VIETNAM NATIONAL UNIVERSITY – HOCHIMINH CITY

INTERNATIONAL UNIVERSITY
SCHOOL OF BUSINESS

INDIVIDUAL ASSIGNMENT

CASE ANALYSIS OF
AIRBNB COMPANY

Course: Strategic Management

Name: Nguyễn Thành Nhân
Student ID: MBAIU23017

Hochiminh City, November 2023

Table of Contents
INTRODUCTION............................................................................................................................2
AIRBNB ANALYSIS......................................................................................................................2
1. Business Model Analysis.........................................................................................................2
2. Strategy Analysis......................................................................................................................2
3. SWOT Analysis........................................................................................................................3
4. PESTEL Analysis.....................................................................................................................4
POLITICAL..............................................................................................................................4
ECONOMIC.............................................................................................................................4
SOCIAL.....................................................................................................................................4
TECHNOLOGICAL..................................................................................................................4
OVERALL.................................................................................................................................5
STRATEGY AND RECOMMENDATION....................................................................................5
STRATEGY.................................................................................................................................5
● Why Airbnb need to proposed these strategies..................................................................5
● Strategy Proposed..............................................................................................................6
IMPLEMENTATION..................................................................................................................7
OVERALL RECOMMENDATION................................................................................................8
CONCLUSION................................................................................................................................8
INTRODUCTION
In 2020, Airbnb, a pioneer in the sharing economy and short-term lodging market, faced a pivotal
juncture in its journey. Founded in 2008, the company revolutionized the travel and hospitality
industry by connecting travelers with unique accommodations offered by hosts worldwide.
However, the year 2020 presented unprecedented challenges in finance, reputation, and customer
service quality, as well as grappling with the global COVID-19 pandemic. As travelers canceled
plans and governments imposed restrictions on movement, Airbnb encountered a significant
downturn in its business. The pandemic forced the company to confront not only a sudden drop in
demand but also a myriad of regulatory and operational hurdles. However, through published
data, Covid 19 is not the main reason leading to the crisis of the Airbnb model. The crisis
originates like a chain of dominoes starting from a lack of control over internal and external
environmental factors, and strategic control of the business model. Therefore, this article aims to
analyze the factors of Airbnb according to flow from strengths, weaknesses, opportunities and
challenges. From there, recommendations are pointed out to minimize challenges and increase
the level of business opportunities for Airbnb in the future.

AIRBNB ANALYSIS

1. Business Model Analysis

Airbnb operates within the collaborative (shared) economy, acting as an intermediary that
connects hosts providing short-term lodging services with guests seeking distinctive
accommodations. The foundation of its success lies in the utilization of the sharing
economy, transforming private residences into temporary lodging spaces. The primary
source of revenue for Airbnb comes from service fees imposed on both hosts and guests
for each transaction. Key to its achievements is the user-friendly digital platform,
fostering trust through reviews and ratings. Airbnb's versatility is evident in its diverse
range of accommodation options, appealing to a wide array of traveler preferences.
Despite initial triumphs, the platform has encountered challenges, including regulatory
scrutiny, safety issues, and the repercussions of external events like the COVID-19
pandemic. The resilience of Airbnb's business model is seen in its adaptability, as the
company consistently refines its services and ventures into related areas, positioning itself
as a comprehensive travel platform.

2. Strategy Analysis
According to Porter (1980), there are four strategies that companies can choose before
operating. One of Airbnb's comparative advantages over motels and hotels lies in its
ability to minimize costs, enabling the provision of more favorable rates to tenants.
According to Exhibit 1, notable cost components such as wages, property, utilities, and
consumables like food constitute 78 percent of the industry's overall expenses,
necessitating higher rental prices to ensure profitability. This strategic choice aligns with a
leadership approach (Porter, 1980). Beyond cost efficiency, Airbnb not only offers more
economical options than traditional hotels but also maintains customer experiences that
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 rival those of higher-priced alternatives. Consequently, Airbnb's approach proves
mutually beneficial for hosts and renters, as hosts avoid extensive investment costs, while
renters enjoy cost savings. This strategic approach has facilitated Airbnb's rapid global
expansion, encompassing approximately 190 countries with over 4 million listed
properties and boasting an estimated valuation of $31 billion in 2018, signaling its
trajectory toward an Initial Public Offering (IPO) plan.

