Airbnb's Business Model Proposition: A Comprehensive PESTEL Analysis

This report provides a comprehensive analysis of Airbnb's business model proposition, employing a PESTEL framework to critically evaluate its political, economic, social, technological, legal, and environmental aspects. It examines Airbnb's business canvas model, highlighting key partners, activities, value propositions, customer relationships, and revenue streams. The report identifies areas for improvement within Airbnb, such as refund processes and customer support, and proposes transformational strategies including CSR initiatives and global expansion. Justification for these strategies emphasizes enhanced public image, media coverage, employee engagement, and investor retention. The conclusion underscores Airbnb's leading position in the global service sector, while the recommendations stress the importance of safety and the integration of marketing programs with CSR activities. Desklib offers students access to this and other solved assignments.

MANAGEMENT

INTRODUCTION
• The main aim and purpose of the presentation is to analyse the business
model proposition of Airbnb along with critical analysis through PESTEL
analysis
• With the help of the business proposition, the different transformational and
improvement aspects are required to be analysed which will improve the
overall growth of the company positively
• Airbnb Inc is privately held global organization which is headquartered in San
Francisco and it operates in online marketplace along with hospitality service
which can be accessible through websites and mobile applications
• The operating income of the company is $450 million till the year 2017 and
the number of employees working in the company is 3100 till the year 2017

BUSINESS PROPOSITION
• Airbnb is one of the community-based along with
two-sided platform which helps in facilitating the
overall process of booking the private living spaces
for the different travellers in the market
• It enables the different owners of the business Airbnb
to list the different spaces along with earning rental
money appropriately (Fang, Ye and Law 2016)

BUSINESS CANVAS MODEL
OF AIRBNB
Key Partners
Hosts
Travel Managers and Business Travel
Partners
Venture capitalists or Investors
Others
Maps, method of payment and
Insurance (Kavadias, Ladas and Loch
2016)
Travel Managers
Key Activities
Engagement of the different
participants
Analyzing the data and improve
the same
Removing of the friction from
the different transactions
Value Proposition
For the Hosts
Generation of Income
Ease of the different
transactions
Meeting of the new
individuals
Booking and Calendar
Management
For the Guests
Lower cost
More of Variety
Ratings are
transparent
Customer
Relationships
Owning the
relationship
along with
managing the
interactions
Resolution of
Issue of the
guests
Public image of
the company
Customer
Segments
Demographic
Geographic
Behavioral
Hosts
Type of
accommodation
Preferences from
rentals

BUSINESS CANVAS MODEL OF
AIRBNB
Key Resources
Effects of network along with listings
Brand and application of the company
Content is user generated
Channels
Digital advertisements
Marketing is content related
Engagement of customers through mails and offers
Cost Structure
Acquisition cost of the customers along with
weighted average cost of capital
Inclusion of legal aspects and insurance (Zott and
Amit 2017)
Customer care and Support
Infrastructure along with costs of transactions
Revenue Streams
Charging of the transaction fee which is being based
on savings which is related to:
Rental guests- 5-10%
Event Hosts- 1%
Event Guests- 20%
Rental Hosts—3-15%

CRITICAL EVALUATION WITH
PESTLE• Political Aspects- Airbnb is unique business which offers individuals with rented homes along
with apartments. However, the organization has run into different legal issues as there are some
locations which do not follow state housing laws along with regulations
• Economic Aspects- It is the perfect example of shared economy as people share various resources
with those who need it for the short span of time (Zervas, Proserpi and Byers 2017).
• Social Aspects- It helps in blending cultures along with societies from various parts of world. The
host and tenant helps in submitting experiences and expectations and in case of social media, it
plays a major role in spreading voices
• Technological Aspects- Technology spreads communication between communities in the globe
wherein visitors can download app for booking the home stays accordingly.
• Legal Aspects- There is legal document which prevents Airbnb from being liable when the
different issues appear and it follows taxation
• Environmental Aspects- It boasts energy by reducing usage of energy and it has helped in
lowering the impact of travelling

IMPROVEMENT AT AIRBNB
• Issue temporary type of refunds is one of the major aspects which can be improved
by Airbnb as this will become middleman profiting off of the different transactions
between the guest and host appropriately
• Airbnb needs to provide the support agents with the customer email ids as putting a
name on support will make it feel that the customers are dealing with actual humans
and the problems will be resolved soon
• Giving the customers with case numbers as they can provide the same as the
reference once they contact the Airbnb support centre to explain their whole situation
appropriately without much difficulties
• Training the staffs in escalating the urgency of the response when there is
involvement of the young ones or the physically handicapped as this will become
more efficient towards their operations

TRANSFORMATION AT
AIRBNB
• Airbnb needs to offer and collaborate for social causes as the part
of CSR activities for instance offering rental services at the time
of crisis escalating the need for urgency
• Expanding the services in global territories along with rural areas
of the countries wherein they are operating in the current era
• The partnership with the tourism organizations by offering the
complete package to the travellers which will expand their
business

JUSTIFICATION
• The contribution of Airbnb towards the CSR related activities is
mandatory as this will improve the public image of the company
• Secondly, it will help in increasing the media coverage which will
improve the overall forming of relationships with local media
outlets which will improve their brand image appropriately
• It will boost the employee engagement which will engage more
customers towards using the service and gain more competitive
advantage in the market
• It will help them in retaining more investors as they will be sure
that the funds will be refunded properly by them

CONCLUSION AND RECOMMENDATIONS
Conclusion
• Therefore, it can be concluded that Airbnb is one of the most leading service providers in
global era which improves their brand image in comparison to the other hotel services
• There are different legal issues which can affect the growth of the firm as there are
different legislative aspects that can hinder their performance
Recommendations
• It can be recommended that Airbnb needs to provide safe stay for the visitors as the
safety is the utmost priority of any business to be provided to their customers
• There can be inclusion of different marketing programs by collecting funds through the
inclusion of CSR programs and this helped them in improving the overall sustainability
programs

REFERENCES
• Fang, B., Ye, Q. and Law, R., 2016. Effect of sharing economy on tourism industry
employment. Annals of Tourism Research, 57(3), pp.264-267.
• Kavadias, S., Ladas, K. and Loch, C., 2016. The transformative business model. Harvard
business review, 94(10), pp.91-98.
• Zervas, G., Proserpio, D. and Byers, J.W., 2017. The rise of the sharing economy: Estimating
the impact of Airbnb on the hotel industry. Journal of Marketing Research, 54(5), pp.687-705.
• Zott, C. and Amit, R., 2017. Business model innovation: how to create value in a digital
world. GfK Marketing Intelligence Review, 9(1), p.18.