplace.
These users can either be single or married. Single users are more likely to use Airbnb for fun
and adventurous travel while married users are likely to use it for family-based travel. The
users are travelers who value unique experiences. The guests get the unique experience of
staying in someone else’s home while the hosts get the unique experience of having a
stranger be a guest in their home. Because of the stranger aspect of the business model
users are generally very trusting and very adventurous. Vacation rentals as a whole, and
especially Airbnb, allow for users to book on very short notice, this leads to the possibility of
the users being impulsive in their travels. Airbnb is a global company which operates in over
161 countries and over 65,000 cities. The main group of people that Airbnb has the potential
to reach and middle and high income travelers. These two groups of people summed up to
1.16 billion people.43 Currently, however, Airbnb has an existing market of over 200 million
consumers.
Purchase Process
The purchase decision process begins with problem need or recognition. In regards to
Airbnb this means that the guests recognize that they want to travel for leisure, need a place
43 https://data.worldbank.org/indicator/ST.INT.DPRT?locations=DO-XP&year_high_desc=false
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to stay for a business trip, or they were exposed to advertising promoting fun travel
destinations. For the hosts, the need is often recognized by either an excess of space or a
INFORMATION SEARCH
The second step of the purchase decision process is information search. Because
Airbnb is an online and app-based product, the information search is primarily done through
online search engines. Another reason for this is that the primary users of Airbnb are people
ages 25-44, most of whom are accustomed to using online searches to find most of the
The third step in the process is evaluation of alternatives. When traveling people have
a multitude of option of where to stay, everything from staying on a friend’s couch to staying
in a penthouse at a hotel. Even people who know that they want to use a vacation rental
website have many different options to choose from. Airbnb, VRBO, and HomeAway are only
a couple of examples.
PURCHASE DECISION
The fourth step in the purchase decision process is the actual purchase decision. The
guests who choose to book via Airbnb go through a simple booking process where they
specify how many people and how long they wish to stay. When a host decides to use
Airbnb, they go through a process in which they post pictures and describe the specifics of
the rental that they are posting. When a guest finds a listing that fits their specific needs the
booking is made, and, on the specified date, the product offered by the host is enjoyed by the
guest.
26
The fifth and final step of the purchase decision process is post-purchase behavior.
The main post-purchase behavior for Airbnb comes in the form of reviews. Like many other
sharing companies, both the hosts and the users have the opportunity to rate their
experiences with one another. The idea behind this is that it will give future users and hosts
more information and will allow them to make a more informed decision upon whether or not
they want to rent to or from someone. An additional post purchase behavior is simply telling
other people about experiences with using Airbnb. Often, word-of-mouth referrals can be the
categories: guests and hosts. As previously mentioned, the hosts choose to use Airbnb for
extra income. Additionally, Airbnb offers a very customizable renting experience in which
hosts are given a lot of power to choose who to rent to. Guests use Airbnb primarily when
traveling, but also get the same benefits as the guests in a customizable, unique experience.
When a host rents via Airbnb, they have an expectation that they are going to be
presented with all the information necessary to make an informed decision regarding who
they are renting to. Additionally, they expect to get paid the amount agreed upon when they
posted the rental. Guests expect to have a pace to stay which meets the expectations
Microenvironment Review
Microenvironmental factors can have a powerful impact on a firm’s ability to sustain
itself in an industry. The microenvironmental review will follow a PESTLE format, including
the following topics: legal and regulatory, economic, social and cultural, environmental, and
technical. In the case of Airbnb, microenvironmental factors become especially important due
to global scope and the legal ambiguity regarding short-term rentals. After the essential
microenvironmental factors have been explored, focus will shift to firm-specific analysis.
this reason, some of the legalities surrounding the industry are still a little blurry. Online rental
agencies like Airbnb are being sued by cities for not paying taxes and undergoing typical
regulations that most hotels are subject to.44 Additionally sometimes the rentals aren’t
authorized by the landlords of the buildings, this is a problem for apartments and condos in
particular.45 Airbnb does have a webpage on legal issues, which claims that it will handle
“calculating, collecting, and remitting local occupancy tax” in some tax jurisdictions, but there
Economic
The impact that economic factors have on Airbnb vary by country. Generally, the price
of gasoline and other fuel alternatives impacts Airbnb’s flow of business. This is likely
44 https://www.engadget.com/2018/01/02/airbnb-prevails-against-aimco-lawsuit/
45 https://skift.com/2017/11/06/airbnb-faces-landlord-landlord-lawsuit-that-could-impact-its-business-model/
46 https://www.airbnb.com/help/article/376/what-legal-and-regulatory-issues-should-i-consider-before-hosting-
on-airbnb
28
because fuel prices often impact travel costs, which in turn affects how many people book
with Airbnb. Due to the strong travel focus of the service, inflation and deflation of the local
for staying in someone else’s home vary depending on country, customs, and culture.
Cultural differences in guest treatment, trust, and social interaction impact Airbnb’s relevance
in certain areas. The following is a brief overview of social and cultural impacts of the four
efficiency.48 Communication efforts are explicit, which leaves very little room for
highly contextual. U.S. citizens are also less likely to be risk averse, which makes
them more likely to try new business ventures - like an Airbnb service.49
The United States is well developed and many of its citizens are digital natives
who are very familiar with online marketplaces. Furthermore, the concentration of
Airbnb hosts in this area is extremely high, which allows for easy movement within the
country.
47 https://www.worldatlas.com/articles/10-most-visited-countries-in-the-world.html
48 https://www.hofstede-insights.com/country-comparison/the-usa/
49 https://www.hofstede-insights.com/country-comparison/the-usa/
29
French citizens enjoy a 35-hour work week and five weeks of holidays per year.50 Due
to the popularity of short vacations, France is a prime target for the Airbnb service.
societies, people belong to social groups that care for one another. Often, the group’s
wellbeing is placed before the individual’s. Spain also ranks highly in uncertainty
China - China is a highly collectivist culture that places a strong emphasis on personal
relationships.54 The Chinese are success oriented and driven. The culture is extremely
pragmatic with a strong future orientation.55 Airbnb had to localize very strongly in
China, due to its unique outlook on rentals and guests, but China is considered a very
Environmental
Airbnb operates worldwide, though it is more concentrated in some areas than others.
The habitability of the area strongly affects Airbnb’s access to it. The inventory of homes in a
specific area affect not only the asking price of the hosts but also the willingness to pay of the
50 https://www.hofstede-insights.com/country-comparison/france/
51 https://www.hofstede-insights.com/country-comparison/france/
52 https://www.hofstede-insights.com/country-comparison/spain/
53 https://www.hofstede-insights.com/country-comparison/spain/
54 https://www.hofstede-insights.com/country-comparison/china/
55 https://www.hofstede-insights.com/country-comparison/china/
56 http://fortune.com/2017/12/05/airbnb-china-growth/
30
guests. Airbnb is sensitive to season shifts in demand, the presence of natural disasters, and
shifts in weather patterns. Often, the natural environment is one of the key draws of a
particular rental property. While Airbnb does not have direct control of the location of its
Technological
Technology has been advancing with increasing speed, and, because Airbnb operates
required to use the Airbnb service, and Airbnb will be expected to adapt as technology shifts
into new platforms. Currently, multichannel effects are essential for digital-based businesses
more integrated experience across all popular channels: social, site, mobile, and often in-
Firm Analysis
32
Key Information
Size
Airbnb is headquartered in San Francisco, California and operates in more than
65,000 cities and over 191 countries.57 As of 2017, Airbnb had 2,276 employees.58 In August
Key Management
Airbnb’s management is headed by its
team also includes Belinda Johnson who is Chief Business Affairs and Legal Counsel,62
which is an important role because of the current concerns and debates over Airbnb’s
legality. In many cases, the legality of Airbnb’s business model is still being determined.
