Business Expansion: Challenges and Strategies for Airbnb in China

This report explores the challenges faced by Airbnb while operating in the Chinese market and suggests strategies to overcome them. It includes a SWOT analysis of Airbnb's social media usage and target market identification. The report also provides a persona planner and social media approach for China.

Running head: BUSINESS EXPANSION
Business Expansion
Name of the Student
Name of the University
Author note

1
BUSINESS EXPANSION
Introduction:
The present global hospitality organisations are facing several challenges in the course of
their global operations. The challenges which hospitality companies are facing are stemming due
to influence of external impacts like legal factors, security reasons and challenges which are
endemic to specific markets. These market challenges are proving to be great impediments
before online hospitality organisations which work on commission basis in return of their
services. The report would explore the challenges Airbnd, an American online hospitality
provider is facing while operating in the market. The paper after introducing the firm would
proceed to explore its marketing and social media usage. The basis of the study would be a
identification of target market and SWOT analysis of the social media usage by Airbnb.
Profile of the chosen SME:
Airbnb is an American hospitality services providing company which was founded in
2007 by Brain Chesky and Joe Gebbia. The firm is a private company which functioned using its
official portal to offer hospitality services to both accommodation service providers and tourists.
This shows that the customer profile of the company consists of both business organisations and
individual customers. The company provides information to tourists about hotels and lodges
according to their needs. The customers could log into its official website to search for hotels
based on the requirements like dates, types of hotels and rates at which would like to book hotels
as per their financial capability. The market of Airbnb consists of North America, Europe, Asia
and Australia. The official website of the company consists of information about events, cuisine
and to-do lists which the tourists could to enhance their tourism experience. The website of the
company also provided the customers the facility to rate specific events and locations on the
grounds of their experiences. The firm also has a strong social media presence on social media

2
BUSINESS EXPANSION
platforms like Twitter and Facebook. This enabled the firm to communicate with its customers,
both existing and prospective on regular basis. It can be pointed out that the social media
platforms allows the firm to promote its services among customer bases around the world. This
enables creation of demand among people seeking accommodations and things of interests they
are seeking. Similarly, the firms operating in the tourism industry like providers of
accommodations and restaurants could sign up with the company on its official website. They
can thereafter advertise their services and attract customers. The net income of the firm was high
as $ 93 million in the year 2017 which proved its operating capability. Mr Brian Chesky, one of
its founders functions in the capacity of CEO.
Target Market Identification:
The target market of the Airbnb which the company seeks to enter is China. China is one
of the most visited countries in the world and attracts more than 50 million tourists a year.
Besides hosting this immense number of international tourists, the country has a immense
population. This provides the domestic tourism industry with an immense customer base.
Moreover, the country is also one of the top countries of origin of tourists heading towards other
tourism destinations like the United States and Australia. Thus, China is an appropriate market in
two ways which has necessitated Airbnb enter the market of the country. First, the country is one
of the top tourists destinations and also provider of large number of international tourists to other
tourist destinations countries. Thus, Airbnb would be able to generate immense revenue by
serving both emigrating tourists and immigrating tourists. Moreover, the company would be
able to generate immense revenue by serving domestic tourists in the country. It can also be
pointed out that this rise in the tourism market in China has encouraged development of a large
number of firms providing tourists services like accommodations and food facilities. This has

3
BUSINESS EXPANSION
also led to development of several event management companies which promote events in order
the tourists with entertainment and enhance their knowledge about their local traditions. These
local events enable the hospitality services providing firms create authentic local experiences to
enhance their tourism experiences and customer satisfaction. It can be inferred from the
discussion that Airbnb should form appropriate marketing strategy by using social media to enter
the market of China and generate huge profits.
Persona Planner:
A customer persona profile is a layout which gives information about the attributes of the
persona of the customers like their income and lifestyle. An et al. (2018) point out that the
business companies can use these customer persona to plan appropriate product offerings to
ensure their satisfaction. It can also be pointed out from this discussion that appropriate customer
persona planning can lead to revenue generation and business growth.
The above analysis of the business profile of Airbnb shows that the customer base of the
firm can broadly be divided into two categories namely, providers of services and tourists,. The
tourist base can again be divided into two categories namely, individual customers and corporate
customers. The following are the persona planner diagram which Airbnb can plan to recognise
the needs of the Chinese customers to enter China.
Customer persona for an individual Chinese customer:

