Airbnb business strategy: a brief overview

Airbnb Business StrategyAirbnb, the lodging colossus, has been prudent from the financial point of view. It is important to note that the company hasn’t raised any money from investors since March 2017, when it raised USD448 million. CEO Brian Chesky has pledged to hold an IPO for the 10-year-old company before 2020 when some employee stock grants expire.[1] At a close look, Airbnb business strategy consists of the following three elements:

 

1. Following a platform business model. A platform business model can be defined as a “business model that focuses on helping to facilitate interactions across a large number of participants”[2] In case of Airbnb, participants are host who offer their properties or organize experiences for guests and travellers who use their services. Airbnb does not own any real estates it lists, not does it host events and experiences it offers. It serves as a broker between suppliers and consumers, receiving a commission of 9% to 15%.

 

2. High level of technology integration into various business processes. It is a cornerstone of Airbnb business strategy. The company uniquely leverages technology to economically empower millions of people around the world to unlock and monetize their spaces, passions and talents to become hospitality entrepreneurs.[3]

The travel industry disruptor currently uses machine learning to improve search, prevent fraud, help hosts optimize pricing, match users with the most relevant listings and other practices vital for the business. Moreover, Airbnb is exploring machine learning algorithms and AI to build  a deeper understanding of images, improve reviews using natural language processing (NLP) and support more advanced search using NLP.

 

3. Focus on community and trust. Cultivating community and maintaining trust among stakeholders is one of the solid bases of Airbnb competitive advantage. The global lodging company maintains a community centre as a place to connect with other hosts, share stories, ask for advice, and get updates from the Airbnb team. Moreover, the company aims to keep guests and hosts safe via a wide range of measures such as risk scoring, background checks, 24/7 global assistance, secure payments and account protection.

Airbnb Inc. Report contains a full analysis of Airbnb business strategy. The report illustrates the application of the major analytical strategic frameworks in business studies such as SWOT, PESTEL, Porter’s Five Forces, Value Chain analysis, Ansoff Matrix and McKinsey 7S Model on Airbnb. Moreover, the report contains analyses of Airbnb leadership, organizational structure and organizational culture. The report also comprises discussions of Airbnb marketing strategy, ecosystem and addresses issues of corporate social responsibility.

Airbnb Inc. Report (2019)

 

[1] Gmelich, K. (2019) “Airbnb Says It Made a Profit Again in 2018” Bloomberg, Available at: https://www.bloomberg.com/news/articles/2019-01-15/airbnb-says-it-made-a-profit-again-in-2018-as-ipo-looms-large

[2] Platform Business Model explained…in under 100 words (2019) Deloitte, Available at: https://www2.deloitte.com/ch/en/pages/innovation/articles/platform-business-model-explained.html

[3] About US (2019) Airbnb, Available at: https://press.airbnb.com/about-us/

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