57 https://press.atairbnb.com/about-us/
58 http://www.mergentintellect.com.ezproxy.library.wwu.edu/index.php/search/companyDetails/34243315
59 http://www.businessinsider.com/airbnb-total-worldwide-listings-2017-8
60 https://www.homeaway.com/info/media-center/press-releases/2017/homeaway-surpasses-two-million-unique-places-to-
stay-integrates
61 https://press.atairbnb.com/about-us/
62 https://press.atairbnb.com/about-us/
33
guides Airbnb’s team of engineers and data scientists to ensure customers are consistently
History
Airbnb was founded in 2008 under the name Air Bed & Breakfast64 by roommates Joe
Gennia, Brian Chesky, and Nathan Blecharszyk. At the time, the three roommates were living
in San Francisco and were struggling to pay rent. In order to come up with some extra money
to subsidize their rent, the group created a website to rent out space in their apartment to
They knew that there was a big design conference coming up in San Francisco. Hotels likely
to reach maximum capacity, and many design students would be looking for a more
affordable place to stay. That weekend, they booked three guests, each paid $80 to sleep on
63 https://press.atairbnb.com/about-us/
64http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#by-2011-four-years-after-the-first-air-
mattress-guests-airbnb-was-already-in-89-countries-and-had-hit-1-million-nights-booked-on-the-platform-it-also-finally-won-
the-break-out-mobile-app-award-at-sxsw--despite-having-tried-to-launch-there-three-years-earlier-16
34
This idea was originally meant to help with rent and was not supposed to last beyond
the design conference, but it ballooned into something more. The three roommates quickly
realized that their concept could work on a much larger scale. Conceptually, they could make
an incredible and unique business by constructing a network of people who had extra space
opened the business up in Denver, CO for the 2008 Democratic Convention.65 Once again,
they thought there would be a shortage of traditional hotel rooms, and they believed their
unique model would increase the supply. During this time, the major issue that they found
was a lack of awareness of their website. In order to increase awareness, the three designers
created two limited edition cereals; Obama O’s and Cap’n McCains. Each box contained its
limited edition number as well as a card containing information about Airbnb. Not only did this
successfully get the word out about Airbnb, but it also generated over $30,000 of additional
income.
With proven results to back-up their business concept, the founders searched for
investors once more. The majority of investors still had trouble seeing the value in shared
rooms and air mattresses. However, in 2009 they landed a $600,000 investment which gave
them the foundation that skyrocket them to be in the position that they are in today.
65
http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#by-2011-four-years-after-the-first-air-mattress-
guests-airbnb-was-already-in-89-countries-and-had-hit-1-million-nights-booked-on-the-platform-it-also-finally-won-the-break-out-
mobile-app-award-at-sxsw--despite-having-tried-to-launch-there-three-years-earlier-16
35
Primary Products/Services
Airbnb is an online marketplace that allows hosts to post their spaces for rent and
allows guests to seek accommodations while traveling. Airbnb collects a host service fee of
approximately 3% and charges a guest service fee that ranges between 5% and 15%,
depending on location and circumstance.66 Airbnb also facilitates guest profiles, reviews, and
offers 24 hour support.67 Perhaps most importantly, Airbnb supports a digital community that
allows for the easy sharing of experiences.68 The Airbnb website boasts planned events for
travelers, meetups, club activities, and events for local communities.69 This active community
is what allows Airbnb to maintain brand engagement and differentiate itself from its
competitors. Because competitors have been unable to match Airbnb’s scale, they have had
unique “experiences” that are provided by locals whom are often Airbnb hosts.71 Examples of
“experiences” include cooking classes with a local chef, hikes with rescue dogs, or meditation
with a local shaman. The “Restaurants” section recommends the best local eateries and
offers a unique “average price per person” metric.72 Airbnb has partnered with Resy, a mobile
app the books reservations, so that consumers can find and book a reservation within a
66 https://www.airbnb.com/help/article/1857/what-are-airbnb-service-fees
67 https://www.airbnb.com/how-it-works
68 https://community.withairbnb.com/t5/Community-Center/ct-p/community-center
69 https://www.homeaway.com/info/media-center/press-releases/2017/homeaway-surpasses-two-million-unique-places-to-
stay-integrates
70 https://www.homeaway.com/info/media-center/press-releases/2017/homeaway-surpasses-two-million-unique-places-to-
stay-integrates
71 https://www.airbnb.com/s/experiences?refinement_paths%5B%5D=%2Fexperiences
72 https://community.withairbnb.com/t5/Community-Center/ct-p/community-center
36
single app.73 In a similar partnership with Nest, Airbnb has been attempting to reduce the
environmental footprint of its hosts. Airbnb offers select hosts in the U.S. with a
friendliness amongst its hosts and also claims that internal studies have shown that Airbnb
guests use approximately 63% less energy than the average hotel guest.75
73 https://press.atairbnb.com/airbnb-resy-team-offer-app-restaurant-reservations/
74 https://www.airbnb.com/press/news/airbnb-partners-with-nest-to-help-community-continue-to-save-energy
75 https://www.airbnb.com/press/news/airbnb-partners-with-nest-to-help-community-continue-to-save-energy
37
through added services. This is exemplified by Airbnb expanding its offerings outside of
accommodations and to create a vibrant tourist ecosystem within cities while supporting
greater product adaptation in the global market. Speaking on their vision for New York, Brian
Chesky said,
“We imagine a more accessible New York that even more people can afford to
visit, where extra space in people’s homes will not go to waste, and where millions of
visitors patronize neighborhood small businesses across all five boroughs. This will
be a city where tens of thousand of jobs for people like photographers, tour guides,
and chefs will be created to support this thriving new ecosystem.” - Brian Chesky76
Currently, Airbnb has been focused on promoting growth for its newest feature -
“Experiences.” “Experiences” offer specialized activities that provide guests with the
opportunity to experience local cultures in an authentic and unique way. “Experiences” are
more complex than rentals and require more management and quality control. For this
reason, Airbnb has begun to set up its events and experiences on a city-by-city basis. In each
city, Airbnb management examines and approves “experience” plans ahead of time, rather
than allowing hosts to list them freely as it did with rental accommodations.77 In a 2017
Fortune interview, Brian Chesky explained the nuances of listing events as opposed to
homes.
76 https://blog.atairbnb.com/who-we-are/
77 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
38
because with a home, it has to be at least good enough for somebody to live in, so
there’s an inherent quality bar. With experiences, because it was so new, there was
no established quality bar. When we were doing pilots, some experiences were
Another goal Airbnb has been working toward is product adaptation to support
worldwide movement. Currently, larger markets that vary greatly from the US and European
markets are a primary focus. China especially is a popular travel destination with huge
potential for advancement. Individualistic cultures, like the U.S., are more explicit and less
risk averse, which makes its members more likely to adapt to shared economies. In
opposition, China has a collectivistic culture, which means that long standing social bonds
are extremely important.79 The Chinese are far less likely to trust complete strangers or
accept short-term relationships, which meant that the Airbnb model needed considerable
adaptation before it could be successful in the Chinese market. Of Airbnb’s nearly 4 million
listings, only 80,000 are currently in China.80 In March, Airbnb announced plans to rebrand
itself as “Aibiying” in China which translates roughly to “welcome each other with love.”81 It
also announced plans to partner with the popular Chinese social app WeChat and to support
the Chinese payment method Alipay in order to promote greater brand trust with Chinese
consumers.82
78 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
79 https://www.hofstede-insights.com/country-comparison/china/
80 https://www.cnbc.com/2017/03/21/airbnb-china-rebrands-as-aibiying.html
81 https://www.bubblestranslation.com/how-airbnb-is-tackling-chinese-expansion/
82 https://www.cnbc.com/2017/03/21/airbnb-china-rebrands-as-aibiying.html
39
Instead, Airbnb aims to provide a holistic travel experience through its rooms, online
working to facilitate events and activities that connect hosts and guests in a more meaningful
way.83 Sharing culture and life together has become a central theme on a global scale. In all
offerings, even within product adaptations, the concepts of “community,” “sharing,” and
In the past, Airbnb took a far more laissez-faire approach to how it organized its
business. Minimal management and interference with its hosts and guests allowed it to enjoy
organic growth and expand its platform fairly quickly.85 Inevitably, culture was shared
organically as guests shared spaces with their local hosts; however it wasn’t emphasized to
the degree it is now. For instance, Airbnb promoted the idea that one could stay with the host
at their house and the host would also make breakfast and share tips and tricks for getting
around the city.86 Its focus remained on providing authentic and affordable accomodations
rather than facilitating the experience of the trip as a whole. As more and more people began
listing on its site, Airbnb began to gain a reputation for offering unusual rentals. From
treehouses to castles to yurts it allows guests to stay in one of a kind rentals 87.
