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AIRBNB
Analysis & Marketing
Plan
Sarah Bryant, Joseph Morris,
Elisa Morrison, Sofie Uhlending
1
2
TABLE OF CONTENTS
INTRODUCTION: .................................................................................................................... 5
Industry Analysis ..................................................................................................................... 6
Market Review..................................................................................................................... 7
Factors of Demand .......................................................................................................... 7
Five Force Analysis ......................................................................................................... 8
Competitive Review ........................................................................................................... 12
Brand Competitors ........................................................................................................ 12
Product Competitors ..................................................................................................... 13
Solution Competitors ..................................................................................................... 13
Total Budget Competitors.............................................................................................. 13
Three Most Significant Competitors .............................................................................. 14
Current and Past Strategies .......................................................................................... 14
Financial Performance .................................................................................................. 16
Strengths and Weaknesses .......................................................................................... 17
Future Strategies ........................................................................................................... 18
Impact on Airbnb ........................................................................................................... 19
Type of Competitive Market .......................................................................................... 22
Customer Review .............................................................................................................. 23
Potential Market ............................................................................................................ 23
Purchase Process ......................................................................................................... 24
Why customers buy and expectations ........................................................................... 26
Microenvironment Review ................................................................................................. 27
Legal and Regulatory .................................................................................................... 27
Economic ...................................................................................................................... 27
Social and Cultural ........................................................................................................ 28
Environmental ............................................................................................................... 29
Technological ................................................................................................................ 30
Firm Analysis ......................................................................................................................... 31
Key Information ................................................................................................................. 32
Size ............................................................................................................................... 32
Key Management .......................................................................................................... 32
3
History ........................................................................................................................... 33
Primary Products/Services ................................................................................................ 35
Current Goals & Objectives ............................................................................................... 37
Current & Past Strategies .................................................................................................. 39
Performance ...................................................................................................................... 41
SWOT Analysis ................................................................................................................. 42
Strengths: ...................................................................................................................... 42
Weaknesses:................................................................................................................. 43
Opportunities: ................................................................................................................ 43
Threats: ......................................................................................................................... 44
Current Lifecycle Stage ..................................................................................................... 45
Current Branding Strategy ................................................................................................. 46
Core Competencies & Competitive Advantage...................................................................... 48
Core Competencies........................................................................................................... 49
Competitive Advantage ..................................................................................................... 52
Cost Advantage ............................................................................................................. 52
Differentiation Advantage .............................................................................................. 52
Segmentation ........................................................................................................................ 55
Segmentation ........................................................................................................................ 55
Convenience Seekers: ...................................................................................................... 56
Low-Budget Culture Seekers............................................................................................. 58
Event-Location Seekers .................................................................................................... 59
Experience Focused .......................................................................................................... 62
3 CIRCLES ............................................................................................................................ 64
Target Market and Competition ......................................................................................... 65
Target Market Segment: Low-Budget/Culture seekers ................................................. 65
Key Competitor: HomeAway ......................................................................................... 65
Context .......................................................................................................................... 65
Customer Perspective ....................................................................................................... 66
Firm Perspective ............................................................................................................... 66
3-Circle Map .................................................................................................................. 68
Opportunities for Growth ............................................................................................... 69
Features that can be Eliminated .................................................................................... 69
4
Features that should be better promoted ...................................................................... 70
Points of Difference ....................................................................................................... 70
Marketing Plan....................................................................................................................... 72
MARKETING PLAN ............................................................................................................... 72
Marketing Goals & Objectives ........................................................................................... 73
Segmentation .................................................................................................................... 75
Non-Current Airbnb Users ............................................................................................. 75
Current Airbnb Users..................................................................................................... 76
Targeting ........................................................................................................................... 78
Positioning Strategy ...................................................................................................... 78
Marketing Implementation ................................................................................................. 80
Actions .......................................................................................................................... 80
CONCLUSION....................................................................................................................... 86
References ............................................................................................................................ 87
5
INTRODUCTION:
Travel as an industry has been evolving dramatically. In recent years, sharing
economies have become more popular, giving rise to companies like Airbnb that utilize
sharing economies to create an online marketplace for the exchange of private products and
services. Sharing economies have complex dynamics in how they form relationships between
market participants. The lines between customer and seller become blurred, and trust has
become an increasingly important factor as this trend continues to grow. In the travel
industry, in particular, Airbnb has been utilizing this unique structure to create a new type of
experience for its customers.
This paper aims to provide a comprehensive review of Airbnb, its competitors, and the
travel industry as a whole. An analysis of the firm and industry are provided to determine
whether the vacation rental industry itself is favorable. Next, the paper examines core
strengths and competencies that Airbnb has developed in order to succeed in the industry.
Four key market segments were identified as: business travelers, low-budget culture seekers,
event-goers, and group/family travelers. Low-budget culture seekers were isolated as the
ideal segment based on its potential to further Airbnb’s overall goals. Lastly, the paper will
inspect how Airbnb fills the needs of its ideal segment in a way that is meaningful and
differentiated from its competitors.
6
Industry Analysis
A key factor in determining the success of a company is analyzing the industry it resides in. No matter
the strength of an organization, if the industry it operates in is dying there is no way for it to continue. In this
section, the vacation rental industry is reviewed for opportunities and challenges that could be posed to Airbnb.
