The name of the most well-known rental house company was “Air bed and breakfast”. It’s not a different company from Airbnb.
Airbnb is the world’s most sought-after accommodation site, with a market value of more than $35 billion as of the year 2019.
The most well-known brand worldwide and operating for more than 10 years, Airbnb has come a far in its journey despite the challenges and ups and downs of the industry.
The Airbnb SWOT Analysis concentrates on identifying the strengths of the company, its weaknesses, opportunities, and threats. Let’s begin by understanding more about Airbnb.
Airbnb – At A Glance
|Founders||Brian Chesky, Joe Gebbia, Nathan Blecharczyk|
|Chief Executive Officer (C.E.O.)||Brian Chesky|
|Headquarters||San Francisco, California|
|Type of Corporation||Public|
|Year Founded||August 2008|
|Revenues (2019)||$3.378 Billion (FY 2020)|
|Key Competitors||Vrbo, Plum Guide, TurnKey, FlipKey|
To conduct the review of the Airbnb SWOT it is vital to understand the company’s past and current plans.
Airbnb offers an online marketplace for the primary homestays that are used for accommodation, vacation rentals, and tourism activities. Customers can use the platform using mobile apps and on their websites.
Airbnb is the stylized version of AirBedandBreakfast.com. They provide accommodation for guests who are interested in tourism events and short-term thinking.
Airbnb has drawn the attention of the regulatory authorities of San Francisco, the European Union as well as New York City.
But, as with other businesses, Airbnb also faced challenges from its competitors. In 2016, it was faced with complaints of discrimination against racial groups.
Milestones Development Timeline of Airbnb
|2007||The idea was born for breakfast and bed|
|2008||Nathan Blecharczyk joined as the chief technology officer.|
|2009||Staff training and promotion of the website|
|2010||The company has raised funds|
|2011||The ‘app’ award was awarded by the Southwest conference|
|2012||The office opened located in Sydney, Paris, Moscow, Milan, Copenhagen, Barcelona, Sau Paulo|
|2014||The introduction of the new logo named Belo|
|2018||Launched Airbnb Plus|
SWOT Analysis of Airbnb
Airbnb SWOT analyses will reveal strategies that allow the company to improve its position and increase revenues.
It helps to identify the impacts of competition and the weaknesses in the company’s organizational culture and culture.
The business is able to revamp its strategy and tactics by analyzing opportunities. The business can seek growth opportunities to make money and stability over the long term in the market. The company can also be able to adapt to changes in technology.
Strengths In The SWOT Analysis Of Airbnb
A worldwide-recognized brand: Airbnb is recognized globally and is considered to be one of the best advantages of this platform. Airbnb has even made its way into everyday language all over the world, and Airbnb is utilized as both a verb and as a verb in a few locations.
Airbnb’s popularity Airbnb is unparalleled among other travel brands. Indeed, the company’s internet search traffic is higher than that of other travel brands as per Google Trends.
The strength of Airbnb’s brand is what draws people to its platform. This is apparent in the amount of organic traffic to its website. From January to September of 2020 around 91% of the Airbnb traffic came via direct channels or free channels.
A thriving guests’ communityAirbnb’s customer community can be described as one of its greatest strengths. The way in which guests experience the Airbnb experience and the personal touch of hosts, as well as the interactions with them, allow guests to interact in their Airbnb community.
People who have had positive experiences with Airbnb often return to the site to book future trips and make reservations directly instead of booking through intermediaries.
The guest experience is essential to the success of Airbnb’s business since it creates word-of-mouth which drives organic traffic to the website and helps to save Airbnb a significant amount of cash in its advertisement and marketing department. Additionally, Airbnb has the numbers that show that. The indicators of engagement with guests include the number of guests who leave reviews (68 percent left reviews on their 2019 stays) and the repeat guest revenue (69 percent of revenue in 2019 was generated from stays by repeated guests, compared to 66 percent in the year 2018) and are continuously going up.
The global web: Airbnb’s worldwide network of hosts and guests allows the short-term rental service to expand its reach, without having to establish local operations in every location it operates.
Hosts and guests cover more than 220 countries and regions which allows Airbnb to succeed in traveling across borders, it aids in establishing an international brand.
The network expands because new hosts are seeing opportunities to earn additional revenue and attract guests with the attractiveness of Airbnb stay. The global network was the basis of the structure which allowed Airbnb to function during the Covid-19 crisis and provide accommodation close to the home of guests.
Built-in platform custom made by Airbnb: Airbnb takes a lot of satisfaction from its platform, and with good reason. The technology that is proprietary to Airbnb is specifically developed to meet the particular needs of guests and hosts. The platform offers industry-leading features for guests and hosts including pricing suggestions and scheduling, integrated payment and community support hosts protection mechanisms feedback, reviews, etc.
Airbnb’s method of building an online and mobile application host and guest ecosystem that interacts with Airbnb is unique and provides a wealth of security features via AI and automation.
Airbnb’s payment capabilities are used worldwide in the world of travel and can be crucial in allowing individuals to join the platform.