83 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
84 https://press.atairbnb.com/airbnb-resy-team-offer-app-restaurant-reservations/
85 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
86 http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#by-2011-four-years-after-the-first-air-
mattress-guests-airbnb-was-already-in-89-countries-and-had-hit-1-million-nights-booked-on-the-platform-it-also-finally-won-
the-break-out-mobile-app-award-at-sxsw--despite-having-tried-to-launch-there-three-years-earlier-16
87 http://www.businessinsider.my/airbnbs-summer-reach-has-grown-by-353-times-in-5-years-2015-9/
40
Another key component in Airbnb’s current strategy is broadening its customer base.
When Airbnb was founded, it targeted cost-conscious millennials who were seeking a more
authentic experience, but, in order to continue its growth, Airbnb recognized the need
increase its appeal. Business travelers became an important target. Airbnb set up
partnerships with companies like Hyundai and Dominos to find places for traveling employees
that catered to unique needs: wireless internet, a desk, and 24-hour check in.88 In 2017, it
was reported that over 250,000 businesses regularly booked travel with Airbnb.89 In February
2017, Airbnb also acquired the luxury rental site, Luxury Retreats, in order to appeal to high-
end clientele and fight the developing stigma that Airbnb offered “quantity over quality.” 90
88 https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-tech-firms-
airbnb-has
89 https://blueswandaily.com/airbnb-stresses-it-is-making-strides-in-duty-of-care-for-business-travellers/
90 https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-
tech-firms-airbnb-has
41
Performance
Airbnb is a privately owned company. For this reason, all performance numbers are
educated estimates calculated using information from external sources. According to the
Bloomberg Report for Airbnb’s 3rd Quarter in 2017, revenue was approximately $1 billion. 91
It’s market share in 2016 ranged from 1% in Washington DC to 3.9% in Greater London.92 Its
market share globally was estimated to be approximately 2.7%.93 This would be a .2%
increase from its estimated 2015 market share of the global vacation rental industry of 2.5%.
Airbnb’s exact net profit margin on listed rentals is unknown. It charges hosts a 3% fee
per listing which covers the costs of listing on its site. In addition, it also charges each guest a
6%-12% fee per booking,94 which can be considered its approximate net profit margin.
However, this assumption cannot account for the costs of running and setting up tours on its
platform, since Airbnb is still preparing that feature and it is unclear how it will impact net
profit. Additionally, as a fast-growing startup, with an estimated 40% to 50% growth in listings
per year, Airbnb listings could make up 3.6% to 4.3% of inventory by 2020.95
Market share, in 2017 was approximately 2.7% which represents a growth of 0.2%
91 https://www.bloomberg.com/news/articles/2017-11-14/airbnb-is-said-to-reach-net-revenue-of-1-billion-last-quarter
92 http://www.str.com/Media/Default/Research/STR_AirbnbHotelPerformance.pdf
93 https://www.statista.com/outlook/268/100/vacation-rentals/worldwide#
94 https://www.investopedia.com/articles/investing/112414/how-airbnb-makes-money.asp
95 https://www.marketwatch.com/story/as-airbnb-grows-hotel-prices-expected-to-drop-2015-08-13
96 https://www.statista.com/outlook/268/100/vacation-rentals/worldwide#
42
SWOT Analysis
Strengths:
Airbnb was the first vacation
and negative, which has helped contribute to a high level of brand awareness. Airbnb is a
very recognizable brand, most people who live in the countries in which Airbnb operated are
aware of it and the major services it provides.97 Airbnb has also expanded into international
markets, which uncapped enormous growth potential.98 The platform provides a lot of outlets
for customer input, which is essential to the model since it relies on consumer feedback and
reviews. Airbnb uses a star system to determine rankings of hosts and guests. Finally, a
major strength that Airbnb offers over competitors is additional services, such as location
97 https://skift.com/2015/11/17/airbnb-wants-to-be-the-superbrand-that-defines-this-generation/
98 http://www.oneskyapp.com/blog/airbnb-global-growth/
99 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
43
Weaknesses:
One of the main weaknesses that Airbnb faces is that it relies heavily on clients. The thought
of staying in a stranger’s home causes many to think back to the age old saying: ‘stranger danger.’100
Although most guests have pleasant, issue-free stays using Airbnb, there have been instances where
hosts took advantage of the almost anonymous nature of the booking process. In 2017, guests found
a spy camera in the home that they were renting via Airbnb.101 This is just one example, and it shows
a major weakness within Airbnb - a reliance on its hosts and the need to curate a necessary level of
trust betweens its guests and hosts.102 Airbnb also depends on its consumers to fill its portfolio with
desirable and affordable rentals. If Airbnb were to suffer any large string of incidents tied to its brand,
it would be extremely difficult to rebuild trust with both customers and homeowners listing on its site.
Opportunities:
As mentioned previously, one of Airbnb’s primary goals is growth. Airbnb has
considerable opportunities in this area, because its concept is applicable worldwide. Some
sources have stated that Airbnb has been considering adding additional services such as
personal chefs and travel options.103 This is a good opportunity as many of Airbnb’s direct
competitors already offer such services. Airbnb is also particularly well positioned for
partnership opportunities, which could make product adaptation for new markets considerably
easier (which is what we’re beginning to see in China).104 Finally, most of the current clients
of Airbnb are people ages 25-44. Airbnb could expand its market to include older and
younger clients.
100 https://airbnb.design/how-airbnb-designs-for-trust/
101 http://abcnews.go.com/US/couple-find-hidden-camera-florida-airbnb/story?id=50402059
102 https://www.usatoday.com/story/news/nation-now/2017/10/12/couple-finds-spy-camera-florida-airbnb-room-owner-said-
sex-parties/757625001/
103 https://airhostsforum.com/t/add-on-travel-services/3855
104 https://www.gfkmrismartsystem.com/UniversityReporter/Report.aspx
44
Threats:
One of the major threats that Airbnb faces is new entrants. As the sharing economy
continues to grow in size, more and more companies attempt to copy or create models
similar to Airbnb. The increasing competition creates an additional threat in the form of price
wars. As more companies enter the market, it could become tempting for Airbnb to compete
as a cheap option, but it is a fast race to the bottom and these types of price wars can be
detrimental to a company. The final, and possibly most important threat that Airbnb faces, are
larger companies as competition. Unlike FlipKey by Tripadvisor and other similar competitors,
Airbnb does not have the backing of a large parent company.105 It lacks the option to borrow
internally and hide its intentions from its competitors. Additionally, the possibility of added
105 https://www.tripping.com/industry/rental-companies/flipkey-vs-airbnb
45
Airbnb is in the growth stage on the product life cycle for vacation rentals that operate
in a sharing-economy model. Previously, renting spaces from strangers was met with
skepticism and fear. The majority of customers were innovators and early adopters who didn’t
Airbnb and other sharing economies have grown in prevalence, which has taken away some
of the fear that came with the newness of its model. Questions about safety and
accountability have been answered and its model for dealing with issues has been more
developed which has allowed customers to feel more comfortable engaging in sharing
accepting of Airbnb’s model. As mentioned earlier, other companies like HomeAway have
started to cut in, and cost is becoming a more important differentiator. Another indicator of its
growth is Airbnb’s funding and listings are growing at an increasingly large rate.107
106 https://www.economist.com/news/leaders/21573104-internet-everything-hire-rise-sharing-economy
107 https://growthhackers.com/growth-studies/airbnb
46
visual recognizability.108 Having a clear logo, color scheme, and general visual presence is
something that Airbnb focuses on in its branding. The second factor is playing a role in
culture. Instead of simply using culture to benefit the business, Airbnb puts an emphasis on
adding to the culture, which they have done by helping to get the Sharing Economy going.
The third factor that the brand focuses on is making sure that the product and brand stand for
something bigger than themselves. Airbnb embodies the idea of community on a global
scale. The final factor, which the Nancy King, the director of branding for Airbnb, deems the
Airbnb uses multiple media vehicles to advance its strategy. Airbnb’s 2017 Super Bowl
ad, titled “We Accept”,110 is a great example of the use of emotions over rationale in branding.
also builds on perceptions of cool. This is exemplified through the exclusive parties,
As Airbnb continues its advancement, it has also focused on adapting to local cultures
in order to assure continued success in foreign markets. Airbnb has always tried to present
itself as a global citizen. Branding efforts have been offered in 26 different local languages. 111
Airbnb’s engineering group has produced a highly sophisticated translation management tool
(TMS) that allows the company to continue to add new languages and update existing
content with ease.112 Airbnb ads are also extremely localized with targeted adaptation based
on internal data collection. Additionally, when online recruiting tactics have failed, Airbnb has
sent staff members to host info sessions, meet potential hosts, post fliers, and exercise other,
more personal outreach tactics.113 This led to Airbnb’s most recent success in Cuba.