3. SWOT Analysis

Strength Weaknesses

1. Global Market Leadership: 1. Regulatory Vulnerabilities:

Airbnb's extensive global presence and
dominance in the short-term lodging market
solidified its leadership position.
2. Diverse Accommodation Portfolio:
The platform's diverse array of
accommodation options, ranging from entire 2.Quality Assurance Concerns:
homes to individual rooms, catered to a
wide spectrum of traveler preferences.
3. Robust Digital Infrastructure:
Airbnb's user-friendly digital platform,
complemented by a seamless website and
mobile application, provided an intuitive
booking experience.
4. Community-Centric Model:
Airbnb's emphasis on fostering community
connections and cultural exchange set it
apart from traditional hospitality services.
Airbnb faced persistent challenges in
navigating regulatory landscapes across
various jurisdictions, with concerns
revolving around housing shortages, safety,
and compliance.
Maintaining consistent quality standards
across a diverse array of listings posed
challenges, with instances of fraudulent
activities impacting the platform's
reputation.
3. Dependency on Tourism:
Airbnb's susceptibility to fluctuations in the
global travel and tourism industry exposed it
to economic uncertainties and downturns.

Opportunities Threats

1. COVID-19 Pandemic Impact: 1. Diversification Initiatives:

The global pandemic severely impacted The introduction of innovative offerings
travel and hospitality, resulting in such as "Experiences" and "Adventures"
widespread booking cancellations and a enabled Airbnb to diversify its service
significant reduction in demand. portfolio beyond traditional lodging.

2. Regulatory Risks: 2. Market Expansion:

Persistent and evolving regulatory Opportunities for growth existed in
challenges in diverse locations posed a untapped markets, presenting avenues for
continued threat to Airbnb's business Airbnb to extend its reach and increase
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 operations. market share.

3. Intensified Competition: 3.Adaptation to Remote Work Trends:

Heightened competition from traditional The surge in remote work trends presented
hotels and other online booking platforms an opportunity for Airbnb to cater to
added pressure on Airbnb's market individuals seeking extended stays and
positioning. unique work-friendly accommodations.

4. Economic Uncertainties:
Economic downturns and uncertainties
threatened to curtail travel spending,
potentially affecting Airbnb's revenue
streams.

4. PESTEL Analysis
POLITICAL
Regulatory hurdles were a prominent feature in Airbnb's global landscape in 2020, as numerous
cities and nations deliberated or enacted regulations specifically targeting short-term rentals. The
operational scope of the platform was substantially influenced by political decisions, with the
effectiveness of its operations contingent upon adept lobbying efforts and compliance with
varying regulatory frameworks across diverse regions.
ECONOMIC
The global pandemic of 2020 exerted a profound economic impact, particularly within the
domain of travel and tourism. The repercussions were severe, manifesting in a substantial
contraction in travel activities worldwide. Economic downturns ensued as uncertainties
surrounding public health and safety precipitated a discernible reduction in consumer spending
on travel and accommodations. This downturn, attributable to the unprecedented circumstances
imposed by the pandemic, necessitated a comprehensive reassessment of the dynamics within the
travel and tourism sector, with lasting implications for consumer behavior and industry strategies.

SOCIAL
The societal landscape in 2020 witnessed discernible shifts in travel behaviors precipitated by the
unprecedented circumstances of the global pandemic. Noteworthy among these changes was a
distinct inclination towards domestic travel, remote work accommodations, and an accentuated
emphasis on health and safety considerations. In response to these transformative social
dynamics, Airbnb, as a pivotal player in the travel and accommodation sector, necessitated
strategic adaptations to align with the evolving preferences and expectations of its clientele. This
dynamic interplay between emergent societal trends and the strategic recalibration undertaken by
Airbnb underscored the imperative for businesses to agilely respond to evolving social dynamics
for the purpose of sustaining relevance within the contemporary marketplace