7
Market Review
In order to examine the firm’s current situation, it is helpful to start with external market
factors and then move inward. For this reason, the paper will begin with an overview of the
market based on Porter’s 5 Forces model. Afterwards, a comprehensive view of competitors
will be offered to better frame the external review. Each competitor will be examined based
on its relation to Airbnb’s unique solution. Each competitor’s current strategy will be explored
as well as the potential effects that each of those strategies might have on Airbnb’s strategic
decisions. Once the competitors have been thoroughly evaluated, the paper will shift to
internal factors focused on an analysis of Airbnb’s ability to compete in the current market.
Factors of Demand
The vacation rental industry is influenced primarily by the discretionary income of
individuals according to the 2017 IBIS World Reports.1 These reports also indicate that when
discretionary income increases, people tend to spend more money on traveling, particularly
on vacations and leisure trips. The price and variety of hotels, hostels, and other
accommodations also influence demand for vacation rentals.2 Individuals looking for a unique
experience or trying to get a better value for long-term stays, tend to be more interested in
vacation rentals than hotels. Last, but not least, the overall health of the tourist industry plays
a large part in the health of vacation rentals since a thriving tourist industry promotes travel to
a wider range of locations and boosts spending.
1 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
2 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
8
Five Force Analysis
THREAT OF NEW ENTRAN TS: HIGH
The threat of new entrants is high in the online, vacation rental industry. According to
the 2017 IBIS industry report for travel agencies and online booking services, the competitive
intensity is quite high.3 Since minimal capital is needed to set up a website for people to list
their home rentals online the barriers to entry are fairly low. One hindrance to new entrants is
the networking effect, since sites with a reputation and a larger user base tend to attract more
sellers and buyers. Homeowners that intend to list a rental will visit the site with the most
traffic, and buyers tend to prefer the sites that offer them the widest variety in terms of price
and accommodation type.
BUYER POW ER: MEDIUM
Buyer power is medium in the online vacation rental industry. There are alternatives
including hotels, hostels, or staying with friends or family. These, however, do not offer the
same benefits that a vacation rental would - such as privacy, price, or customization. For
example, staying in a hotel could be an alternative, but there is little privacy due to the close
proximity to other rooms, the prices are often astronomical, and, other than the number of
beds, there is little room for customization. Staying with friends and family is a much more
customized experience, but is not always an option that is readily available for travelers.
While there are options for vacation travelers, options for staying in relatively private,
customized lodgings are more limited.
3 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1481
9
SUPPLIER POW ER: MEDIUM/DEPENDS
Supplier power in the vacation rental industry is usually low. While there are many
businesses that allow consumers to lease their own properties on a short-term basis, few
exist on a large scale since home-sharing is a new industry. This gives this small number of
businesses that offer a rental platform a greater power over the suppliers (those leasing
property/rooms). In order to reach the greatest number of people and optimize the chances
that their property will be leased, the suppliers rely on companies already operating on a
large scale. There are many smaller companies where the supplier power is higher. This is
because they are not only less established, they rely on suppliers to fill their portfolio of
rentals. Without rentals, the business would fail. Large companies are less impacted by this
phenomenon, because the company has an established base of suppliers and the power is
spread thinly amongst them.
THREAT OF SUBSTITUTE S: HIGH
The threat of substitutes in the vacation rental industry is high. Rental agencies, hotel
services, hostels, and full-service vacation booking agencies are all well-established
industries.4 Consumers considering short-term vacation rentals might also have the option of
staying with family or friends, which is considerably less expensive. Short-term stay options
are widely available in other formats as well. There are camping services, bus rentals, and
couch sharing options.
COMPETITIVE INTENSIT Y: MEDIUM/HIGH
The vacation rental industry provides a unique challenge since it intersects multiple
industries. The first of these, home-sharing, has a relatively high level of competitive intensity
4 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
10
because the model is fairly easy to replicate.5 It is important to note that, while there are
several options, many of the new home-sharing businesses have not established notable
scale. The second industry, accommodation booking through third party services, is an older
industry with a reportedly high level of competitive intensity according to IBIS World’s Industry
Report.6 This industry includes travel agencies and similar full-service travel business. While
it seems that home-sharing hasn’t become completely established, despite the rush of new
entrants, the rental market is an established concept. For this reason, competitive intensity
could be considered medium-high and increasing.
IMPORTANCE OF COMPLI MENTS: HIGH
The vacation rental industry relies heavily on other travel and vacation centered
expenses. Transportation to and from destinations is important, whether that be by plane or
by services such as Uber or Lyft. Access to local hot spots and tourist attractions also
influences the attractiveness of a vacation rental. If a location is easier to access, it is likely to
be more attractive to renters looking for a vacation spot. Vacation rentals are also strongly
influenced by events such as concerts, festivals, and seasonal activities.
MOST IMPORTANT FORCE
The most important force in the vacation rental industry is the threat of substitutes,
which is high. There are a lot of alternatives for places to stay. In many cases, price is a key
driver for which platform consumers decide to book through. According to IBIS World’s report
on Travel Agencies, “Travelers are increasingly booking directly with travel operators, or with
travel sites that provide side-by-side comparisons of hotel rates for various destinations.”7
5 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
6 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=1661
7 http://clients1.ibisworld.com/reports/us/industry/default.aspx?entid=148111
This makes it similar to the airline industry, where customers rent from whichever site can
give them the cheapest price for their desired accommodation. Airbnb is a sharing economy,
which allows it a far greater degree of diversity than many of its substitute options. This is the
key feature of a sharing economy. Offerings are less commoditized than a consumer would
expect from a typical rental or booking service.