Airbnb has attempted to expand its global citizen image to include “good citizen”
efforts that emphasize improvement for the global community. Airbnb has emphasized the
idea of global understanding and has made efforts to promote environmental friendliness as a
worldwide benefit of its service. Airbnb’s environmental efforts with Nest is just one example
of these good citizen efforts, but efforts have gone far beyond brand partnerships. 114 Airbnb
has hosted volunteer efforts with its hosts all around the world, and they’ve spread the news
of these efforts using internal content marketing efforts and the trending tag “global
111 http://www.oneskyapp.com/blog/airbnb-global-growth/
112 http://www.oneskyapp.com/blog/airbnb-global-growth/
113 http://www.oneskyapp.com/blog/airbnb-global-growth/
114 https://www.airbnb.com/press/news/airbnb-partners-with-nest-to-help-community-continue-to-save-energy
115 https://www.airbnbcitizen.com/tag/global-citizenship/
48
Core Competencies
Airbnb’s core competency is its superior design coupled with an innovative mindset in
Airbnb has a high caliber design to all its products and services.116 The superior
aesthetics and experience customers have while browsing through Airbnb’s services are an
process before it can be added to the listings on the site.117 The attention to detail in the
listing photos greatly add to the professionalism of the site, which leads to a greater sense of
customer trust. Because building trust is one of the greatest hurdles for a sharing economy
business, the uniformity and professionalism of Airbnb’s listings has lent to its current
While high caliber design is not a core competency that is easily copied, it is feasible
for other organizations to accomplish a similar result in time. However, Airbnb has built its
business model around providing a superior experience on its website and makes user
experience a top priority. Airbnb continually tests variations on its website to improve
customers’ experience.118 Airbnb data scientists partner with engineers, designers, and
product managers in order to create a completely integrated experience while capturing the
116 https://techcrunch.com/2017/08/07/airbnbs-director-of-experience-design-on-using-stories-to-design/
117 https://www.airbnb.com/professional_photography
118 https://uxplanet.org/airbnb-experiences-a-usability-testing-d56e96f28937
50
best data possible.119 With over 30 million guests per year, Airbnb would struggle to
individually review all of the information it receives. 120 Instead, it relies on complex data
management systems to make decisions about community growth, product development, and
resource prioritization.121 Currently, data initiatives are used to determine and track host
preferences, ensure diverse hiring, and to determine what guests are more likely to book
Along with its superior design, Airbnb has also led in innovation ever since it first
entered the market.123 It was one of the first companies to effectively utilize a sharing
economy in a way that appealed to consumers. As it grew, it continued to add value for its
customers by adding new services that aligned with Airbnb's business model. Airbnb has
expanded into postings for photographers, personal chefs, and is looking into adding airfare
to its site.124 New services such as these can help Airbnb add variety to its product offering
and assist their efforts to adapt to new markets. The new “Experiences” feature moves Airbnb
further toward full-service travel offerings,125 and the addition of community involvement
information to its website has allowed it to become more integrated into the lives of its
consumers.126 Innovation is particularly beneficial in the hotel and travel industry. The market
is highly saturated, and Airbnb’s ability to creatively problem solve gives it an edge over its
119 https://blog.kissmetrics.com/how-airbnb-uses-data-science/
120 https://www.infoq.com/news/2016/01/airbnb-data-science
121 https://www.infoq.com/news/2016/01/airbnb-data-science
122 https://blog.kissmetrics.com/how-airbnb-uses-data-science/
123 https://skift.com/2015/11/17/airbnb-wants-to-be-the-superbrand-that-defines-this-generation/
124 https://press.atairbnb.com/airbnb-expands-beyond-the-home-with-the-launch-of-trips/
https://www.airbnb.com/professional_photography
125 https://www.airbnb.com/s/experiences
126 https://community.withairbnb.com/t5/Cities/ct-p/cities
51
competition.127 The unorthodox approach Airbnb takes to solving its customers problems is a
unique competency it can leverage across multiple businesses and platforms going forward.
The ability to find rentals that meet segment needs is another core competency.
Airbnb caters to four primary segments: business professionals, millennials, event-goers, and
due to its partnerships with businesses such as Hyundai and Dominos128. The primary needs
for business professionals were: wireless internet, a desk, 24-hour check in, and privacy129.
Airbnb has been able to work with hosts in order to find reasonably priced accommodations
for long term business stays that better cater to these needs than an average hotel service.
Airbnb is very well structured for similar partnerships meant to cater to their other segments.
For example, a partnership with the reservation app Resty allowed Airbnb to provide direct
reservation channels for their guests130. In China, Airbnb created strategic partnerships with
WeChat and Alipay to allow Chinese consumers to more easily communicate and to pay in a
more familiar format131. The recent addition of Experiences has been particularly attractive to
the millennial and group/family segments, because both seek unique and diverse
127 http://michaeloregan.me/2017/10/17/airbnb-isnt-killing-the-hotel-industry-a-lack-of-innovation-and-creativity-
is/
128https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-
tech-firms-airbnb-has
129 https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-
tech-firms-airbnb-has
130 https://www.airbnb.com/s/experiences
131 https://www.cnbc.com/2017/03/21/airbnb-china-rebrands-as-aibiying.html
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Competitive Advantage
Cost Advantage
Airbnb started with an inherent cost advantage due to the far lower price of host’s
spaces in comparison to established solution competitors (such as hotels). Airbnb also has a
much larger scale, which allows it to accept lower margins. Airbnb charges a 3% fee 132 for its
host relative to its competitors who average around 4 - 9%.133 The cost advantage is
disappearing as more competitors copy it’s initial model. While its initial cost advantage is
decreasing, Airbnb still has a marketing cost advantage relative to its competitors. Unlike its
some of its smaller competitors, Airbnb is able leverage its size of its business and its brand
Airbnb has no investment in physical properties. This reduces its operating costs significantly
as properties require extensive maintenance and may decrease in value overtime. The
decision to not purchase properties or rentals has decreased Airbnb’s risks and liabilities.
This is a distinct advantage Airbnb has over traditional hotel companies like Marriott.
Established hotel industries do not have the flexibility to sell off their properties and switch to
a sharing-economy business model.134 Despite this, the advantage is not sustainable since it
is easy for other online rental agencies to copy Airbnb’s business model.
Differentiation Advantage
competitors. Over the years it has created a little monopoly, leveraging its larger scale to
132 https://www.airbnb.com/help/article/1857/what-are-airbnb-service-fees
133 http://www.vrmintel.com/homeaway-quietly-increasing-service-fee-travelers/
134 http://www.nasdaq.com/symbol/mar/financials?query=ratios
53
build an integrated online community.135 Airbnb users are able to access local community
information such as club events or community service opportunities when they’re not
traveling.136 When Airbnb users are traveling, they can access the “MeetUp” feature to find
Airbnb events hosted nearby.137 Detailed user profiles and advanced data tracking allow
Airbnb to cater to users and continually engage.138 Airbnb’s first mover strategy and large
scale almost certainly contributed to its ability to build and maintain such a tremendous
community.
Airbnb also differentiates via the scope of listings it carries. The wide selection and
vast array of listings they maintain make its more appealing for users looking for variety. The
different types of rentals, everything from rooms to mansions differentiates Airbnb particularly
with renters looking to list their spaces. With Airbnb they can list rooms versus needing to list
an entire property, this attracts more individuals looking to post listings as well as individuals
becoming a full-service travel experience. Ultimately, Airbnb hopes to be able to host each
aspect of a user’s travel experience and thus reach a high level of consumer integration.
Airbnb’s partnership with Resty allowed it to add restaurant reservations to its list of services,
and the addition of “Experiences” has allowed Airbnb to offer some activities for travelers as
well.140 By continuously increasing its involvement with the travel experience of its users,
135 https://www.airbnb.com/help/article/1183/what-is-the-airbnb-community-center
136 https://community.withairbnb.com/t5/Cities/ct-p/cities
137 https://www.meetup.com/topics/airbnb/
138 https://blog.kissmetrics.com/how-airbnb-uses-data-science/
139 https://www.airbnb.com
140 https://www.airbnb.com/s/experiences
54
Airbnb is creating lasting customer relationships at a level that competitors have not been
able to match.
