PESTLE Analysis of Airbnb

Pestle analysis of Airbnb. Air Bed and Breakfast (Airbnb) is a US online short-term rental lodging company. Nathan Blecharczyk, Joe Gebbia, and Brian Chesky are the founders of Airbnb, and they established the company in 2008. The headquarter of the rental company is situated in San Francisco, California, USA.

Some of the prominent subsidiary brands of Airbnb are Trooly Inc, Deco Software Inc, Aibiying, Trip4real Experiences S.L, Accomable, Lapka Inc,, Airbnb U.K. Limited, Luxury Retreats International Inc, and HotelTonight.

The online platform of Airbnb has a network of hosts and guests across the world. They both connect on the platform for the temporary and short-term lodging of homestay, vacation, and tourism. The interesting thing about brad that it doesn’t own any single property, but it earns through commission.

According to a financial estimate, Airbnb’s annual revenue was 2.5 billion US dollars by the end of 2020, and it has decreased by 32%. Out of which the company’s net earnings were 219.3 million US dollars.

Today, we’ll discuss the pestle analysis of Airbnb. Here it would focus on the macro-environmental factors of the online rental platform. For internal factors, check out the swot analysis of Airbnb. Here’s the pestle analysis of Airbnb as follows;

Political Factors Impacting Airbnb

Shared Economy

Airbnb follows the concept of the sharing economy where people rent out a part of their house, room, or apartment. It helps hosts to earn some extra money. On the other hand, the guest could save up some money by renting an apartment at a discounted price. If you compare the staying and rental prices with the professional hotels, then you’d find a huge difference.

Political Pressure

The sharing economy is good both for the hosts and guests, but the rent doesn’t fall under the category of rental house regulations. In other words, the government doesn’t get much through this process. Some states require the owner to be there for the short-term rental period. The other states require the hosts to pay the same tax rate that other hotels are paying for it.

Legal Status

The business model of Airbnb is unique and out of the ordinary. That’s why the company has had problems with the law and politicians. Some of the states like New Orleans, Barcelona, and New York have imposed heavy fines on the brand. Therefore, the online rental company should make sure to follow the housing regulations of different states and countries.

Economical Factors Affecting Airbnb 

Cheaper Alternative

Airbnb provides a cheaper cost alternative to middle-income families that are traveling. The other reason for its success is that the company is the only alternative to mainstream hotels and restaurants. According to an estimate, Airbnb is serving the needs of more than 10 million people across the globe.

Employment Opportunities

Airbnb has been creating employment opportunities by allowing them to share their homes and apartments. The brand has been successful, especially in those areas where there aren’t many hotels. However, some of states and countries are generating millions of dollars in full-time jobs. The brand has employed more than 6300 employees to manage its various operations across the world.

Working Class

Airbnb has been helping out the working class and middle-income families in terms of paying their bills and home loans. It has also made it easier for people to have economical tours and trips.

Positive Impact

The overall economic impact of Airbnb has been positive. It brings out the positive values of society and makes people open up and share their resources. The demand and supply of shared resources are balanced.

Social Factors Impacting Airbnb

New Experience

The hosts of Airbnb provide a unique experience to their guests and visitors in return for money. It’s completely different from the hotels and restaurants. When people share their experiences on social media and the word of mouth marketing saves the company’s marketing and promotional costs.

Social Business

Airbnb follows the principle of shared economy and the purpose is to help out both buyers and sellers. It’s been creating employment opportunities and distributing wealth in society among ordinary and middle-class families. In other words, it’s bringing society closer when they share their houses and other resources.

Not Profitable

If we look at the income statement of Airbnb, the company hasn’t been making a profit for the past five years. The brand has been working on various expansion projects across the globe by having a positive impact on the technology.

Technological Factors Affecting Airbnb 

Relying on Technology

Airbnb is heavily dependent on technology for the smooth running of its operations. The company is using both; the website and the mobile application to connect hosts and guests. The brand has a very effective system of evaluation and that’s feedback and customer reviews.

The company is also using AI and automation tools. For instance, if the host is buying and could reply to the guest’s queries. The automated system would communicate with the guests on its behalf. In other words, Airbnb wouldn’t have achieved this level of success without the use of technology.

Social Media Reviews

Airbnb has been utilizing the social media platforms like FacebookLinkedInGoogle Trends, and Instagram efficiently. The brand connects with guests and visitors through social media and it encourages people to share their experiences. When they do, the company uses their feedback for the promotion of the brand.

Legal Factors Impacting Airbnb

Housing Regulations

The housing regulations of various countries and states are different and Airbnb has had many issues with the legal department. Now the company has devised a certain set of rules and regulations for hosts and guests to follow it.

Renting Regulations

The renting regulations of various governments are also different. Airbnb paid a tax of 15.3% of the company’s income in 2020. It helps the company to keep running its business and avoid conflict with the law.

Environmental Factors Affecting Airbnb 

Energy Efficient

Airbnb and the sharing economy is a positive steps towards a sustainable future. It has allowed people to open up and share their resources. Now people are effectively utilizing the limited resources, instead of wasting scarce natural resources. Overall it helps the planet in terms of waste reduction, lower water consumption, lower emission of greenhouse gasses, and energy efficiency.

Conclusion: Airbnb PESTLE Analysis Example Company

After an in-depth study of the pestle analysis of Airbnb, we have realized that Airbnb is undoubtedly one of the world’s leading shared economic companies. Rental regulations, net losses, and political pressure are severe threats to the company. Airbnb should find a way to align its business with the law; while paying heed to the external political, economical, social, technological, legal, and environmental factors impacting the company.

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