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 TECHNOLOGICAL
Airbnb found its technological capabilities assuming a pivotal role in sustaining operational
relevance. The imperative for remote communication and contactless transactions necessitated a
robust technological infrastructure to ensure a seamless and secure user experience. Airbnb's
adept utilization of technology became indispensable in meeting the heightened expectations for
safety and efficiency in the accommodation booking process. This reliance on advanced
technological solutions underscored the strategic importance of technological resilience in
adapting to unforeseen externalities and optimizing user interactions, thereby exemplifying the
critical intersection between digital transformation and user-centric business strategies during
unprecedented times.
OVERALL
In overall, Airbnb encountered a dynamic external environment shaped by various PESTEL
factors. Politically, the platform grappled with an intricate web of regulatory challenges globally,
navigating differing political landscapes and policy frameworks. Economically, the COVID-19
pandemic posed a formidable challenge, precipitating a sharp decline in global travel and
introducing economic uncertainties that impacted consumer spending on accommodations.
Socially, changing travel behaviors emerged as a prominent trend, marked by a preference for
domestic travel, remote work, and an increased focus on health and safety considerations. Airbnb
had to swiftly adapt to these societal shifts to remain relevant. The technological landscape
witnessed accelerated digital transformation, with Airbnb's robust technological infrastructure
becoming pivotal in providing a seamless and safe user experience during the pandemic. From an
environmental perspective, sustainability considerations gained prominence, influencing traveler
preferences and potentially requiring Airbnb hosts to adhere to eco-friendly practices. Legally,
health and safety regulations became paramount, necessitating compliance adjustments to ensure
the well-being of hosts and guests. Navigating this multifaceted PESTEL landscape, Airbnb
displayed resilience, adaptability, and responsiveness in addressing the challenges posed by the
unprecedented events of 2020.

STRATEGY AND RECOMMENDATION

STRATEGY

● Why Airbnb need to proposed these strategies

Airbnb, as a trailblazer in the short-term lodging industry, finds itself at a crucial juncture
necessitating strategic recalibration. The dynamic business landscape, marked by regulatory
complexities, shifting consumer preferences, and the unprecedented disruptions of the global
pandemic, demands a strategic response. Regulatory hurdles have underscored the imperative for
Airbnb to optimize compliance strategies and engage with diverse legal frameworks globally.
Evolving consumer behaviors, notably the surge in remote work, require Airbnb to adapt its
service offerings for sustained relevance. Additionally, the quality and safety of listings have
become paramount, prompting the implementation of enhanced quality assurance measures to
safeguard the trust of both hosts and guests. The imperative for sustainable business practices,
coupled with the growing demand for unique travel experiences, compels Airbnb to diversify its
service portfolio. Furthermore, the technological frontier presents an opportunity for Airbnb to
reinforce its leadership by leveraging innovations to enhance the user experience. Amidst these
challenges and opportunities, community engagement, crisis preparedness, and effective
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communication are essential components to fortify Airbnb's standing and navigate complexities
with resilience. This set of strategies is imperative for Airbnb to not only address immediate
concerns but also to secure a robust and adaptive foundation for future growth and sustainability.

● Strategy Proposed

1. Diversification of Service Portfolio:

Airbnb must aggressively expand its "Experiences" and "Adventures" categories, curating
unique, localized activities. This strategy aligns with the demand for personalized travel,
enriching the platform's offerings and appealing to a broader audience seeking memorable
experiences.

2. Regulatory Compliance Optimization:

Establish specialized teams to navigate and proactively engage with regulatory bodies
globally. Develop a dynamic compliance strategy to adapt swiftly to evolving legal
landscapes, fostering a cooperative approach with policymakers and ensuring adherence
to local laws.

3. Enhanced Quality Assurance Measures:

Institute stringent quality control mechanisms utilizing AI algorithms for comprehensive
property assessments. Implement regular manual inspections, ensuring consistent safety,
cleanliness, and accuracy standards. This approach bolsters user confidence and
safeguards Airbnb's reputation.

4. Adaptation to Remote Work Trends:

Introduce a dedicated category for extended stays, featuring work-friendly amenities.
Collaborate with hosts to create environments suitable for remote work, tapping into the
growing market of professionals seeking flexible and comfortable accommodations.

5. Sustainability Integration:
Launch a rigorous sustainability certification program for hosts, emphasizing eco-friendly
practices. Forge partnerships with reputable environmental organizations to validate and
promote sustainable initiatives, catering to the increasing demand for responsible travel
options.

6. Technological Innovation Leadership:

Allocate resources to cutting-edge technological features, including augmented reality for
immersive property experiences. Prioritize real-time customer support solutions,
reinforcing Airbnb's commitment to technological leadership and an enhanced user
experience.

