SWOT analysis of Airbnb (Airbnb SWOT)

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SWOT analysis of Airbnb (Airbnb SWOT)

This is a detailed SWOT analysis of Airbnb. It aims to analyse the strengths and the weaknesses of Airbnb. It also aims to explore the opportunities and the threats facing the company. Airbnb‌‌ ‌Inc. is an American online marketplace which was founded in 2008. It is the biggest accommodation-sharing site in the word which millions of people use to rent out their properties to guests and tourists.

Strengths of Airbnb

Airbnb provides guests and tourists with access to around 5.6 million unique places to stay in 100,000+ cities and 220 countries and regions (Airbnb, 2021). This is a remarkable achievement for a company that started its journey not so long ago. Its hosts run thousands of unique and handcrafted activities for the guests around the world giving it a competitive advantage over many of its competitors.

Accommodation is a very important sector in the hospitality industry. It often challenges travellers particularly, due to its costs and locations. However, travellers do not need to worry any more as Airbnb provides services virtually everywhere with affordable prices. Unlike traditional hotels, it offers a diverse range of accommodation e.g. cabins, farms, tiny homes, boats, castles, yurts, treehouses, private islands, lighthouses, and igloos (Airbnb, 2021). Whatever tourists fancy in terms of accommodation, it has almost everything to offer!

The prices charged by Airbnb hosts are often cheaper than those offered by many budget hotels. Adopting this low pricing policy has been made possible because Airbnb does not own any of the real estate listings, hence very low operating cost. It rather works as a broker and receives commissions from each booking.

Airbnb’s financial position has been good in recent years. It made more than $1 billion revenue in the third quarter of 2018. It also made $100 million in profit out of $2.6 billion revenue in 2017 (Bosa, 2018). The company was valued at over $35 billion in 2019 (Lock, 2021). Average annual income per host is around $7900 and the total number of hosts is over 4 million. However, the year 2020 produced some challenging results.

Weaknesses of Airbnb

Airbnb has been accused of destroying the social fabrics of many cities in the world. For instance, in Amsterdam, it has been accused of simply turning many homes into cash-generating assets rather than places to live. In New Orleans (the USA), it has been accused of increasing social division (Boztas, 2019). Although many travellers love the company, Airbnb has proved unpopular with local communities in many cities around the world.

While not owning any of the real estate listings is great, it has some disadvantages too. For instance, Airbnb must rely on the quality of services provided by the hosts, and it does not have any direct control over them either. Poor services provided by any hosts may lead to social media backlash and poor ratings thereby damaging the brand reputation.

Many analysts argue that the business model of Airbnb is weak and flawed. This model can be copied very easily particularly due to global success in digital innovation. Likewise, a number of properties of Airbnb hosts were vandalised in the past in different countries causing concerns for both the hosts and the guests.

Opportunities for Airbnb

Although Airbnb has 5.6 million listings in 220 countries and territories, the number of listings can be increased further with market penetration strategies. Likewise, it can benefit from introducing new services such as travel guides and rental cars. In fact, introducing new services may serve the needs of guests better. Likewise, diversifying into other markets through mergers and acquisitions is also worth exploring.

Threats to Airbnb

Threat is the last element to address in the ‘SWOT analysis of Airbnb (Airbnb SWOT)’. Undoubtedly, many competitors challenge Airbnb and compete for the same market shares. The main competitors of Airbnb include but not limited to Tripping.com, HomeToGo, FlipKey, HomeAway, VRBO, HouseTrip, VayStays, and VacayHero.

Government regulations may also turn out to be extremely problematic for Airbnb. For example, many cities around the world have short-term rental restrictions. For instance, New York City, San Francisco, London, Amsterdam, Barcelona, Paris, Singapore, and Tokyo have placed restrictions on hosts concerning how many nights a year they can rent out their properties. In fact, many cities started bringing in new restrictions that might impact on the operations of Airbnb dearly (Guttentag, 2018).

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Last update: 28 January 2021

References:

Airbnb (2021) About us, available at: https://press.airbnb.com/about-us/  (accessed 25 January 2021)

Bosa, D. (2018) Airbnb booked more than $1 billion in third quarter revenue, available at: https://www.cnbc.com/2018/11/16/airbnb-booked-more-than-1-billion-in-third-quarter-revenue.html (accessed 05 July 2019)

Boztas, S.  (2019) Airbnb Is Accused of Destroying Cities. This Company Says It’s The Ethical Alternative, available at: https://www.huffingtonpost.co.uk/entry/airbnb-affordable-housing-gentrification-tourism fairbnb_n_5c5949c3e4b00187b554828d? (accessed 09 July 2019)

Guttentag, D. (2018) What Airbnb really does to a neighbourhood, available at: https://www.bbc.co.uk/news/business-45083954 (accessed 09 July 2019)

Lock, S. (2021) Company value of Airbnb 2016-2019, available at: https://www.statista.com/statistics/339845/company-value-and-equity-funding-of-airbnb/ (accessed 26 January 2021)

Author: M Rahman

M Rahman writes extensively online with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.