The intersection between sharing economies and vacation rentals is where Airbnb
operates. The industry has become considerably less attractive since Airbnb opened its
service. The industry has just begun to saturate with new entrants, many of which are
attempting to emulate Airbnb’s business model. The hotel and vacation rental industries are
highly saturated and competitive. However, the sharing economy niche is still relatively new,
which means there is likely still some room to become better established.12
Competitive Review
Competitors are an essential piece of the external review. This paper breaks down
Airbnb’s competitors based on the solution they provide. Brand competitors are those with a
similar product and price. Product competitors are those with different products that are very
similar in nature and fulfill the same need. Solution competitors are those with a very different
product that can be used to fulfil a similar need. Total budget competitors can be considered
competitors whose goods fall within the same “mental budget.” Total budget competitors do
not necessarily fill the same need, but exist in a similar category. In the case of Airbnb, total
budget competitors are businesses that relate to travel.
Brand Competitors
Tripping.com provides a meta-search site for users to compare rates across platforms.
Rather than providing its own listings, Tripping.com offers a one-stop shop to compare deals
from multiple rental sites. It partners with HomeAway, VRBO, Housetrip, FlipKey, and others
to show consumers what the different sites have to offer all in one place. FlipKey is a
subsidiary of TripAdvisor, founded in 2007 and bought in 2008. FlipKey connects consumers
to over 300,000 international rentals.8 Much like Airbnb, anyone can post their property on the
site for rental. HomeAway is a subsidiary of Expedia, Inc. and is based in Austin, Texas.
HomeAway includes consumer rental listings from homeaway.com, vrbo.com, and
vacationrentals.com. HomeAway also operates BedandBreakfast.com, “the most
comprehensive global site for finding bed and breakfast properties.”9
8 https://www.flipkey.com/pages/about_us/
9 https://www.homeaway.com/info/about-us/company-info13
Product Competitors
Staying with friends and family is one example of a product competitor. It is a similar
alternative to Airbnb in that it is a potential place to stay during travels; however, the usage is
different in that it is not booked online and uses strangers instead of friends and family.
Another product competitor is Craigslist. Craigslist is another online/app company that allows
strangers to connect and share goods and services, however the focus of Craigslist primarily
on goods rather than lodging. Another product competitor is Real Estate agencies, apps, and
websites. These also allow people to find homes, but the focus of Real Estate agencies is
mostly on buying rather than renting.
Solution Competitors
Marriott is the biggest hotel chain in the world, with over 5,800 properties and 1.1
million rooms that cover 110 different countries.10 As is common in the hotel industry, Marriott
owns a small portion of its rooms, and instead franchise their brands to individual owners.
This has reduced Marriott’s liability as a company as they are not heavily invested in
properties that may be hard to liquidate. Hostels are a cheaper alternative to hotels, often
with dormitory style housing. Hostels target students and people traveling on a very low
budget, as they offer much less amenities and often require visitors to help with chores.
Total Budget Competitors
Airbnb’s major total budget competitors are expenses associated with travel and
vacation. Travel expenses can include plane rides, food, and other transportation. Vacation
expenses can include tours, local activities, and souvenirs. These costs have a large impact
10 https://www.cnbc.com/2016/09/23/marriott-buys-starwood-becoming-worlds-largest-hotel-chain.html14
on what lodging options are used during travel. Large purchases such as cars and TV’s also
are a competitor because of their impact on vacations. People who spend their disposable
income on material things instead of taking a trip, are obviously less likely to use Airbnb.
Three Most Significant Competitors
The three most significant competitors are HomeAway, FlipKey by TripAdvisor, and
Marriott. These are the most significant competitors because they each pose as different
types of competition within the vacation rental industry.
Current and Past Strategies
HOMEAW AY
According to VRM Intel, a site dedicated to providing up-to date news in the vacation
rental industry, HomeAway’s past strategy was to give travelers a “one-stop shop for whole
home vacation rentals in leisure travel markets.”11 Its current strategy is fairly similar. It
focuses on resort locations and emphasizes treating its landlords like business owners. On
average guests pay a higher price, but typically stay longer at its locations.12 One key
distinction is HomeAway’s pricing strategy. Rather than charging guests extra fees, it charges
the host either a 13% fee per booking or an $349-$999 annual subscription for its services.13
This makes it more attractive for guests but offers slightly less incentive for hosts.