In the end, Airbnb demonstrates its global market savvy by making the platform accessible in more than 62 languages and dialects in order to ensure that its services are available to hosts and guests from around the world.
Host community large Airbnb hosts community consists of hosts from all over the world, who provide accommodation and services. Airbnb hosts currently have four million hosts that have been attracted by Airbnb organically, or in incentive programs (programs where hosts are recruited by hosts). In many cases, guests choose to become hosts after having a positive experience themselves. In 2019 the majority of the new Airbnb hosts had been guests who had first joined the platform.
Weaknesses In The SWOT Analysis Of Airbnb
Covid-19 affects the financial performance of the company: Coronavirus interruptions have affected Airbnb’s financial health and business. Airbnb’s measures to reduce the outbreak will affect the results of its operations.
Risk of losing expertise and knowledge of institutions: Due to the coronavirus’s negative effects and the economic problems triggered by its disruptions, Airbnb had to lay down around 1,800 employees between April and May 2020. The decrease in workforce affected marketing and design as well as customer service as well as transportation for Airbnb Studios, Hotels, and Airbnb Luxe teams. In the end, the worldwide platform experienced a decline in expertise and knowledge from institutions in a few key positions. Airbnb has been impacted by the limitations of capacity that are crucial for its expansion, the innovation of products, and to be able to enjoy an advantage in competition.
Risk of net loss and inability to make a profit: Airbnb has experienced a net loss of $70.0 million, $16.9 million, $674.3 million in addition to $696.9 million for the periods ending the 31st of December 2017 2018, and 2019, and the nine months ending on September 30th, 2020 and. At the time of November 30, 2019, and September 30 in 2020, the business was in the process of accumulating a $1.4 billion deficit as well as $2.1 billion respectively.
The world’s leading short-term rental platform is able to explain this by investing in expanding guest and host communities as well as expanding their offerings and features and also expanding their operations and bringing on new staff throughout the years. If they continue investing in major ways in the near future and this could affect their financial performance. It could be difficult for the company to increase its revenue significantly in order to offset the cost of operations that are high. The process to overcome the issue of rising expenses could be more difficult than what the company anticipates.
Airbnb anticipates an enormous net loss in 2020 because of its Coronavirus pandemic. They’re spending a large amount of their money to fund their operations because of the decline in bookings and revenue as compared to 2019.
The areas with low service costs: Some of Airbnb’s offerings in specific regions have reduced service costs, and Airbnb has to make large additional investments. This is a problem for Airbnb’s offerings since the regions expand in size in time when compared to other regions. For example seats for Airbnb Experiences are sold at a lower cost than stays booked for nights.
The reduction in service fees could have an impact on the long-term profitability of the company: Airbnb has changed and might reduce its service charges in the near future due to strategic or competitive motives. But, the possibility of not raising their revenues or controlling the growing operating costs may hinder Airbnb in sustaining its profitability.
Airbnb’s revised EBITDA and free cash flow may pose a the stock price at risk: Airbnb had adjusted its EBITDA (Earnings before Interest, Taxes, and Depreciation and Amortization) to $60.0 million, $170.6 million, $253.3 million in addition to $230.2 million in the periods that ended on December 31, 2017, 2018 and 2019 and for the nine-month period ending September 30, 2020. The Free Cash Flow of the company included $151.0 million, $504.9 million $97.3 million in addition to $520.1 million for periods ending December 31, 2017, 2019, 2018, and 2017 and for the nine-month period ending the 30th of September, in 2020 and for the nine months ended September 30, 2020.
The Adjusted EBITDA, as well as Free Cash Flow, decreased in the year 2019. Airbnb explains that the decrease is due to their decision to make the year 2019 the year they invested heavily in the development of new products and growth initiatives, such as in China as well as to upgrade their technical infrastructure.
Furthermore, the Covid-19 caused a decline in 2020. This means that the negative direction of the company’s modified EBITDA and Free Cash flow may not change. If the forecasted adjustments to EBITDA, as well as Free Cash Flow, did not be in line with the expectations of analysts and investors the price of Airbnb’s stock could be in danger.
Slow growth in revenue: Airbnb’s revenue growth has been slow in recent years and is expected to increase.
The year-over-year rate of growth of revenue fell in 2019 compared to the year before and also in comparison to 2017. For the initial nine months in 2020 due to Covid-19, revenue fell significantly in comparison to the first three months of the year.
Inability to retain hosts that are already in place and add new hosts: If Airbnb hosts do not have enough listings, and the amount of nights booked is reduced or the cost that hosts are charged decreases the company’s business. Airbnb may not be able to provide a wide range of accommodations and retain hosts as well as guests, which could pose unfavorable for the expansion of the number of listings. The platform’s global reach could be at risk if professional hosts were not kept.
Maintaining brand recognition and reputation: The most important assets on Airbnb are brand recognition and reputation. These are vital for Airbnb to grow and increase its competitive advantage.
Security perception: In the event that Airbnb has to confront a guest, hosts, or any third-party action that is unsafe, violent, criminal, or fraud it could affect the security or more specifically the perception of security on its website. In addition, the way in which the platform is able to respond to these issues could impact the financial results of its business.