Airbnb also enjoys a unique advantage in the way it has cultivated its company
management and culture. It will be difficult for Airbnb’s competitors to copy or steal Airbnb’s
tacit knowledge, and the company culture isn’t easily replicated.141 The Airbnb management
has been built slowly over time, so as to prevent the spreading of essential tacit knowledge
outside of the organization. The co-founders are still with the company, thus the learning and
knowledge they have accumulated throughout the lifetime of the organization remain a
competitive advantage. This can be leveraged against competitors who would have to start
from scratch when learning to grow a online sharing economy successfully. Airbnb’s
company culture is another asset that is difficult for its competitors to replicate. As of 2017
Airbnb ranked sixth on the employee experience index.142 Employees at Airbnb are
encouraged to keep personal blogs exploring creative idea and new methods to improve the
customer experience. The innovation orientation has been infused into every aspect of
Lastly, Airbnb’s brand is a competitive advantage. Its unique design, the values it
stands for, and the vision it pursues are all elements that bring meaning into its users lives
and create value. Since brands are a co-creation between the consumer and the
organization, Airbnb’s competitors cannot necessarily capture the same brand meanings
Airbnb has cultivated over the years. It requires a significant investment of time and money,
as well as a certain amount of user engagement to build a strong brand. This is an area that
Airbnb particularly excels at that can be used to create superior value for its customers.
141 http://www.knowledge-management-cafe.com/faq/what-explicit-implicit-and-tacit-knowledge
142 https://thefutureorganization.com/employee-experience-index/
55
Segmentation
Segmentation
56
Convenience Seekers:
Those focused on amenities and having a wide variety of global locations are often traveling
business professionals. These customers are located all over the world so accommodations need to
be available globally. In 2017, Airbnb reported that approximately 250,000 businesses booked
regularly with Airbnb143. Primary needs for business travelers were identified as: wireless internet, a
desk, and 24-hour check in144. Airbnb achieved a better understanding of this segment by partnering
with companies like Hyundai and Dominos to find places for their traveling employees that catered to
their unique needs145. Business professionals tend to be less sensitive to price than other segments
The primary competitor of Airbnb for this segment is hotels. Hotels are located all over the
world and offer similar benefits. The primary point of difference that sets Airbnb apart from the hotel
industry is that Airbnb offers a more diverse portfolio of options, which includes offerings that are far
more private than hotel rooms. In hotels, guests often have neighbors on either side, Airbnb offers
many options which are much more secluded. However, the greater consistency in the pricing of hotel
The business professional segment can be considered extremely large. The number of
individuals in the U.S. employed in a professional or business services job is 20.6 million146. Because
Airbnb is global, the potential market could be considerably larger. It’s important to consider that the
offered number also excludes individuals in other lines of work who may also have to travel.
Furthermore, the number of business travelers seems to be very consistent each year. Statista, a
popular statistics site, displays both the recent travel information for business and leisure travelers as
143Airbnb stresses it is making strides in duty of care for business travellers . (2017, November 15). Retrieved February 19, 2018, from
https://blueswandaily.com/airbnb-stresses-it-is-making-strides-in-duty-of-care-for-business-travellers/
144Among private tech firms, Airbnb has pursued a distinct strategy. (2017, May 27). Retrieved February 19, 2018, from
https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-tech-firms-airbnb-
has
145Among private tech firms, Airbnb has pursued a distinct strategy. (2017, May 27). Retrieved February 19, 2018, from
https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-tech-firms-airbnb-
has
146 https://www.bls.gov/iag/tgs/iag60.htm
57
well as estimates for the next few years. Since 2008, the number of business trips out of the U.S. has
hovered between 434.3 million and 466.2 million147. On average, American business travel accounts
for approximately 16% of all long-distance travel148. The majority of business trips are less than 250
miles but often local accommodation149. The average stay is between 4 and 6 days per business
trip150.
According to the U.S. Travel Bureau, approximately 77% of business travelers were male in
2003, though there is some evidence that the number has become less skewed in recent years151.
Approximately 55% of business trips are taken by individuals between the ages of 30 and 49, and the
average traveler has an income level that exceeds the national average152. U.S. business
147Number of business and leisure travelers U.S. 2008-2020 | Statistic. (2018). Retrieved February 19, 2018, from
https://www.statista.com/statistics/207103/forecasted-number-of-domestic-trips-in-the-us/
148U.S. Business Travel. (2003). Retrieved February 19, 2018, from
https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/america_on_the_go/us_business_travel/html/entire.html
149U.S. Business Travel. (2003). Retrieved February 19, 2018, from
https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/america_on_the_go/us_business_travel/html/entire.html
150Among private tech firms, Airbnb has pursued a distinct strategy. (2017, May 27). Retrieved February 19, 2018, from
https://www.economist.com/news/business/21722653-its-culture-cohesive-and-its-finances-disciplined-among-private-tech-firms-airbnb-
has
151U.S. Business Travel. (2003). Retrieved February 19, 2018, from
https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/america_on_the_go/us_business_travel/html/entire.html
152U.S. Business Travel. (2003). Retrieved February 19, 2018, from
https://www.rita.dot.gov/bts/sites/rita.dot.gov.bts/files/publications/america_on_the_go/us_business_travel/html/entire.html
58
professionals tend to work in professional, managerial, or technical positions and often value
practicality153.
Millennials look for a way to affordably escape their day-to-day jobs and impending student loans.
According to a recent study done by Airbnb, most millenials would value travel over paying off student
loans or buying a home. Millennials often seek out culturally rich experiences and they overall value
experience over material things. In the same study, over 80% of millennials say they travel to discover
something new and want to have unique local experiences. ** Airbnb offers these benefits to
millennial travelers by offering global rental locations and with their new experiences feature that
Airbnb’s largest competitor in this segment is Flipkey by TripAdvisor. Flipkey is a very similar
company to Airbnb and offers many of the primary benefit that millennials are looking for. Because of
backing from TripAdvisor, Flipkey is able to offer an extremely large portfolio of affordable rentals.
However, Airbnb’s focus on experiences, especially pairing with locals to provide these experiences is
more fit to fulfill these benefits than a traditional hotel chain or similar competitors like Flipkey.
Millenials are a large generation, consisting of about 92 million.154 Millennials are born
between the years of 1980 and 2000 (ages 18-38).155Millennials are recently coming into their prime
working and spending years, so who they choose to support is crucial for the success of a business.
They are the first generation of digital natives and are therefore more adept at using many
technologies than previous generations. Millennials also often have less money to spend and are
more encumbered with debt, and consequently are less likely to invest luxury or high-priced items.
Instead, millennials are turning to a new set of services that provide access to products without the
burdens of ownership.
Millennials priorities are also different, with many putting off traditional milestones like
marriage and home ownership. Compared to 68% in 1968, only 23% of millennials in 2012 were
married and were living in their own household. In addition, the previous generation had an average
age of 25 for home purchases while millennials on average wait until 45. Many millennials never buy,
with 60% choosing to rent instead. This contributes to millennials connection to Airbnb as they are
less focused on ownership and are more inclined to share space with others.