11 http://www.vrmintel.com/airbnb-vs-homeaway-winning-race-top-vacation-rental-industry/
12 http://www.vrmintel.com/airbnb-vs-homeaway-winning-race-top-vacation-rental-industry/
13 https://www.tripping.com/industry/rental-companies/homeaway-vs-airbnb15
FLIPKEY BY TRIPADVIS OR
Previously FlipKey focus on vacation rentals near resorts and tourist destinations. In
addition, it had more of a domestic focus, in 2012 50% of its listings were in the U.S.
market.14 FlipKey initially offered annual subscription or short-term subscriptions for its hosts
to list properties on its site.15 After getting bought by TripAdvisor in 2008, FlipKey updated its
strategy to integrate with TripAdvisor’s larger goals. Currently it aims to provide a holistic
traveling experience through both FlipKey and TripAdvisor’s online travel community. 16 In
2013, it switched from subscriptions to a fee-based model for homeowners looking to list on
its site. Now it charges a 3% booking fee per accommodation. Recently it has also expanded
its listings to include more apartments and urban dwellings. 17
MARRIOTT
Marriott’s strategy has been to attract customers by providing a wide variety of
accommodations and destinations at different price points. Their motto was, and still is, “One
company many brands.”18 Marriott was the first international company to offer a vacation
sharing program in 1984.19 Through timeshares or vacation sharing, customers can own the
room for a specific week of the year. Programs like this have led to a whole new marketplace
where individuals exchange and sell their “weeks” for weeks at other Marriott Timeshare
locations around the world.20
14 https://skift.com/2012/07/06/how-flipkey-plans-get-back-game/
15 https://books.google.com/books?id=59xpBAAAQBAJ&pg=PA140#v=onepage&q&f=false
16 https://www.forbes.com/sites/petertaylor/2016/12/07/watch-out-homeaway-airbnb-heres-why-tripadvisor-may-
be-your-biggest-competition/#4f33018c736d
17 https://skift.com/2014/06/16/apartment-rentals-are-flipkeys-fastest-growing-category/
18 http://www.marriott.com/about/culture-and-values/history.mi
19 https://www.buyatimeshare.com/marriott-timeshare-history.asp#
20 https://www.marriottvacationsworldwide.com/downloads/presskits/Company-Facts.pdf16
Marriott’s current strategy is to attract more than just customers looking for a short-
term stay through its timeshares and other hotel-sharing programs.21 In 2010 Marriott
changed its timeshares to a point-based system that allowed its members to travel to any
Marriott hotel location in the world.22 It continues to focus on leveraging its properties and
multiple brands to create a unique, yet consistent experience for its customers around the
world.
Financial Performance
HOMEAW AY
HomeAway had a revenue of $446,762,000 in 2014.23 The market share of
HomeAway within the vacation rental industry was 2.7% in 2014,24 which was .6% higher
than it was the previous year.25 The net profit margin for HomeAway in 2014 was 2.9%, which
is relatively low compared to other companies operating in this industry.
FLIPKEY BY TRIPADVIS OR
TripAdvisor had a revenue of $1,480,000,000 in 2014.26 This is more than double that
of HomeAway in the same year. TripAdvisor had a 9.1% market share of the vacation rental
21 http://www.marriottvacationclub.com/
22http://www.marriott.com/Multimedia/PDF/CorporateResponsibility/Marriott_Sustainability_Report_Update_201
0.pdf
23 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1366684&accession_number=0001193125-15-
062554&xbrl_type=v#
24 https://www.statista.com/outlook/268/109/vacation-rentals/united-states#
25 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1526520&accession_number=0001564590-17-
001783&xbrl_type=v#
26 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1526520&accession_number=0001564590-17-
001783&xbrl_type=v#17
industry. This market share was a .1% decrease from the previous year’s market share.
TripAdvisor has a net profit margin of 8.1% which is relatively average for this industry.
MARRIOTT
Marriott had a revenue of $17,072,000,000 in 201427 and a 27% market share of the
hotel industry. The company saw a .5% growth in market share the following year. 28 The
Marriott had a net profit margin of 8.01%, which is also relatively average for the hotel
industry.
Strengths and Weaknesses
HOMEAW AY
HomeAway’s primary weakness is that it is more expensive on average for hosts to list
their accommodations on, the prices are generally more expensive for guests as well which is
a drawback. HomeAway’s strength is it can tap into economies of scales due to its ownership
of multiple vacation rental sites. This allows it to leverage its core competencies across
multiple platforms and reach a wider spectrum of people.
FLIPKEY BY TRIPADVIS OR
FlipKey by TripAdvisor struggles since it is does not have a strong brand. Its
connection to TripAdvisor is beneficial, but at the same time it is also detrimental. FlipKey is
just viewed as supporting TripAdvisor whereas its competitors have a more narrowly defined
focus on providing unique vacation rentals for customers. Its advantage is that it only charges
a 3% booking fee which is cheaper than its competitors
27 https://www.sec.gov/cgi-bin/viewer?action=view&cik=1048286&accession_number=0001628280-17-
001506&xbrl_type=v#
28 https://csimarket.com/stocks/competitionSEG2.php?code=MAR18
MARIOTT
Marriott has less flexibility to its highly efficient system of operations it has established
over the years. Because of this it is less agile and cannot take advantage of the sharing
economies since it is already heavily invested in its own properties. The fact that it owns its
own resorts and rentals gives it an advantage though. Location is key and owning property in
highly sought-after destinations gives it an edge over its competitors who are merely acting
as a broker. Lastly, its brand is globally recognized and trusted which is a huge asset since
guests feel less apprehension about committing to stay for a week at a Marriott versus in a
stranger’s home.