Inability to provide top-quality quality service: Airbnb’s service for community assistance is essential to keep hosts and guests on its platform.
Opportunities In The SWOT Analysis Of Airbnb
Resilient Categories aid in recovering from the Covid-19 crisis: Domestic travel, short-distance travel, travel beyond the top twenty cities, and long-term stays are among the categories that were steady despite the negative overall impact of the Covid-19. This demonstrates the reliability of Airbnb’s model of business and its ability to adapt to the changing environment problems.
Expand guest base according to changing traveler preferences: The biggest player in the rental market for short-term stays intends to adapt its offerings to changing the behavior of travelers due to Covid-19. Airbnb believes it has the potential to create products in line with the habits of its customers and draw more customers.
Investments in the brand: Airbnb has a strong brand name that can be utilized to develop effective marketing strategies that are linked to product launches that unveil new features. Airbnb has the opportunity to place its values at the heart of its branding.
Expanding globally: Airbnb has a global presence however it has the potential to grow its guest and host communities in areas with less coverage, like China, Latin America, Southeast Asia, and some smaller markets.
Innovative: Innovation on the Airbnb platform can improve its appeal to guests and hosts. It may also improve retention and engagement from new and existing communities.
New products: Investments in technology and innovation are closely tied to the design of interfaces for guests and hosts as well as new products that may create opportunities for the global short-term rental market.
Threats In The SWOT Analysis Of Airbnb
Reduced demand for travel: Covid-19 has had and is likely to continue to have a huge impact on travel demand and travelers’ willingness to make use of Airbnb. It could have a negative impact on Airbnb’s business as well as its financial situation.
Changes in the law and regulations: The legal and regulatory landscape, as well as changes in the implementation of laws and regulations or introduction or enactment of regulations and laws that affect Airbnb’s business may affect its revenues. Changes in the regulatory landscape could affect hosts and guests. Changes could occur in tax laws.
The threat of competition: Airbnb tries to stand out and attract hosts as well as guests by being a dominant competitor in an industry that is competitive. Hosts are able to choose to use any of the competitors and they frequently offer a variety of services. In the same way, guests can opt for a different short-term rental site. The competition could result in a decline in the demand for Airbnb from both guests and hosts.
Regulations could trigger penalties and fines: Another possible environmental threat for Airbnb is that its complex changes in regulations and laws could result in fines and penalties. This could have negative effects on the company’s business.
Litigation with various parties and potential legal liability: The Airbnb has found itself involved in legal proceedings with various stakeholders, including governments municipal bodies, industry groups as well as trade associations. The company is trying to impose liability on the platform. Airbnb could be more vulnerable to third-party claims as a result of the changes in regulation.
Responsibility for content that is posted hosted on Airbnb’s platform: Due to changes in the regulatory framework of various markets Airbnb may be faced with legal claims regarding the content or information available on its platform that was created by third parties, like hosts. In the US For instance there’s a proposal for legislation to make short-term companies accountable for the content that is created by users. The liability guarantee in Europe’s E-Commerce Directive might be changed by the introduction of an act called the Digital Services Act.
The decline in the acceptance of home-sharing: In certain areas, because of cultural factors, home-sharing may not be as well-known. Therefore, this could adversely impact Airbnb’s competitiveness. For instance, a significant number of hosts and visitors do not want to share their homes in the current crisis of Covid-19.
Technology advancements and the ever-changing needs of guests and hosts: Airbnb has to continue investing in the latest technology to keep up with changing demands. Cryptocurrencies, tokenization, and other new technologies for authentication for instance should be taken into consideration in order to maintain the users on its platform.
Airbnb SWOT Analysis exposes that the company has a variety of possibilities to be more successful.
Airbnb has made its mark in the hospitality and lodging business within the U.S.A. It can continue its popularity by implementing a couple of other steps:
- Airbnb is able to reach out to additional regions, such as the emerging markets, with lesser competition. In the same way, it could create and create more opportunities for business in these regions where hosts might take advantage of the opportunity to collaborate with Airbnb;
- Make use of the Mobile App. We all know that nowadays we use our smartphones to do whatever we like, therefore it is essential to seize this opportunity.
- It must find a way to balance unexpected events such as pandemics, or other emergency situations, with the home-sharing system, so that it can find the breaking point needed to expand within the market’s negative environment.
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Conclusion And Recommendations For Airbnb
In short, Airbnb’s plan to be successful in the market relies on a blend of understanding of customers’ operational excellence, as well as customer satisfaction.
To offer more convenience, at a lower expense than its rivals, Airbnb relies on its outstanding operating system.
Airbnb is focused on renting advertising, advertisements, and technology systems that allow the lodging process to be fully automated.
- Continued growth, through solving legal issues and taking legal precautions
- Develop through celebrity alliances and alliances
- Revenues are growing and a better name by involving the latest establishment
Through the help of this Airbnb SWOT review, the company highlighted the strengths potentials, weaknesses, and threats to Airbnb in the marketplace.
To grow its market share as well as its financial security, Airbnb must take vigorous actions. Despite the negatives, Airbnb is without doubt an example of innovation and progress.