Event-Location Seekers
One of Airbnb’s primary segments are those individuals traveling to a location to
participate in a specific event - often outlined of as tourism events. Event tourism has grown
exponentially since 2008, and Airbnb has certainly benefited from the increase 156. The people
in this customer segment are seeking accommodations that are efficient, easy, and hassle
free. The primary feature members from this segment seek is an accommodation close to the
activity or event they traveled to participate in. A short commute to local destinations is
important as the reason these individuals are traveling is to participate in that specific event
or activity. Because their focus is on attending a specific event, they are a looking for
accommodations that can be booked far in advance or last minute since they often will book
156Getz, D., & Page, S. (2015, May 13). Progress and prospects for event tourism research. Retrieved February 19, 2018, from
https://www.sciencedirect.com/science/article/pii/S0261517715000679
60
Image from Volume 52 of Tourism Management by Donald Getz and Stephan J. Page157
The type of event can vary from a concert, theme park, festival or rally. Often, the
needs vary based on the scale and importance of he event. The segment size is difficult to
calculate since the number of events people participate in along with the frequency they
attend events varies. Often events are broken down into four categories: 1.) local events, 2.)
regional events, 3.) periodic hallmark events, and 4.) occasional mega-events. The value of
rentals within an area increases depending on its place on the event spectrum. For example,
a rental in proximity to an occasional mega event would have its value greatly increased for
157 https://www.sciencedirect.com/science/article/pii/S0261517715000679
61
the duration of the event, whereas a local event is unlikely to significantly impact the value of
Image from Volume 52 of Tourism Management by Donald Getz and Stephan J. Page 159
Airbnb’s most important competitor in this segment includes hotel industry competitors like
the Marriott, because the hotel chains frequently own properties near common event
destinations. Hotel chains also allow for consumers to book their visits far in advance, which
allows those planning for large scale events to secure housing long before the event
approaches. However, in locations that are more unique and rare, Airbnb has an advantage
since it has access to a broader inventory of locations due to its network of hosts. This could
be seen in this year’s recent solar eclipse in Oregon. Airbnb was able to provide a platform
for individuals living near the eclipse with the means to rent their homes in a professional
manner. The demographics and psychographics change depending on the event type. The
majority of concerts and festivals typically draw a younger crowd. Sports events draw people
158Getz, D., & Page, S. (2015, May 13). Progress and prospects for event tourism research. Retrieved February 19, 2018, from
https://www.sciencedirect.com/science/article/pii/S0261517715000679
159 https://www.sciencedirect.com/science/article/pii/S0261517715000679
62
from all backgrounds, but the higher priced games typically draw avid fans with the money to
spend on tickets. Because the event types are so broad, it is difficult to pinpoint specific
Experience Focused
Families or large groups that travel together are typically looking for accomodations
that not only provide an affordable rate, but allow everyone in the group to stay in close
quarters. Often, if the trip is a pleasure trip or vacation, they are looking for a space with a
common area that can be shared by the members in the group. Flexibility of space and the
ability to spend time together in a large group without disturbing other guests is important,
because the purpose of the trip is to group bonding. These trips typically take the form of a
family vacation or reunion of some type (either a reunion of friends or family members). It has
also been posited that the group traveler segment has more a more diverse set of interests,
and that traveling groups may prefer areas that offer a relatively wide variety of activities160.
Adjoining rooms, suites, condos with kitchens, and a common area that can be shared
by all members of the group are generally features that offer what this segment is seeking. A
space to eat together as a group, to prepare food, and to participate in activities (indoor and
outdoor) together also provides the ability for large groups to connect as they travel. The
primary need is a space to be loud in and spend time together without disturbing fellow
guests. According to Group Travel Leader, retirees dominate the group travel market and
only 16% of their respondents are under the age of 50161. Group travelers also tend to prefer
160Jewell, B. (2016, August 30). Statistics on the Modern Travel Planner. Retrieved February 19, 2018, from
http://grouptravelleader.com/articles/statistics-modern-travel-planner/
161Jewell, B. (2016, August 30). Statistics on the Modern Travel Planner. Retrieved February 19, 2018, from
http://grouptravelleader.com/articles/statistics-modern-travel-planner/
63
full-package accommodations that include events and activities162. For this reason, it seems
that Airbnb could expect more group travelers as its “Experience” options become more
widely available.
200,000 official family reunions were held every year in the U.S. with over 1 million people.163
This number counts for official family reunions only and doesn’t include family vacations or
trips made with a group of friends. It also does not account for families and groups who travel
together globally. However, it is assumed the segment is quite large, particularly in areas
Airbnb’s most important competitor in this segment includes friends and relatives who
offer places to stay to groups of travelers, as well as other home rental sites such as
HomeAway. Because individuals in this segment travel in groups, it is often more convenient
to rent a whole house or apartment, because the stand-alone properties become more
affordable when the cost is split between multiple people and privacy can be assured. The
privacy allows greater flexibility for the group to interact and eat together. In opposition, hotels
tend to be cramped and inconvenient for members to spend time in each other’s rooms
where there is limited space. The segment tends to be comprised of families, relatives, and/or
close knit friends. Culture plays a large part in how people interact in groups.
162Jewell, B. (2016, August 30). Statistics on the Modern Travel Planner. Retrieved February 19, 2018, from
http://grouptravelleader.com/articles/statistics-modern-travel-planner/
163 http://www.nytimes.com/2013/09/01/fashion/just-one-big-happy-family.html
164 http://factsanddetails.com/india/People_and_Life/sub7_3d/entry-4174.html
165 https://chinaculturecorner.com/2013/06/21/the-chinese-family/
64
3 CIRCLES
65
segment sees travel as a way to discover new places, experience unique adventures, and
soak in the local culture. They also expect to do this with a minimal budget and tend to avoid
luxury products. This segment is represented by the Millennial generation and range in age
from 18 to 38.166
HomeAway. Although HomeAway does not rent out single rooms, but focuses on the entire
apartment/house it still competes with Airbnb for the Low-Budget/Culture Seekers. Besides
Airbnb it is the option that provides a cheap, authentic stay, with a vast selection of locations
globally. Unlike staying with neighbors or friends, HomeAway allows greater diversity and
flexibility in locations. Both HomeAway and Airbnb in essence connect their consumers to a
Context
Our goal is to determine how Airbnb can grow market share globally by
166https://www.homeaway.com/info/homeaway/owner-marketing/how-it-
works?icid=IL_support_BR_T_Text_howitworks_LOTH_howitworks
66
Customer Perspective
Factors Importance
Location of Accommodations 10
Cleanliness 7
Amenities 7
Aesthetics/Uniqueness of Lodgings 6
Firm Perspective
- Airbnb- -HomeAway-
Factors
Importance Importance
Score Weighted Score Weighted
Score Score
*Unless otherwise note the information gathered here was obtained via Airbnb’s website.
• “Experiences” that gives individuals options for unique local tours and activities.
• Offers greater flexibility for renting part of a property (such a single room)169
*Unless otherwise note the information gathered here was obtained via HomeAway’s website.
167 https://www.airbnb.com/
168 https://trip101.com/article/homeaway-vs-airbnb
169 https://trip101.com/article/homeaway-vs-airbnb
170 https://trip101.com/article/homeaway-vs-airbnb
171 https://www.homeaway.com/
172 https://trip101.com/article/homeaway-vs-airbnb
173 http://fortune.com/2016/12/08/airbnb-1-million-instant-booking/
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3-Circle Map
69
for everything you need during travel. The first steps would be branching out into flight
booking and local travel arrangements. It has been reported that Airbnb already is developing
a way to add flights to it’s app, which would pull it closer in competition to sites like Expedia
and Priceline.174 Once at the destination this segment is looking for an affordable way to get
around. A partnership with a company like Uber could satisfy this need without having to
switch between apps. Not only will the addition of transportation add value for this segment, it
per person costs of $40 or above.175 The segment of Low-Budget/Culture Seekers tend to not
value luxury experiences or rentals.176 This segment is looking for local and affordable
eateries, not the expensive tourist traps. In order to appeal to this segment Airbnb needs to
refocus this feature, or strive to include the unique small places that this segment seeks out.
Airbnb also recently announced “Beyond by Airbnb,” an extension of Airbnb that offers luxury
full-service rentals.177 Beyond includes only the most expensive and luxurious rental homes
that are paired with experiences for a “elevated” travel experience. This is diametrically
174 https://www.bloomberg.com/news/articles/2016-12-19/airbnb-is-building-a-flight-booking-tool
175 https://www.airbnb.com/s/restaurants
176 http://adage.com/article/digitalnext/consumers-experiences-things/299994/
177 https://www.townandcountrymag.com/leisure/travel-guide/a18667178/airbnb-launches-new-luxury-tiers/
70
experiences portion of the business. Most people know Airbnb for its wide offerings of unique
vacation rentals around the world. However, one aspect that many low budget/culture
seekers value are the experiences that they can have when on vacation. While Airbnb offers
services to help solve this unmet need, these services are not particularly well promoted. In
the “Experiences” feature local hosts can post adventures that range from guided tours and
personal cooking classes to classical Japanese dance classes or snorkeling. This feature
5
moves Airbnb further towards being a full-service travel provider and being able to provide
every benefit this segment looks for when making travel decisions. To best appeal to this
the multitude of unique activities and tours Airbnb can offer. Going forward Airbnb should
focus more of its resources and capabilities on growing and enhancing its experiences in
Points of Difference
One of the major points of difference that Airbnb offers over its competition is readily
available services which offer restaurant reservations and reviews. This information can be
valuable to consumers as they travel and are more likely to eat out.178 This feature of Airbnb
is well designed and easy to navigate with a wide variety of specific filters to help the user
customize their results. Despite this, the feature may not be a particularly valuable point of
difference for Airbnb. This segment, low budget/culture seekers, are likely going to be
178 https://www.statista.com/topics/1957/eating-out-behavior-in-the-us/
71
seeking either low cost meal options, or culturally accurate meal options. Many of the
restaurants promoted on Airbnb are more expensive and the company doesn’t offer very
many small local restaurants. Although there is room for growth in this service, as it stands
now, this is not a particularly valuable service to be offered to this specific segment.