Future Strategies
HOMEAW AY
HomeAway is likely to follow the same format as many of its previous marketing
strategies. This means that the company is likely to release many print ads as well as many
video ads. Most of the company’s advertisements are humor centered and involve the use of
celebrities, most notably and frequently Nick Offerman. HomeAway will likely continue to
follow this format for their ads as well as keeping the motto: “Get away, Get HomeAway.”
TRIPADVISOR
TripAdvisor will likely continue to emphasize trust and use brand recognition and
sincerity in their marketing efforts. They will probably continue to use a variety of different
media vehicles such as print, video, digital/online, and TV ads. The company has recently
begun to use an owl in a bathrobe29 as its spokesperson, and that will likely continue in future
29 https://skift.com/2017/06/13/tripadvisor-returns-to-tv-advertising-with-bathrobe-clad-owl-as-spokesperson/19
marketing strategies. The main personality that the company has been, and will likely
continue to, try to convey in its marketing efforts is a fun and trustworthy personality.
MARRIOTT
Marriott will likely follow a different approach to the previously mentioned companies in
its marketing strategies in the future. Marriott has taken to a more content-based marketing
strategy in which the company puts out information not only about themselves, but also
information and content that its customers would be interested in.30 The company has been
on a mission to establish itself as the authority in the travel lifestyle and it will convey this
using storytelling tactics as well as its history.
Impact on Airbnb
HOMEAW AY
HomeAway’s strategies are most likely to directly impact Airbnb. This is because they
operate in the exact same niche of the vacation rental industry, sharing economies. Airbnb
and HomeAway use similar strategies to reach their consumers, humor and vacation appeal.
HomeAway also has a strong parent in Expedia, which has allowed it’s successful use of
celebrity endorsements.
Airbnb capitalizes on “fun” and “cool.” Often, marketing strategies are centered toward
building a close-knit and trendy community of travelers. In 2015, Airbnb hosted a ‘floating
house’ publicity stunt that on the Thames River in London, which was attended by several
important social influencers.31 The resulting coverage and brand engagement that followed
30 http://adage.com/article/cmo-strategy/marriott-a-content-marketing-mecca/308365/
31 https://www.theceomagazine.com/business/6-things-can-learn-airbnbs-marketing-strategy20
were immense. Airbnb has also paid for a few celebrity trips in return for social media
acknowledgement, but it has yet to make any lasting relationships with celebrity endorses. 32
Depending on the strength of HomeAway’s endorsements, Airbnb may need to consider a
more lasting celebrity approach.
Because HomeAway appeals to a similar demographic, it’s also important that Airbnb
maintains its online communities. Currently, it hosts a large online community with detailed
profiles, communication options, and a strong review focus.33 The Airbnb Community even
offers “Meetups,” which allow you to meet new people in Airbnb hosted events all around the
world. A local function allows Airbnb users to find clubs and events that they can attend
nearby, even if they’re not currently paying customers.34 HomeAway does not currently have
the same set up, but it could easily be emulated by a business in their position. For this
reason, Airbnb should focus on better integration to continue to support the digital hub it’s
started.
TRIPADVISOR
The greatest danger of TripAdvisor is the easy comparison of prices, and the fact that
businesses and users can use TripAdvisor for free.35 Unfortunately, the nature of Airbnb
gives it very little control over price. TripAdvisor’s strategy of building consumer trust and
comparing prices across channels appeals primarily to consumers whom might be less
comfortable with traveling and searching for accommodations. TripAdvisor doesn’t seem to
be targeting the same young and trendy demographic that Airbnb has focused on, but
TripAdvisor does offer a wide variety of listings from multiple sites and could compete with
32 https://www.theceomagazine.com/business/6-things-can-learn-airbnbs-marketing-strategy
33 https://community.withairbnb.com/t5/Community-Center/ct-p/community-center
34 https://community.withairbnb.com/t5/Cities/ct-p/cities
35 https://www.tripadvisor.com/21
Airbnb on diversity. As Airbnb moves forward, it might need to consider new ways to highlight
its diversity, or even consider a partnership that might allow Airbnb listings to appear on
TripAdvisor’s multi-business search.
MARRIOTT
Marriott is the least similar to Airbnb of the chosen competitors, but it does have an
extraordinary content strategy.36 In 2014, Marriott founded its own global content studio.37
Marriott content efforts focus primarily on “storytelling.” In 2015, it created its own TV show
(The Navigator Live), a short film (The Two Bellmen), a personalized online time travel
magazine, and even a few short programs for the Oculus Rift.38
Airbnb has also attempted to produce some content, but content offerings are often a
public response to legal issues. For example, in 2012 Airbnb sponsored an Economic Impact
Study in San Francisco that was meant to highlight its positive impact on the area.39 It has
since used its proprietary data to support similar studies in other cities, but these studies
have usually been packaged into “feel good” campaigns following legal battles.