4
BUSINESS EXPANSION
Name:
Yi Lung
Age:
39
Profession:
Banker
Income:
$10000 annually
Marital status:
Married and has two children
Hobbies:
Painting, trekking and
visiting countries
Pain points:
Waiting for long time for
services.
Poor complex processes
to acquire make
payments
Favourite tourist destinations:
France, Europe and Australia
Customer persona planner for a corporate customer:
Name:
Chung Lee Limited
Tenure(years)
10
Industry
Telecommunication
Profit annually:
$ 1000000 approx
Type:
Public limited company
Staff(nos):
300 approx
Pain points:
Waiting for long time for
services.
Favourite tourist destinations:
Asia-Pacific, Europe
Reason for touring:
Business meets and
excursions

5
BUSINESS EXPANSION
Poor complex processes
to acquire make
payments
Persona Planner of an accommodation service provider:
Name:
The Royal Chinese Hotel
Tenure(years)
10
Industry
Hospitality
Profit annually:
$ 2000000 approx
Type:
Public limited company
Staff(nos):
500 approx
Pain points:
Low number of tourists
Rating:
4 star property
Reason for touring:
Business meets and
excursions
Social Media Audit:
A social media audit of Airbnb shows that the company uses social media aggressively to
communicate with customers on regular basis as well as acquire new customers. The firm
regularly posts pictures of resorts, accommodations, restaurants and places of interests. The firm
allows customers to gain business information on its social media handles. The customers can
post questions on the social media platforms regarding facilities and their prices. The personnel
of Airbnb provide accurate and prompt answers to the questions. This process of communicating
with customers on timely basis creates a positive perception in the minds of the customers. This

6
BUSINESS EXPANSION
communication policy on the social media platforms encourage demand among customers to use
the services of Airbnb (Bowie et al. 2016). The customers can then sign up on the website with
the Airbnb to gain services from the company.
Social media approach for China:
Airbnb should use social media as a significant part to enter the market of China. Huang,
and Rundle-Thiele (2014) point out that culture has a profound impact on a person’s taste and
tourism needs. Similarly, tourists today prefer companies to know their cultural perceptions and
background. Tigre Moura, Gnoth and Deans (2015) point out another trend in the global
hospitality and tourism market, especially among the customers which Huang, and Rundle-
Thiele
(2014) did not explore. The customers today expect the international companies reveal
association with their cultural aspects. This trend has necessitated the international tourism
companies like Airbnb localise the websites to be able to relate to the customers in their host
markets and attract them to buy products like tourist packages from them. It can be pointed out
that this integration of global and local strategies has enabled the international tourism
companies to attract immense customer base and generate huge revenue (Geetha, Singha and
Sinha 2017). Airbnb should consider this fact while forming its social media strategies to expand
and tap the booming tourism market of China.

7
BUSINESS EXPANSION
Figure 1. Comparison between China and the US on Hofstede tool
(Source: Hofstede-insights.com. 2018)
The above graph compares between the cultural orientation of the United States and
China on the basis of Hofstede’s tool. Airnbnb being an American firm should first identify the
cultural aspects of China and incorporate them while functioning in the Chinese market.
The above comparison between the USA and China clearly shows that there exist marked
differences between the cultural perceptions of the two nations. Firstly, there exists an immense
power distance among the Chinese compared to Americans. This means that senior members of
families as well as business organisations exercise commanding position in the Chinese society.
The power distance in the American society is far less than China which is revealed by the score
of 40 which the USA has earned against 80 of China.

8
BUSINESS EXPANSION
This means that company while operating in the Chinese should exhibit respect for customers,
especially during communicating with them over the digital platforms.
The Chinese society exhibits high preferences for collectivism and low preferences for
individualism. The country of China has an ancient and varied culture. This means that people
have immense respect for the culture, status and society. Thus, it can be inferred from the
discussion that Airbnb should express recognition and respect for Chinese culture on its social
media platforms.
The Chinese prefer to maintain long term relationship and are ready to take risks. This
means that Airbnb on while marketing hospitality services on its social media platforms should
operate in ethical ways to be able to establish and retain long term business relationship with the
Chinese customers. The company must design a separate website dedicated to the Chinese
market. The website should provide the visitors information about China like its cultural heritage
and places of interests (Han and Hyun 2015). This would enable Airbnb to build a deeper
association with the Chinese customers and attract them to purchase tourism packages. Similarly,
this cultural association with China using social media would enable the tourism services
providers to relate to Airbnb and advertise their services to attract tourists. Thus, it can be
inferred that appropriate projection of association with the Chinese culture would enable Airbnb
enter and establish its business more successfully in its target host country China (Lai, Chu and
Petrick 2016).