72
Marketing Plan
MARKETING PLAN
73
the intersection of vacation rentals and the sharing economy is still relatively new,
competitors like HomeAway and Tripping.com continue to rival Airbnb. One objective
identified to help achieve this goal is to, “Create 20 large scale business partnerships with
major companies by January 1st, 2019.” Already, Airbnb has partnered in the growing Asian
market with WeChat, the popular app that increased Chinese signups by 700%.179
Partnering with businesses that deliver benefits that Airbnb does not already provide will help
to differentiate itself from its competitors. Examples of potential partner could be with
Duolingo or Uber.
The second goal is to, “Grow the market for short-term vacation rentals.” While the
market for travel accommodations is immensely saturated by hotel chains, the market for
short-term vacation rentals is relatively untapped. According to IBIS World, the revenue for
global hotels and resorts is 878 billion dollars.180 This is compared to the vacation rental
market with estimated revenue of 17,949 million dollars.181 The objective associated with
achieving this goal is to, “Increase conversions by 20% for low-budget culture seekers by
January 1st, 2019.” As consumer spending on travel is expected to increase over the next
five years, pulling Airbnb’s chosen segment away from hotels and towards more personal
179 https://www.forbes.com/sites/briansolomon/2016/05/03/how-airbnb-expanded-to-190-countries-by-thinking-
glocal/#f8f75f07e919
180 https://www.ibisworld.com/industry-trends/global-industry-reports/hotels-restaurants/hotels-resorts.html
181 https://www.statista.com/outlook/268/109/vacation-rentals/united-states#
182 https://www.ibisworld.com/industry-trends/global-industry-reports/hotels-restaurants/hotels-resorts.html
74
The third goal is to, “Capture the market for ‘Experiences.’” Experiences, Airbnbs new
offering where travelers can buy unique, local experiences, is still in its fledgling stage. This
essential that “Experiences” is available wherever Airbnb has listings. In order to reach this
goal Airbnb should focus on, “Expanding ‘Experiences’ to 400 new cities globally by January
1st, 2019.” In October 2017, Airbnb launched its 40th city of “Experiences” in New York
City.183 Airbnb’s CEO wanted the introduction of this offering to be more gradual and
controlled, unlike the unbridled growth of rental listings.184 Now that experience listings have
The final goal pinpointed for Airbnb is to, “Become more globally relevant.” Thus far,
Airbnb has experienced extraordinary growth in North America and many major European
cities. Already, two thirds of trips are booked internationally. 185 Efforts to expand listings
internationally will likely prove to be profitable and successful as market saturation is low and
internet adoption is increasing.186 To fulfill this goal, the following objective has been offered:
“Increase the number of international listings in Asia by 20% by January 1st, 2019.” Growth in
major Asian cities accounts for three of the top five fastest growing cities for Airbnb, with
183 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
184 http://fortune.com/2017/10/23/airbnb-ceo-experiences-new-york/
185 https://www.forbes.com/sites/briansolomon/2016/05/03/how-airbnb-expanded-to-190-countries-by-thinking-
glocal/#f8f75f07e919
186 https://www.cnbc.com/2016/06/01/how-airbnb-is-growing-a-far-flung-global-empire.html
187 https://www.cnbc.com/2016/06/01/how-airbnb-is-growing-a-far-flung-global-empire.html
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Segmentation
Non-Current Airbnb Users
VISIBILITY/TRAFFIC S EEKERS
“Airbnb allows hosts all over the world to rent out space for guests to use, so no matter
how big or small and no matter where the business is located Airbnb hosts can rent space
out through Airbnb.”
Although this segment does have the potential to benefit from using Airbnb it seems as
though Airbnb is not focusing on filling the needs of this segment. A lot of the company’s
promotions are focused on experiences and adventurous travels. Often, these promotions
disclude small, rural areas. Airbnb operates in over 150 countries, and many of these
countries are more rural. For this reason, the company is missing out on promoting a large
One segment that could greatly benefit from using Airbnb are people who are seeking
vacation rentals who are not as familiar with technology, also known as digital immigrants.
These are individuals, mostly those over the age of 55, who were not brought up with
technologies such as cell phones or the internet. Unfortunately, because of the primarily
digital nature of Airbnb, this would be a difficult segment for Airbnb to capture and fulfill the
needs of. However, the Airbnb website was created with ease of navigation in mind so this
One of the primary segments that exists for Airbnb are convenience seekers. These
are typically individuals who are travelling primarily for business and are in need of
convenient locations globally. Because so many businesses book their employee travel
Many people are in need of affordable places to stay while traveling. A large portion of
this segment is made up of millennials who are looking for an affordable way to escape their
everyday jobs. Additionally, this segment has a focus on experiencing new things and
interesting cultures over material things. Although a large portion of this segment is
millennials, the low budget culture seekers segment flows into other segments as well, as
most people booking through Airbnb are looking for an affordable vacation rental.
EVENT-LOCATION SEEKERS
“With a variety of different types of lodgings located all over the world any customers
looking for a place to stay for a specific event can find what they need through Airbnb.”\
When people travel for specific events, such as concerts, and other tourist events,
they are in need of efficient, easy, and hassle free lodging. As the tourism event industry has
Groups who travel together, families in particular, are looking not only for lodgings to
accommodate larger groups, but also entertainment. Airbnb offers an experience service
which helps to cater to these needs. Additionally, with the large selection of different kinds of
lodgings located all over the world Airbnb, is able to help fill the needs of this segment.
78
Targeting
The segment which Airbnb should be targeting are the low-budget culture seekers.
The reason for this is that it the largest segment and has needs that will also benefit other
segments if met. Because of this, if the low-budget culture seeker segment is focused on,
then it has the highest amount of positive impact. Furthermore, this segment is seeing the
most growth as the number of millennials who travel increased by 35% in 2017 and is
expected to continue to grow.188 Airbnb has the scope to continue to offer lower
accommodations, and the availability of its rentals in other countries has continued to grow
each year. Millennials are coming into their prime spending years, and who they choose to
Positioning Strategy
“For those travelers with a low budget and seeking local culture, Airbnb creates a holistic
travel experience via scope, experiences, and community.”
Airbnb is “first” when it comes to the intersection of vacation rentals and the sharing
economy. This gives Airbnb several advantages. Airbnb is the first look for not only
consumers looking for short-term vacation rentals, but also the first look for those looking to
rent an extra room or their home. Airbnb IS short-term vacation rentals. This association
gives Airbnb unmatched scope, with limitless hosts and cities. In addition to being able to
offer incredible variety beyond that of its competitors, Airbnb utilizes this scope to be able to
offer a wide range of price points for rentals. While there are high-end rentals available,
188https://www.travelagentcentral.com/running-your-business/stats-millennials-to-travel-35-percent-more-2017-
according-to-mmgy
79
Airbnb is the first and only business in this market to offer “experiences” in conjunction
with its rentals. Bringing accommodations and activities together captures everything this
segment values when traveling. Incorporating this new feature positions Airbnb beyond just
being a vacation rental company. Airbnb does not just offer rentals, it offers this segment an
entire travel experience with integrated applications to offer continuously improving ease of
use.
While Airbnb currently has an online community for its hosts to share tips and network,
we recommend developing a similar online platform for renters. Allowing renters to share
images and stories of not only their rentals, but also their activities, will help further position
Airbnb as the provider of a full travel experience. Personal stories and engaging photos will
also bring out the desire for locality and cultural experiences that this segment associates
with travel. Positioning Airbnb as a gateway to this locality and unique experiences will further
Marketing Implementation
Actions
Airbnb will start a social media campaign to encourage engagement with its brand.