Airbnb has also participated in traditional content marketing campaigns geared toward
social media movement. In 2013, it produced the first crowd sourced Vine.40 At the same
time, it produced short films meant to tell short stories about Airbnb hosts.41 However, Airbnb
has never produced content on the scale that the Marriott currently does, and Airbnb may
need to commit to creating more content in the future in order to compete. Marriott has just
36 http://adage.com/article/cmo-strategy/marriott-a-content-marketing-mecca/308365/
37 https://contently.com/strategist/2015/11/05/were-a-media-company-now-inside-marriotts-incredible-money-
making-content-studio
38 https://contently.com/strategist/2015/11/05/were-a-media-company-now-inside-marriotts-incredible-money-
making-content-studio
39 https://contently.com/strategist/2014/12/05/how-airbnb-is-using-content-marketing-to-stay-on-top/
40 https://contently.com/strategist/2014/12/05/how-airbnb-is-using-content-marketing-to-stay-on-top/
41 https://contently.com/strategist/2014/12/05/how-airbnb-is-using-content-marketing-to-stay-on-top/22
begun the shift into providing short, virtual experiences as well. It might be difficult to compete
with VR marketing on high end rentals without creative marketing efforts in the future.
Type of Competitive Market
The vacation rental market seems oligopolistic, because there are only a handful of
firms that command the majority of sales and business within the industry. However, due to
very low barriers to entry, the industry has begun to shift toward monopolistic competition.
The firms within the industry sell somewhat differentiated but similar products, which might
lead customers to have some preference over one service or another.
Only brand awareness and scale have allowed the current market leaders to maintain
their extremely dominant positions, but,
because many of these businesses use share
economies, there is a huge number of
potential hosts available to help new players
build inventory. Hosts could conceivably list
with multiple services or jump services fairly
easily. Only the potential loss of positive
reviews keeps a host with a specific service.
Furthermore, the industry is still in a state of
rapid growth, which allows for competitors to
easily snatch up developing market share.23
Customer Review
The customer review is an excellent place to start the internal analysis of the firm. A
successful firm examines a potential market and looks for holes in consumer needs that can
be filled with a new firm’s offerings. The potential markets for both travelers and hosts are
wide and extraordinarily diverse. This review will begin with an overview, then identify key
segments. Later in the paper, a more specific Three-Circle analysis will identify the target
most advantageous for Airbnb. Each segment will be identified based on the primary needs
of consumers within the segment and evaluated based on Airbnb’s potential to meet those
needs at a higher level than competitors targeting the same segment.
Potential Market
The existing and potential users of the Airbnb can be broken into two different
categories: hosts and guests. The hosts are generally people who have extra space and
people who are looking for additional
income. The guests are people who
are traveling often for work or for
leisure. The demographics for the
users of Airbnb are men and women
ages 25-44. The market is made up
mostly of people with at least some
college and an annual household
income of $75,000-$150,000.42 The
42 https://www.gfkmrismartsystem.com/UniversityReporter/Report.aspx24
most common occupation for users of Airbnb is a position in an office or business setting. This
could be in part because of the amount of travel often necessary for business, thus increasing
the demand for vacation rentals in that occupation. Typical business trips place employees in
standard hotels. It is possible that individuals who normally go on business trips are looking for a more
unique experience when they travel, since typical hotels are something they could find commonplace.
These users can either be single or married. Single users are more likely to use Airbnb for fun
and adventurous travel while married users are likely to use it for family-based travel. The
users are travelers who value unique experiences. The guests get the unique experience of
staying in someone else’s home while the hosts get the unique experience of having a
stranger be a guest in their home. Because of the stranger aspect of the business model
users are generally very trusting and very adventurous. Vacation rentals as a whole, and
especially Airbnb, allow for users to book on very short notice, this leads to the possibility of
the users being impulsive in their travels. Airbnb is a global company which operates in over
161 countries and over 65,000 cities. The main group of people that Airbnb has the potential
to reach and middle and high income travelers. These two groups of people summed up to
1.16 billion people.43 Currently, however, Airbnb has an existing market of over 200 million
consumers.
Purchase Process
PROBLEM NEED/RECOGNI TION
The purchase decision process begins with problem need or recognition. In regards to
Airbnb this means that the guests recognize that they want to travel for leisure, need a place
43 https://data.worldbank.org/indicator/ST.INT.DPRT?locations=DO-XP&year_high_desc=false25
to stay for a business trip, or they were exposed to advertising promoting fun travel
destinations. For the hosts, the need is often recognized by either an excess of space or a
need for more income.
INFORMATION SEARCH
The second step of the purchase decision process is information search. Because
Airbnb is an online and app-based product, the information search is primarily done through
online search engines. Another reason for this is that the primary users of Airbnb are people
ages 25-44, most of whom are accustomed to using online searches to find most of the
information they seek.
EVALUATION OF ALTERN ATIVES
The third step in the process is evaluation of alternatives. When traveling people have
a multitude of option of where to stay, everything from staying on a friend’s couch to staying
in a penthouse at a hotel. Even people who know that they want to use a vacation rental
website have many different options to choose from. Airbnb, VRBO, and HomeAway are only
a couple of examples.
PURCHASE DECISION
The fourth step in the purchase decision process is the actual purchase decision. The
guests who choose to book via Airbnb go through a simple booking process where they
specify how many people and how long they wish to stay. When a host decides to use
Airbnb, they go through a process in which they post pictures and describe the specifics of
the rental that they are posting. When a guest finds a listing that fits their specific needs the
booking is made, and, on the specified date, the product offered by the host is enjoyed by the
guest.26
POST PURCHASE BEHAVIOR
The fifth and final step of the purchase decision process is post-purchase behavior.
