Swot analysis of Airbnb. Airbnb (Air Bed and Breakfast) is an online rental lodging U.S. platform and a Company. Joe Gebbia, Nathan Blecharczyk, and Brian Chesky laid the foundation of the Airbnb in August 2008. The headquarter of the company is in San Francisco, California, USA.
Airbnb has a worldwide network/platform of hosts and potential guest/customers. It allows people/guests to arrange their lodging for vacation, homestay, or tourism and meet with the hosts. The company doesn’t possess any of the building and property. In fact, the brand earns the commission by making deals with hosts and guests.
HotelTonight, Airbnb U.K. Limited, Lapka Inc, Trip4real Experiences S.L., Deco Software Inc, Trooly Inc, Aibiying, Accomable, Tilt.com, and Luxury Retreats International Inc are some of the principal subsidiary brands of Airbnb.
According to an estimate, the annual revenue of Airbnb in 2020 was 2.5 billion dollars, and it decreased by 32% annually. Out of which, the net income of the online rental lodging brand was 219.3 million dollars.
Today, we’ll discuss the swot analysis of Airbnb. Here we’re going to analyze the growth of the world’s leading online rental company. For macro-environmental factors, check out the pestle analysis of Airbnb. Here’s the swot analysis of Airbnb as follows;
Strengths of Airbnb
Worldwide Host Community
According to an estimate, Airbnb has approximately 4 million hosts across the world and connected with the company through different incentive schemes. Often many hosts were guests first, and they joined the company after having a wonderful experience. Approximately 23% of the new hosts in 2019 were the guests.
Online Customized Platform
Airbnb uses technology like automation and A.I. to satisfy the lodging needs of hosts and guests. The company provides features like feedback, reviews, host protection, community support, integrated payment system, scheduling, recommending prices, etc.
The brand has now reached the global market and offering its services in over 62 languages. It’s because of the payment system of the company that allows people to join the platform.
According to an estimate, Airbnb provides short-term rental lodging services in more than 220 countries across the world. It has helped the company to become the global brand. Most importantly, many hosts are joining the platform because the company provides them with an earning opportunity.
Loyal Guest Community
Loyal guest community is one of the significant strengths of Airbnb. The hosts try their best to provide them with personalized service. Once visitors have a better experience with the particular host, they hire the same host next time instead of trying others.
Word of Mouth Marketing
Airbnb has an excellent feedback and review system, and it does the work of mouth marketing on behalf of the company. It saves the company’s marketing expense. According to an estimate, 68% of the guests have left positive reviews for the company in 2019. Approximately 69% of the guests were repetitive visitors.
Airbnb has become a worldwide recognized and renowned brand because of the quality lodging service it provides. According to Google trends, the brand’s popularity is increasing among the people through searches relevant to the competitors.
According to an estimate, 91% of the platform’s traffic came from organic searches and unpaid sources in 2020.
Weaknesses of Airbnb
Some people have been complaining that the service quality of Airbnb has been declining. The company has been facing an issue of keeping hosts and guest satisfied on the platform.
One of the most significant issues that the company faces is the safety of hosts and guests. It’s because you don’t know the violent and criminal background of the hosts and guest. Even though it raises safety concerns, a real incident would cause financial losses to the company.
Airbnb has become a global brand. Now it has to maintain the same status as the quality service provider. Only then the brand would achieve a competitive edge.
Airbnb has a limited number of hosts and booking list, and the company can’t add more hosts to the platforms. If it does, it would create an atmosphere of competition and lowers the price of lodging. However, the price reduction would make hosts unhappy, and the unsatisfied hosts would leave the platform.
The revenue stream of Airbnb has been decreasing for the past few years. The pandemic of covid-19 has turned out to be the final nail in the coffin, metaphorically speaking. The months of lockdown, travel ban, and shutdown of businesses have restricted the company’s growth and productivity.
Lower Service Fee
The increasing competition has made Airbnb reduce its service charges. It may help the company to decrease the competition level, but it would increase the operational expenses.
Airbnb has had net losses for the past few years. The brand had a deficit of 2.1 billion dollars and 1.4 billion dollars in the single year of 2020. The management explains the losses by making a massive investment in various projects. Like the company is expanding the guests and hosts and adding new features for the long term. That’s why such new schemes are badly impacting the profitability of the company.
Opportunities available to Airbnb
Airbnb should make an investment in the development of new technological tools and products, and it would link more hosts and guests. Most importantly, it would create more opportunities for the rental company.
Innovation is the key to the success and growth of any business. Airbnb should add some new innovative and creative features to appeal to the interest of hosts and guests. It would pay off the company in terms of increasing loyalty and engagement.
Airbnb has already reached more than 220 countries across the world. The rental company should expand its market share into smaller markets like Southeast Asia, Latin America, and China. The market expansion would increase the company’s revenue.
As we know that Airbnb is a world’s famous and recognized brand. Now the company should promote its brand along with its new products and services.
The pandemic of covid-19 has made people cautious about travelling and staying in different places. Now, Airbnb should exploit this trend and offer them what they want. The safe, hygienic, and secure place would attract the attention of many customers.
Threats Airbnb has to face
Increasing Demands of Hosts
It seems that the demands of hosts are increasing for the past few years. New authentication technologies, cryptocurrency, and Tokenization are some of their main demands. The rental platform is expanding its operating expenses to meet those demands.
Reluctant to Share Homes
Many people don’t like the idea of home-sharing with strange guests. It may be a cultural thing, a pandemic of covid-19, or some other factor is involved. It’s impacting the growth of the company.
Airbnb is a global brand and operating its business in many countries. The company has partnered up with many hosts across the world. They’re using the company’s platform and uploading the content for their business’s marketing if the content uploaded by third parties turned out to liable for copyrights. It would result in the form of a content liability claim.
3rd Party Lawsuits
Airbnb has faced many lawsuits over the years by the trade association, municipalities, industries, government institutes, etc. The changing regulations have made the company more exposed to the risk of 3rd party liability claims and lawsuits. They cost the company in terms of hefty fines and penalties.
The rental lodging market has been very competitive, bringing many new independent owners into the market. It has now become difficult for the company to retain hosts and guests on its platforms. They’re willing to leave the venue as soon as they get a better offer.
Out of all the threats, a pandemic of covid-19 has turned out to be the most dangerous. It has brought a ban on travelling, social distancing, and shutdown of everything. It would continue to negatively impact the business and profitability of Airbnb.
After a careful study of the swot analysis of Airbnb, we have realized that Airbnb is indeed the world’s leading online rental platform. The changing regulations, pandemic, liability claims, and net losses are severe threats to the company. Airbnb should address these issues before they shut down the platform.
Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Other than that, he’s a fun loving person.