Instagram, and other relevant social media platforms specific to the country. Airbnb will utilize
a continuous scheduling for its owned media. For paid or promoted ads on social platforms it
will utilize a pulsing strategy and increase the number of promoted posts or ads during
vacation worthy events such as spring break, summer vacation, and other nationally
recognized holidays specific to each country. Early interactions will be initiated by asking
provoking questions about travel in general, and reaching out to individual consumers to ask
about their experience using Airbnb. The campaign will center around Airbnb’s “Experiences”
and building a discussion around the pros, cons, and interesting opportunities it offers
consumers. One way that Airbnb could accomplish this is by creating events such as online
video or photo contests for participants to record and vote on their favorite “experience”
videos or photos. Airbnb will encourage users to post or tag the brand’s social media account
and do its best to respond to as many individual posts as possible so that users feel they are
being heard. It will help enhance the “experience” element of the Airbnb brand by making it
more shareable and visible for friends and family. Airbnb will also work to create more of a
back-and-forth conversation between Airbnb and the consumers by asking thought provoking
Another method Airbnb will employ is utilizing the plethora of online vacation bloggers,
vloggers, and content creators. Airbnb will offer these content creators free “experiences” in
return for honest reviews and articles on their individual content platforms. This will help the
experience section of Airbnb gain traction and promote the idea of Airbnb providing a holistic
81
travel experience. It can also leverage native advertising with these content creators to
A key component that will tie together all the other marketing elements is an online
community for travelers. Currently, Airbnb has an online platform for hosts to connect and
discuss, however there is no such platform for individual travelers. If Airbnb were to create its
own website to host an online forum for guest interactions, it would help promote a greater
sense of community among guests. Airbnb would need to make the site integratable with
other social media sites so that conversations could be fluid across platforms but still be
Last, Airbnb can encourage engagement and awareness among low-budget culture
seekers through strategic partnerships and integration with common language and traveling
apps. Duolingo, is a popular language app, partnering with apps like these could be beneficial
since they offer a service relevant to travelers needing to learn a new language. Airbnb could
promote these apps on its sites and in return Duolingo and other travel/language apps could
granular level, by country. Implementing by regions (Asia, Europe, America, Africa etc.) will
help ensure that the programs can be enacted on a large scale while still taking into account
cultural differences. After the programs are implemented regionally, steps will be taken to
tailor each one by country. Airbnb’s current language algorithms should be incredibly
with the brand, Airbnb will need to work on each of the programs simultaneously. However,
Airbnb’s traveler site should take approximately nine months to develop. For this reason,
some of the site integration may take time. The social media campaign and engagement with
vacation bloggers will help drive the conversation online. The online community platform for
guests and app integration will provide users more resources to participate in that dialogue.
community for guests. The social media campaign will take approximately 1-2 months to start
gaining traction online. Because the length of traction time and campaign relevance varies by
platform, it is difficult to predict more exact values for the social campaign. It is possible that
this could take more or less time depending on the current political and cultural environment,
because these factors can strongly affect how people interact with and use social media
offerings.190 The app integration will take approximately 6 months to a year since Airbnb will
have to negotiate with each individual app company and integration with each of these apps
will vary. In some cases, Airbnb may just display its logo or post ads frequently. In other
cases, it may act as an app sponsor191, or it may chose integrate its services within the app
It will also take, at minimum, a year to encourage content curation with vacation
bloggers, vloggers and other content creators. Airbnb will have to work with each of these
189https://www.quora.com/How-much-does-it-cost-to-make-a-social-network-website-exactly-like-Facebook-
with-the-same-features
190 https://blogs.umass.edu/Techbytes/2017/10/10/politweets-the-growing-use-of-twitter-and-social-media-for-
politics/
191 https://www.mobilemarketer.com/ex/mobilemarketer/cms/news/advertising/13407.html
83
content creators individually. Curating these relationships can be time consuming, but
ultimately having the support of subject matter experts will help their “experiences” services
gain credibility in the marketplace. Because consumer trust is so vital in sharing economies,
the process of gaining credibility can be considered vital to widespread adoption efforts.
ACTION COSTS
Estimating the costs of a global campaign can be difficult. The following numbers
overall budget for the marketing efforts as calculated below is $1,251,950 ($551,950 for
social media outreach, $200,000 for a community site, $500,000 for app partnerships). The
overall budget can be considered to be $1,300,000 with approximately $48,050 set aside for
miscellaneous expenses.
$551,950. The average salary of a social media marketing specialist in the U.S. is $50,390,
and an estimated five specialists (50,390 x 5 = $251,950) were required for the global
campaign192. An additional marketing budget of $300,000 was provided to pay for advertising
and content creation. A closely related influencer outreach budget was set at $150,000. This
was based on a goal of 150,000,000 or more impressions and an industry average provided
by Sprout Social of $1,000 - $5,000 per content piece expected to receive 500,000 or more
impressions193. This budget may seem relatively high, but Airbnb’s scale indicates that it
should seek high visibility influencers. Celebrity bloggers, youtubers, and actors require a
much higher fee. Influencer collaboration efforts often result in improved brand advocacy,
192 https://www.glassdoor.com/Salaries/social-media-marketing-specialist-salary-SRCH_KO0,33.htm
193 https://sproutsocial.com/insights/paying-social-media-influencers/
84
expanded brand awareness, and often leads to an expanded reach. For these reasons, the
A web app creator for Quora provided a rough estimated cost of $500,000 for a
website with features similar to Facebook195. The estimate was based on the development of
several smaller social media websites. Airbnb doesn’t require the same level of integration as
Facebook. In fact, a more lean social design akin to its host community that could be linked to
a user’s existing social media platforms would be more advantageous to the company,
because it would allow Airbnb to access Facebook network connections. For this reason, a
more conservative budget of $200,000 has been set aside for the development of the online
community. This budget assumes a lean design and the ability to reuse resources used in the
development of the host community. The estimated time to establish the community based on
App partnerships and integration efforts have been essential to Airbnb’s attempts to
create a holistic experience. App integration has also been essential to establishing the
Airbnb model internationally. Estimating the cost of app partnership efforts is extraordinarily
difficult. Cost is based on the type of partnership, the degree of integration, and the nature
and scope of the app in question. A budget of $500,000 has been set aside for app
partnerships, but this value could be re-evaluated based on the opportunities the
194 https://sproutsocial.com/insights/paying-social-media-influencers/
195https://www.quora.com/How-much-does-it-cost-to-make-a-social-network-website-exactly-like-Facebook-
with-the-same-features
196https://www.quora.com/How-much-does-it-cost-to-make-a-social-network-website-exactly-like-Facebook-
with-the-same-features
85
and impressions197. The traffic derived from social to the new guest community site will also
be closely monitored. The social media marketing campaign will begin immediately and be
carefully observed over the next year by the new social media marketing specialists focused
on the new campaign. Budgets will be managed and adjusted on a monthly basis.
Impressions has been identified as the most important metric for influencers. The goal
expected to drive essential site traffic both to Airbnb’s main site and to its host and traveler
communities. All traffic brought through influencer content will be monitored to assess its
relevance and effectiveness to better inform influencer outreach efforts in the future.
Unfortunately, the engagement metrics for app partnerships are more difficult to identify,
because of the wide variability it potential app partners. For this reason, all potential app
partnerships will require careful evaluation and the identification of performance metrics
The success of the new community engagement website will be based on adoption
metrics. The number of new users and conversion from social outreach efforts will be the
most important considerations. Because the development of the website is expected to take
nine months, there will be limited data on the launch of the website when the campaign
comes under review again on January 1st, 2019. The budget will be adjusted at that time
197 https://blog.hootsuite.com/social-media-metrics/
86
CONCLUSION
Airbnb has many challenges as well as opportunities in its future. While demand for
culturally authentic vacation rentals is growing, competition from businesses that use a
similar sharing economy model as Airbnb is also increasing. As Airbnb expands it product
offerings, it continues to face issues with legality and trust. Rentals have become more
commoditized across the industry as a whole. Travelers looking to get the best value for their
dollar are comparing offerings across sites based on price. Despite this, Airbnb has found
ways to leverage its core competencies in order to create a value for customers that
supersedes the superficial act of pairing a user with a vacation rental. Airbnb continues to
look at the needs of its customers, and in so doing has begun to branch out into other product
offerings such as “experiences.” It can be successful if it continues to focus on who it is, what
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