The main post-purchase behavior for Airbnb comes in the form of reviews. Like many other
sharing companies, both the hosts and the users have the opportunity to rate their
experiences with one another. The idea behind this is that it will give future users and hosts
more information and will allow them to make a more informed decision upon whether or not
they want to rent to or from someone. An additional post purchase behavior is simply telling
other people about experiences with using Airbnb. Often, word-of-mouth referrals can be the
most important in sharing economies, where consumer trust is especially important.
Why customers buy and expectations
The main reason that consumers choose to use Airbnb can be broken into two
categories: guests and hosts. As previously mentioned, the hosts choose to use Airbnb for
extra income. Additionally, Airbnb offers a very customizable renting experience in which
hosts are given a lot of power to choose who to rent to. Guests use Airbnb primarily when
traveling, but also get the same benefits as the guests in a customizable, unique experience.
When a host rents via Airbnb, they have an expectation that they are going to be
presented with all the information necessary to make an informed decision regarding who
they are renting to. Additionally, they expect to get paid the amount agreed upon when they
posted the rental. Guests expect to have a pace to stay which meets the expectations
outlined in the rental description.27
Microenvironment Review
Microenvironmental factors can have a powerful impact on a firm’s ability to sustain
itself in an industry. The microenvironmental review will follow a PESTLE format, including
the following topics: legal and regulatory, economic, social and cultural, environmental, and
technical. In the case of Airbnb, microenvironmental factors become especially important due
to global scope and the legal ambiguity regarding short-term rentals. After the essential
microenvironmental factors have been explored, focus will shift to firm-specific analysis.
Legal and Regulatory
The concept of sharing economies in the vacation rental industry is relatively new. For
this reason, some of the legalities surrounding the industry are still a little blurry. Online rental
agencies like Airbnb are being sued by cities for not paying taxes and undergoing typical
regulations that most hotels are subject to.44 Additionally sometimes the rentals aren’t
authorized by the landlords of the buildings, this is a problem for apartments and condos in
particular.45 Airbnb does have a webpage on legal issues, which claims that it will handle
“calculating, collecting, and remitting local occupancy tax” in some tax jurisdictions, but there
is no elaboration on which zones its working with. 46
Economic
The impact that economic factors have on Airbnb vary by country. Generally, the price
of gasoline and other fuel alternatives impacts Airbnb’s flow of business. This is likely
44 https://www.engadget.com/2018/01/02/airbnb-prevails-against-aimco-lawsuit/
45 https://skift.com/2017/11/06/airbnb-faces-landlord-landlord-lawsuit-that-could-impact-its-business-model/
46 https://www.airbnb.com/help/article/376/what-legal-and-regulatory-issues-should-i-consider-before-hosting-
on-airbnb28
because fuel prices often impact travel costs, which in turn affects how many people book
with Airbnb. Due to the strong travel focus of the service, inflation and deflation of the local
currency also have an effect on Airbnb.
Social and Cultural
Airbnb allows complete strangers to rent space or rent spaces to another. The norms
for staying in someone else’s home vary depending on country, customs, and culture.
Cultural differences in guest treatment, trust, and social interaction impact Airbnb’s relevance
in certain areas. The following is a brief overview of social and cultural impacts of the four
most popular countries for travel:47
U.S. - The United States is an individualistic culture that places a premium on
efficiency.48 Communication efforts are explicit, which leaves very little room for
misunderstandings in everyday conversation. However, it may be more difficult for
American hosts to communicate with guests from countries where communication is
highly contextual. U.S. citizens are also less likely to be risk averse, which makes
them more likely to try new business ventures - like an Airbnb service.49
The United States is well developed and many of its citizens are digital natives
who are very familiar with online marketplaces. Furthermore, the concentration of
Airbnb hosts in this area is extremely high, which allows for easy movement within the
country.
47 https://www.worldatlas.com/articles/10-most-visited-countries-in-the-world.html
48 https://www.hofstede-insights.com/country-comparison/the-usa/
49 https://www.hofstede-insights.com/country-comparison/the-usa/29
France - France is an individualistic country with a strong focus on quality of life.
French citizens enjoy a 35-hour work week and five weeks of holidays per year.50 Due
to the popularity of short vacations, France is a prime target for the Airbnb service.
France also ranks highly in uncertainty avoidance and low on indulgence.51
Spain - Spain, unlike many other European countries, is collectivist.52 In collectivist
societies, people belong to social groups that care for one another. Often, the group’s
wellbeing is placed before the individual’s. Spain also ranks highly in uncertainty
avoidance and prefers to find certainty in social situations in particular.53
China - China is a highly collectivist culture that places a strong emphasis on personal
relationships.54 The Chinese are success oriented and driven. The culture is extremely
pragmatic with a strong future orientation.55 Airbnb had to localize very strongly in
China, due to its unique outlook on rentals and guests, but China is considered a very
important part of Airbnb’s future expansion.56
Environmental
Airbnb operates worldwide, though it is more concentrated in some areas than others.
