Airbnb is known as a cheaper, comfier alternative to hotels. It does not own properties itself; people offer to rent their homes, apartments, or rooms to strangers, providing income for the hosts and profits for Airbnb which collects a fee for each rental. In 2022 the business generated profit of almost $2 bn from its operations in 191 countries and 34,000 cities. In recent years the company’s worldwide expansion has led to a series of issues, though it has also brought several benefits.
Airbnb provides jobs to hosts (people who periodically offer their homes to guests). For cities that lack hotels or motels this is a much-valued service. In the USA Airbnb benefits states by generating millions in spending and full-time-like jobs, particularly for low- and middle-income groups. In New York, Airbnb hosts and associated businesses have generated income of $1+ billion and created over six thousand jobs. The business claims that its platform blends cultures and societies from different parts of the world, bringing diverse groups of people together.
As the global tourism industry was impacted by the pandemic Airbnb experienced a significant lag in growth during 2020 and 2021. Subsequent global economic contraction has continued to affect bookings despite the removal of travel restrictions. In early 2022, in response to hostilities in Ukraine, Airbnb suspended all operations in Russia and Ukraine, removed all fees for hosts in Ukraine, which encouraged members of the public began to make bookings in Ukraine with no intention of travelling as a way of providing financial support to residents facing hardship during the invasion and offered free accommodation to Ukrainians forced to flee their homes following the invasion.
Airbnb has faced fines and court proceedings in Barcelona, New York, and New Orleans because they’ve failed to follow local tourism laws. Some hosts don’t follow established housing rules and in many cases tourist tax regulations have been ignored. Following media and public backlash, Airbnb now requires hosts to agree to terms and conditions agreeing to follow taxation, housing and tourism regulations.
The business takes social responsibility seriously. For example, the “social impact experience” allows non-profit organisations to host and receive 100% of profits.
Airbnb relies heavily on technology. Visitors book rooms on a dedicated app, which has over ten million global users, or through the website, which is also where guests leave reviews and seek support. The use of automation means that if a host doesn’t respond to a guest’s message Airbnb will automatically send a text on their behalf. Online webinars provide training and troubleshooting facilities for hosts.
Airbnb boasts that its model reduces energy usage within America and Europe compared to hotels. A recent business report highlighted how the company's business concept of the shared home uses existing resources, which is a sustainable practice to keep traveling eco-friendly. The brand also pays attention to waste reduction and saving energy. They want their hosts to ensure the limited resources to decrease the wastage of natural resources and water consumption. The company is keen to lower travel impact too and recently highlighted a key research finding that guests are 10-15 percent more likely to use public transportation, walk or bicycle as their primary mode of transportation than if they had stayed at a hotel.
Questions
(a) Define the term ethical factors. [2 marks]
(b) Explain one advantage and one disadvantage to Airbnb of conducting a SWOT Analysis. [4 marks]
(c) Explain two threats that Airbnb may identify in a SWOT Analysis. [4 marks]
(d) Using the STEEPLE analysis framework, evaluate the external environment in which Airbnb operates. [10 marks]