9
BUSINESS EXPANSION
Social Media SWOT Analysis:
The following is the SWOT analysis of social media:
Strengths 1: Extensive global reach:
Social media has extensive global reach to customers at real time basis. It facilitates the
customers to gain information on variety of products on real time basis. The customers can
express their expectations and grievances before the companies using the social media platforms
(Su, Swanson and Chen 2016).
Strength 2: Facilitates business generation:
Social media enables the companies to communicate with a huge customer base and
attract attracts. The companies can gain information about the changing preferences and
expectations of customers. They can thus use the information in making appropriate product
strategy. This enable the companies create customer satisfaction and generate revenue. Thus, it
can be inferred from the discussion that social media enables companies to generate business
(Kim, Vogt and Knutson, 2015).
Weakness 1: No direct communication between company and customers:
There is no genuine communication between company and customers. Thus, social media
does not provide sufficient customer information to companies. This hinders them from
acquiring accurate customer data and taking appropriate business decisions.
Weakness 2: No actual sales generation:

10
BUSINESS EXPANSION
Social media portals does help customers to obtain customer feedback but does not
enable them to sell products directly. Thus, social media platforms does not lead to actual sales
and revenue generation.

11
BUSINESS EXPANSION
Opportunity 1: Advancement of websites:
The business organisations like Airbnb can make their websites more advanced. This
would enhance customer experience and indirectly encourage customers to make purchase
decisions regarding buying products like tourism packages.
Opportunity 2: Brand enhancement:
The business companies like Airbnb can use their social media platforms to enhance their
brand power. This would create positive impact on customers and motivate them to buy products
from the company.
Threat 1: Security issues:
The social media platforms are susceptible to data theft. Security issues of these
platforms often discourage customers from inputting information.
Threat 2: Susceptible to internet snap:
The social media platforms are susceptible to internet snaps and power cuts. This
jeopardizes smooth functioning of the social media platforms.
Conclusion:
It can be concluded from the discussion that Airbnb should enter the Chinese market with
its website. It should however exhibit the aspects of Chinese culture to attract Chinese customers
and generate revenue.

12
BUSINESS EXPANSION
References:
An, J., Kwak, H., Jung, S.G., Salminen, J. and Jansen, B.J., 2018. Customer segmentation using
online platforms: isolating behavioral and demographic segments for persona creation via
aggregated user data. Social Network Analysis and Mining, 8(1), p.54.
Bowie, D., Buttle, F., Brookes, M. and Mariussen, A., 2016. Hospitality marketing. Routledge.
Geetha, M., Singha, P. and Sinha, S., 2017. Relationship between customer sentiment and online
customer ratings for hotels-An empirical analysis. Tourism Management, 61, pp.43-54.
Han, H. and Hyun, S.S., 2015. Customer retention in the medical tourism industry: Impact of
quality, satisfaction, trust, and price reasonableness. Tourism Management, 46, pp.20-29.
Hofstede-insights.com. 2018. Hofstede-insights.com. [online] Available at:
https://www.hofstede-insights.com/product/compare-countries/ [Accessed 28 Sep. 2018].
Huang, Y.T. and Rundle-Thiele, S., 2014. The moderating effect of cultural congruence on the
internal marketing practice and employee satisfaction relationship: An empirical examination of
Australian and Taiwanese born tourism employees. Tourism Management, 42, pp.196-206.
Kim, M., Vogt, C.A. and Knutson, B.J., 2015. Relationships among customer satisfaction,
delight, and loyalty in the hospitality industry. Journal of Hospitality & Tourism
Research, 39(2), pp.170-197.
Lai, Y.H.R., Chu, J.Y. and Petrick, J.F., 2016. Examining the relationships between perceived
value, service quality, satisfaction, and willingness to revisit a theme park.

13
BUSINESS EXPANSION
Su, L., Swanson, S.R. and Chen, X., 2016. The effects of perceived service quality on repurchase
intentions and subjective well-being of Chinese tourists: The mediating role of relationship
quality. Tourism Management, 52, pp.82-95.
Tigre Moura, F., Gnoth, J. and Deans, K.R., 2015. Localizing cultural values on tourism
destination websites: The effects on users’ willingness to travel and destination image. Journal
of Travel Research, 54(4), pp.528-542.