The habitability of the area strongly affects Airbnb’s access to it. The inventory of homes in a
specific area affect not only the asking price of the hosts but also the willingness to pay of the
50 https://www.hofstede-insights.com/country-comparison/france/
51 https://www.hofstede-insights.com/country-comparison/france/
52 https://www.hofstede-insights.com/country-comparison/spain/
53 https://www.hofstede-insights.com/country-comparison/spain/
54 https://www.hofstede-insights.com/country-comparison/china/
55 https://www.hofstede-insights.com/country-comparison/china/
56 http://fortune.com/2017/12/05/airbnb-china-growth/30
guests. Airbnb is sensitive to season shifts in demand, the presence of natural disasters, and
shifts in weather patterns. Often, the natural environment is one of the key draws of a
particular rental property. While Airbnb does not have direct control of the location of its
rentals, environmental factors should be considered of high importance.
Technological
Technology has been advancing with increasing speed, and, because Airbnb operates
on a digital platform, it is sensitive to shifts in technology. Some form of internet connection is
required to use the Airbnb service, and Airbnb will be expected to adapt as technology shifts
into new platforms. Currently, multichannel effects are essential for digital-based businesses
like Airbnb, but multichannel is quickly shifting to omnichannel. Omnichannel promotes a
more integrated experience across all popular channels: social, site, mobile, and often in-
person. Virtual reality options are also gaining popularity.31 Firm Analysis
32
Key Information
Size
Airbnb is headquartered in San Francisco, California and operates in more than
65,000 cities and over 191 countries.57 As of 2017, Airbnb had 2,276 employees.58 In August
2017, it reached over 4 million listings.59 This
number exceeds its competitors, the only firm
that even approaches the same volume is
Homeaway with over 2 million listings.60
Key Management
Airbnb’s management is headed by its
co-founders. Brian Chesky is Airbnb’s CEO,
Nathan Blecharczyk is the Chief Strategy
Officer, and Joe Gebbia is the Chief
Procurement Officer61. Airbnb’s management
team also includes Belinda Johnson who is Chief Business Affairs and Legal Counsel,62
which is an important role because of the current concerns and debates over Airbnb’s
legality. In many cases, the legality of Airbnb’s business model is still being determined.
57 https://press.atairbnb.com/about-us/
58 http://www.mergentintellect.com.ezproxy.library.wwu.edu/index.php/search/companyDetails/34243315
59 http://www.businessinsider.com/airbnb-total-worldwide-listings-2017-8
60 https://www.homeaway.com/info/media-center/press-releases/2017/homeaway-surpasses-two-million-unique-places-to-
stay-integrates
61 https://press.atairbnb.com/about-us/
62 https://press.atairbnb.com/about-us/33
Lastly, an essential part of the team is Airbnb’s VP of Engineering, Michael Curtis.63 He
guides Airbnb’s team of engineers and data scientists to ensure customers are consistently
receiving relevant matches through the site.
History
Airbnb was founded in 2008 under the name Air Bed & Breakfast64 by roommates Joe
Gennia, Brian Chesky, and Nathan Blecharszyk. At the time, the three roommates were living
in San Francisco and were struggling to pay rent. In order to come up with some extra money
to subsidize their rent, the group created a website to rent out space in their apartment to
people who needed a place to stay.
Gennia, Chesky, and Blecharszyk
had graduated with degrees in
design, so creating and designing a
website were skills they had already
mastered. The trio launched their
new “business” with perfect timing.
They knew that there was a big design conference coming up in San Francisco. Hotels likely
to reach maximum capacity, and many design students would be looking for a more
affordable place to stay. That weekend, they booked three guests, each paid $80 to sleep on
air mattresses on the floor of their loft.
63 https://press.atairbnb.com/about-us/
64http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#by-2011-four-years-after-the-first-air-
mattress-guests-airbnb-was-already-in-89-countries-and-had-hit-1-million-nights-booked-on-the-platform-it-also-finally-won-
the-break-out-mobile-app-award-at-sxsw--despite-having-tried-to-launch-there-three-years-earlier-1634
This idea was originally meant to help with rent and was not supposed to last beyond
the design conference, but it ballooned into something more. The three roommates quickly
realized that their concept could work on a much larger scale. Conceptually, they could make
an incredible and unique business by constructing a network of people who had extra space
to rent out. In early 2008, they took their idea to
fifteen angel investors. They were rejected by
eight and ignored by the other seven. However,
they were not dissuaded and decided to
continue trying to make the business work. The
group seized another golden opportunity and
opened the business up in Denver, CO for the 2008 Democratic Convention.65 Once again,
they thought there would be a shortage of traditional hotel rooms, and they believed their
unique model would increase the supply. During this time, the major issue that they found
was a lack of awareness of their website. In order to increase awareness, the three designers
created two limited edition cereals; Obama O’s and Cap’n McCains. Each box contained its
limited edition number as well as a card containing information about Airbnb. Not only did this
successfully get the word out about Airbnb, but it also generated over $30,000 of additional
income.
With proven results to back-up their business concept, the founders searched for
investors once more. The majority of investors still had trouble seeing the value in shared
rooms and air mattresses. However, in 2009 they landed a $600,000 investment which gave
them the foundation that skyrocket them to be in the position that they are in today.
65
http://www.businessinsider.com/how-airbnb-was-founded-a-visual-history-2016-2/#by-2011-four-years-after-the-first-air-mattress-
guests-airbnb-was-already-in-89-countries-and-had-hit-1-million-nights-booked-on-the-platform-it-also-finally-won-the-break-out-
mobile-app-award-at-sxsw--despite-having-tried-to-launch-there-three-years-earlier-16You can also read
