Business Strategy: Analyzing Airbnb's Business Model and Success

This report provides a comprehensive analysis of Airbnb's business strategy, examining its business model canvas, PESTEL factors, and the elements that contribute to its successful execution. The report begins with an executive summary, followed by a detailed business model canvas outlining key partners, activities, value propositions, customer relationships, resources, channels, customer segments, cost structure, and revenue streams. A thorough PESTEL analysis evaluates the political, economic, social, technological, environmental, and legal factors impacting Airbnb's operations. The report also identifies and analyzes the factors responsible for the successful execution of Airbnb's business model, such as solo travel trends and flexibility. The analysis incorporates relevant academic references to support the findings.

Running head: BUSINESS STRATEGY
Business Strategy
Name of the Student
Name of the University
Author note

1BUSINESS STRATEGY
Executive Summary
The assignment helped in the analysis of the business model of Airbnb along with PESTEL
analysis which has helped in managing the different kinds of operations in the competitive
environment. Furthermore, the success factors have been analyzed and identified which
helped in gaining competitive advantage.

2BUSINESS STRATEGY
Table of Contents
Business Model Canvas of Airbnb.............................................................................................2
PESTEL Analysis of Airbnb......................................................................................................3
Factors Responsible for Successful Execution of Business Model of Airbnb...........................4
References..................................................................................................................................5

3BUSINESS STRATEGY
Business Model Canvas of Airbnb
Key Partners
Local
photographs
Travel
Managers and
Travel
Partners
Hosts which is
inclusive of
Events and
Rentals
Insurance
Key Activities
Engage the
different
participants
Analysis of the
data and
improve the
same
effectively
Remove the
friction from
the different
transactions
Value
Proposition
For the
Guests
Easy way of
transactions
Transparent
type of
ratings
Authentic
local kind of
experience
Lower Cost
For the
Hosts
Generation of
Income
Ease of
different
transactions
Booking and
calendar
management
Customer
Relationships
Own the
relationships
effectively
The image of the
company is the
main essential
component for
the public
For the hosts,
this is essential
to resolve the
issue and guide
the different
joining steps as
well
Customer
Segments
Guests
Type of the travel
Geographic
Behavioral
Demographic
Hosts
Type of
accommodation
Preferences of
Rental
Micro
segmentationKey Resources
Brand and the
Application of
Airbnb
Listings
(Zervas,
Proserpio &
Byers, 2015)
Architecture of
the platform
Channels
Digital
advertisements
Word of Mouth
Social and
messaging
Referral
Program

4BUSINESS STRATEGY
Cost Structure
Acquisition Cost of Customers
Weighted average cost of capital
Development and Expansion
Legal and Insurance
Customer Support
Revenue Streams
Charging transaction related savings on:
Rental Guest – 5-15%
Rental Hosts- 3-6%
Event Guests- 0%
Event Hosts- 24%
PESTEL Analysis of Airbnb
Political Factors- Airbnb is one such kind of unique business wherein the people try
to offer to rent the homes or apartments to strangers. However, there are various legal issues
which can affect the overall growth of the Airbnb services in a negative manner. Therefore,
the political factors are the huge weakness for the company (Guttentag, 2015).
Economic Factors- In the shared economy aspect, Airbnb is the leader and this is one
of the developing trends in which the different resources are shared between individuals and
corporations. The Airbnb tries to offer different kinds of competition to the other competitors
and this is opportunity for Airbnb and is benefitting both cities and hosts ("Airbnb-Vacation
Rentals, Homes, Experiences & Places", 2018).
Social Factors- Airbnb is the social business and this is creating a positive impact on
the business of the company as well. This is one of the opportunities which has been gained
by Airbnb as there is socialising and the host tries to socialise and share their ideas as well.
Technological Factors- Airbnb tries to use automation of the technology and this
helps them in becoming tech savvy in nature which is one of the opportunities gained by
them effectually.

5BUSINESS STRATEGY
Legal Factors- There are various legal issues which can affect the overall reputation
of Airbnb and this has created huge impact on the business in a negative manner.
Environmental Factors- The environmental factors are an opportunity for Airbnb in
which this is better than the hotels and there is lowering travelling impact along with usage of
the chemical.
Factors Responsible for Successful Execution of Business Model of Airbnb
There are various kinds of factors which is responsible for the successful execution of
the business model of Airbnb. Firstly, in the present scenario this can be noticed that the solo
travelling has been into trend or fashion and Airbnb is successful in this respective approach
as peer to peer accommodation networks such as Airbnb is disrupting and the tourists prefer
staying with locals instead of staying in hotels.
Furthermore, there is huge flexibility in Airbnb in which there can be seen that many
hotels are strict relating to the check in at 9:00 in morning and there is no such ability to
accommodate the wishes. However, on the other Airbnb has huge flexibility as there is no
such timing for check in and check out and the cancellation policy of Airbnb is negotiable in
nature.

6BUSINESS STRATEGY
References
Airbnb-Vacation Rentals, Homes, Experiences & Places. (2018). Retrieved from
https://www.airbnb.com/
Guttentag, D. (2015). Airbnb: disruptive innovation and the rise of an informal tourism
accommodation sector. Current issues in Tourism, 18(12), 1192-1217.
Zervas, G., Proserpio, D., & Byers, J. (2015). A first look at online reputation on Airbnb,
where every stay is above average.