7. Community Engagement and Stakeholder Communication:

Initiate proactive community outreach programs to address concerns and build positive
relationships with local communities. Implement strategic public relations campaigns

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 highlighting the economic contributions of Airbnb, fostering goodwill and positive public
perception.

8. Risk Mitigation and Crisis Preparedness:

Develop detailed crisis management protocols encompassing various scenarios. Conduct
regular training exercises for teams, ensuring preparedness and swift response during
crises. Establish transparent communication strategies to maintain stakeholder trust in
times of uncertainty.
IMPLEMENTATION

1. Diversification of Service Portfolio:

Conduct extensive market research to identify and curate unique local experiences. Form
a dedicated R&D team and collaborate with local experts to enrich the diversity of
offerings.

2. Regulatory Compliance Optimization:

Establish a specialized compliance team comprising legal experts. Conduct a thorough
review of regulatory frameworks in key markets. Foster direct communication channels
with regulatory bodies for ongoing collaboration.

3. Enhanced Quality Assurance Measures:

Implement AI-driven algorithms for continuous property assessments. Launch a manual
inspection program for high-impact properties. Establish a feedback loop to ensure
consistent safety, cleanliness, and accuracy standards.

4. Adaptation to Remote Work Trends:

Create a distinct category for extended stays, featuring work-friendly amenities.
Collaborate with hosts to tailor accommodations for remote work needs. Develop targeted
marketing campaigns to capture the remote worker market.

5. Sustainability Integration:
Design and launch a sustainability certification program for hosts. Collaborate with
reputable environmental organizations to validate and promote sustainable initiatives.
Communicate the program to hosts and guests.

6. Technological Innovation Leadership:

Allocate resources for the development of augmented reality features. Prioritize real-time
customer support solutions. Continuously invest in technology upgrades based on user
feedback to maintain a leading-edge platform.

7. Community Engagement and Stakeholder Communication:

Initiate proactive community outreach programs to address concerns and build positive
relationships. Develop and implement strategic public relations campaigns to highlight
Airbnb's positive contributions. Establish regular communication channels with local
communities.

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 8. Risk Mitigation and Crisis Preparedness:
Develop detailed crisis management protocols covering various scenarios. Conduct
regular training exercises for teams to ensure preparedness. Establish a dedicated crisis
communication team to handle unforeseen events effectively.

These focused actions for each strategy are designed to guide Airbnb in the practical
implementation of the recommended initiatives.

OVERALL RECOMMENDATION
With the COVID-19 epidemic posing new hurdles, Airbnb is proactively repositioning itself for
growth and resilience. By expanding the range of services it offers with products like
"Experiences" and "Adventures," Airbnb is able to serve a wider clientele and offer distinctive
substitutes for conventional hotels. The goal of market expansion stimulates growth and attracts a
variety of customer bases by reaching out to previously unexplored geographic areas. As remote
work becomes more popular, Airbnb recognizes this trend and responds by providing lodgings
that are conducive to work for extended stays. This move reflects changing consumer
expectations brought about by the new standard in workplaces. Setting improved health and
safety protocols as a top priority allays fears and preserves confidence in the face of persistent
global health crises for both hosts and visitors. Ongoing technical innovation is essential for
optimizing user experiences and guaranteeing flexibility in response to evolving circumstances.

CONCLUSION
Finally, Airbnb's calculated reactions to the COVID-19 pandemic's obstacles show a thorough
strategy focused on flexibility, resiliency, and long-term expansion. By broadening its range of
offerings, venturing into novel areas, and leveraging the surge in remote work practices, Airbnb
places itself at the forefront of changing customer demands. The platform's dedication to user
safety and happiness is highlighted by the emphasis on improved health and safety measures
combined with continuous technical innovation. Airbnb's proactive involvement in regulatory
frameworks is indicative of its commitment to effectively negotiating intricate legal environments
and promoting operational stability. Moreover, the incorporation of environmental efforts
harmonizes the platform with modern principles, augmenting its attractiveness to a socially aware
viewership. Together, these strategic efforts provide a strong basis for Airbnb to go ahead,
enabling the platform not only to weather the challenges of the pandemic but also to thrive in an
ever-changing global landscape. The company's commitment to innovation, customer-centricity,
and ethical considerations positions it as a dynamic player poised for continued success in the
post-pandemic era.