In the present day, Airbnb may be regarded as the most popular online marketplace that connects travelers and homeowners from all over the world. On its platform, it provides an opportunity to rent and rent out private homes, apartments, and rooms. Although the company experiences continuous growth and development being chosen by millions of individuals across the globe on a daily basis, it is essential to provide its external and internal analysis in order to update its core strategies when necessary and keep its positions.
The external analysis within the framework of the five forces model allows defining main competitive forces that exist in a particular industry. Although Airbnb is closely connected with lodging, it belongs to the online rental industry providing accommodation-rental services on the basis of existing offers. In turn, five forces that contribute to the competition and create the market’s competitive pressures include competition from rival sellers, potential new entrants, and substitute products along with supplier and customer bargaining power (Thompson et al., 2021). All in all, it is possible to say that there is a high competition between rivals in the online rental industry – there are several major companies in the market, including Airbnb, Booking.com, Wimdu, Vrbo, TripAdvisor, GlampingHub, Agoda, Expedia, HomeAway and multiple local and niche players.
Due to a low differentiation, all of them offer relatively similar products and services that may be easily substituted. In addition, the market is open for new entrants and with competitive advantages, they may replace even highly successful companies. That is why, rivals that already operates in the market undertake all efforts to improve their marketing strategies gaining competitive advantages and attracting customers through affordable prices, unique and exclusive offers, the higher quality of services, new opportunities, and multiple other features for comfortable use. At the same time, while there are no suppliers as both homeowners and guests may be regarded as platforms’ users and customers, their bargaining power are considered by companies. As travelers want affordable prices, comfortable conditions of rent, and support from the company while homeowners require warranties for their property, they are constantly looking for platforms that will be able to satisfy their needs to the fullest extent.
In a highly competitive environment, for any company, it is essential to define its main strengths, weaknesses, opportunities, and threats. In this case, SWOT analysis may be regarded as the most suitable tool for the assessment of these categories (Thompson et al., 2021). Thus, for Airbnb, it will be the following:
Strengths:
- Airbnb is a globally-recognized and well-established international company that operates all over the world in different locations;
- It offers a unique community that connects hosts and visitors, allowing them to interact;
- Airbnb provides a well-developed web platform with a variety of features for a safe and enjoyable rent, such as scheduling, community assistance, pricing tips, host security measures, integrated payments, customer reviews, and more;
- It may be regarded as an alternative to the cost-inefficient booking of hotels.
Weaknesses:
- Airbnb is frequently criticized for high prices of accommodation;
- It faces the violation of housing regulations and laws;
- The company cannot guarantee the absence of disreputable hosts and guests who, in turn, impact its reputation as well;
Opportunities:
- Airbnb may expand its products by offering car rentals or tour packages;
- It may invite celebrities who will be able to attract millions of new customers by offering their accommodation for rent;
- Airbnb should develop its mobile application including new features and functions.
Threats:
- Airbnb has a business model that may be easily copied by rivals and new entrants;
- The continuous involvement in housing law violation may destroy the company’s reputation;
- Airbnb’s services are highly vulnerable to global events, such as pandemics and economic crises, that may limit travelling and lodging.
Reference
Thompson, A., Peteraf, M., Gamble, J., & Strickland, A. (2021). Crafting & executing strategy: The quest for competitive advantage: Concepts and cases (23rd ed.). McGraw-Hill Higher Education.