Airbnb - SWOT analysis

The article is based on Airbnb SWOT analysis, which can be found in the Library, in CayenneApps SWOT application.

Recently, my husband and I came back from our dream trip to South America. We had the pleasure of visiting Argentina and Rio de Janeiro during Carnival, which I considered to be an unforgettable and awesome experience. But today, I don’t want to concentrate on talking about stories from our journey. Instead, I would like to share with you some thoughts about Airbnb, through which we organized several accommodations during our trip.

A lot of people say that Airbnb has revolutionized the way people think about travel, and has wisely taken advantage of this popular and trendy sharing economy. This is an undeniable fact, particularly when we closer look at the numbers: Airbnb has already about 20 million users; 10 million of them signed up in 2014 alone. This year, their website surpassed 800,000 listings worldwide in 33,000 cities and 192 countries.

Airbnb recently received the distinction of being named Inc.’s 2014 Company of the Year. What are the Strengths and Weaknesses of Airbnb? What type of Opportunities and Threats will they face?

The entire SWOT analysis described in this article was created using the CayenneApps SWOT application, and can be found here: SWOT analysis for Airbnb.

BENEFITS FOR BOTH SIDES

The idea behind Airbnb, which involves sharing your place with strangers, wasn’t really new. The first popular service that implemented such an approach was CouchSurfing. The difference between Airbnb and CouchSurfing is simply the money. The users of CouchSurfing do not charge any money from their guests. The entire CouchSurfing concept is based mainly on exchanging experiences, fun and giving the opportunity to guests to live like locals for a while.

Airbnb expanded this approach by offering additional benefits for hosts and travelers. Hosts can meet people from around the world while making a little extra money. Travelers can stay in numerous cities around the world and pay much less compared to regular hotels. For example, during our stay in Rio de Janeiro, the prices of the accommodations in hotels were ten to twelve times higher than the ones found via Airbnb. What also distinguishes Airbnb from other services is the guarantee of safety for hosts, which is now $1 million of insurance coverage per booking. In addition, Airbnb also provides their users with a user-friendly and visually attractive website, and truly customer-oriented customer service, the benefits of which I also was able to confirm for myself.

These advantages and the successful transformation of the concept into reality has attracted not only users, but also investors. Airbnb to date has received six rounds of venture capital investments, totaling more than $794 million - which is $100 million for each year it has been in business. The high valuation of Airbnb is one of the most important factors, and will play a significant role in the future development of the company. (List of features and their relevance which I received as a part of the strategy for Airbnb in the SWOT analysis process in CayenneApps tool can be seen below).

All the factors mentioned above have convinced many landlords to place offers containing information about their apartments, houses and even boats on the Airbnb website, which has created another important strength of the service: a enormous variety of listings.

The rapid development of the American company and good press it received has created the snowball effect and transformed it into a strong and recognizable brand worldwide. In case it expands to additional markets such as: travel guides, partnering with airlines or car rentals and travel insurance, this brand will be an undeniable advantage.

Dark side

Undoubtedly, Airbnb has a lot of significant strengths which have a strong positive influence on the utilization of their opportunities and, at the same time, on minimazing the impact of possible threats. This impact can be easily observed in the picture taken from Airbnb’s strategy presented below.

The length of the green line suggests how the strengths are connected with the opportunities and threats. The longer the line is, the bigger the correlation is between features. In this particular case, the green line shows that Airbnb can definitely focus on utilising opportunities. But what about the red line?

Even though the red line isn’t as long as in the case of the SWOT analysis for the Uber company, we can clearly see that Airbnb has some weaknesses that might intensify the impact of their threats.

The weakness which intensifies impact of threats the most (54% of relevance) is: violation zoning laws (which prohibit people from running a business, hostel, or hotel in a residential area) and laws requiring hosts to pay a hotel tax. This particular weakness has already had significant consequences for Airbnb.

Recently, Barcelona fined Airbnb 30,000 euros for breach of local tourism laws. New Orleans, San Francisco, and Malibu have all investigated Airbnb hosts for violating zoning laws or the terms of their leases. New York City recently sued two hosts for running illegal hotels in empty apartment buildings that they owned, fueling the accusations of housing advocates that Airbnb is already driving up rental prices by increasing the city’s scarcity of housing. In addition, Airbnb’s opponents, including lobbyists from the hotel industry, argue that the risks affect users much more than the company itself.

Airbnb in order to address these problems and accusations fought back with a team of lawyers, communications specialists, and three external public relations firms.

Airbnb also began collecting taxes from users on behalf of residents who treat their homes as a makeshift alternative to hotels. Cities such as Portland in July, San Francisco in October, Washington and Singapore in mid-February and more recently Paris started to legalize and tax Airbnb’s activities.

Opportunities and the future of Airbnb

These cities have probably only began all new era of a closer relationship between Airbnb and city’ governments. Again, Airbnb took an excellent step which, in the future, might transform their biggest weakness into a great strength: support from the local authorities and good press which will increase their user database.

Everything indicates that Airbnb has a great future ahead. Their involvement in charity activities as well as users offering free emergency accommodations to victims of Hurricane Sandy in 2012 demonstrate that the company may seriously change the way we think not only about traveling but also sharing our private space with others.

But will we let them?