A Situational Analysis of Airbnb: Assessing Business Environment

This case study presents a comprehensive situational analysis of Airbnb, a major player in the lodging industry. It delves into the company's background, highlighting its unique business model as a marketplace for accommodation. The analysis explores the macro environment using the PESTEL framework, examining political (including Brexit impacts), economic (GDP, inflation), social, technological (IoT, AI), legal (privacy regulations), and environmental (sustainability) factors influencing Airbnb's operations in the UK. Furthermore, the micro environment is assessed through a SWOT analysis, identifying Airbnb's strengths (market leadership, global presence, brand image), weaknesses (small unit size, reliance on accommodation providers), opportunities (tourism sector growth, economic growth in the UK), and threats (increasing competition, price fluctuations, financial risks). The analysis concludes by relating the micro and macro factors, emphasizing the importance of aligning business strategies with the external environment for sustainable growth. Desklib provides similar solved assignments for students.

Running head: A SITUATIONAL ANALYSIS: AIRBNB
A Situational Analysis: Airbnb
Name of the Student
Name of the University
Author Note

1A SITUATIONAL ANALYSIS: AIRBNB
Table of Contents
1. Introduction........................................................................................................................2
2. Company Background........................................................................................................2
3. Macro Environmental Analysis..........................................................................................3
3.1. PESTEL Analysis........................................................................................................3
4. Micro Environmental Analysis..........................................................................................5
4.1. SWOT Analysis...........................................................................................................6
5. Relation of Micro-Macro Environment Analysis..............................................................7
6. Conclusion..........................................................................................................................8
References................................................................................................................................10

2A SITUATIONAL ANALYSIS: AIRBNB
1. Introduction
Present scenario of the market is in a very dynamic state with fierce competition in
the market. Thus, decision making becomes significantly important process for any
organization. However, decision making cannot be something based on the instinct. It needs a
very in-depth analysis of the market to support and modify the decisions to adapt with the
consistently changing environment of the market (Bolman and Deal 2017). This study is
primarily focused on the analysis of the macro environmental factors that are influencing the
market. The study also emphasizes on the micro environmental factors that are responsible
for the finding the key strengths and weakness of the organization. For the study, Airbnb is
chosen, as it is one of the major player in the lodging industry. Lodging being one of the
major contributor towards the economy of the United Kingdom, it becomes significantly
important to analyze the issues that will be liable for influencing the organization
(Airbnb.com 2019). Thus, the study will be elaborating about the macro and micro
environmental factors that will be responsible for influencing the decision making process.
2. Company Background
Airbnb is one of the widely known name in the lodging industry as it became one of
the major player in the lodging industry by not owning any of the hotels. The story of Airbnb
started from the year of 2008. Founded by Brian Chesky, Joe Gebbia and Nathan
Blecharczyk it is one of the giants in the global lodging industry (Airbnb.com 2019). Airbnb
have played a vital role in providing the customers with the potentially cheaper and
comfortable alternative of the hotels. They have a market place for accommodation currently
having to serve more than 5 million places that are unique. They are existing in 81000 cities
in more than 191 countries which is a major presence in the whole world (Airbnb.com 2019).

3A SITUATIONAL ANALYSIS: AIRBNB
Thus, it is one of the major duty for the organization to get indulged into correct decision
making which needs the support of the correct situational analysis.
3. Macro Environmental Analysis
Macro environmental analysis is one of the most vital analysis that will be liable for
the contribution in a strategic decision making process. Macro environmental analysis
requires analysis of the influential environmental factors, which are Economical, Social,
Political, Technological, Environmental and Legal. So the analysis is stated below:
3.1. PESTEL Analysis
 Political Environment: The business of Airbnb is one of the most unique ideas that
is being the aggregator or more precisely a marketplace for the accommodation. This
can be impacted by the political environment of UK while the organization is
operating in the country. The organization must follow the rules and regulations that
are prescribed by the government for regulation purposes. There are numerous
political impacts on the industry one of which is the BREXIT (Filimonau and Mika
2019). This has significantly impacted the country and the tourism and the hotel
industry. According to World Bank data (2017), the stability of the politics has
increased to 0.26 in 2017 compared to 2009 when it was 0.12. However, UK was
more stable in 2015 with 0.52 in the political stability index of World Bank.
Fig 1: Political Stability Index
Source: World Bank (2019)

4A SITUATIONAL ANALYSIS: AIRBNB
 Economic Environment: Airbnb in utilizing the resources of their partners. This is
also known as shared economy. This enables the organization to utilize the resources
of an individual. This has enabled the industry rivalry with the hotels and the motels
in the UK. The economic environment of the country is also responsible for the
driving the business operations. The economic growth that the GDP is projecting is
one of the major positives for Airbnb as it will be helpful for the business. The
environment is one of the most favourable situations with a GDP of $2.9 Trillion with
a negligible inflation rate of 2% (Office for National Statistics, 2019).
 Social Environment: United Kingdom is one of the most culturally neutral country.
Thus, it becomes significantly important for the organization to assess them for
providing them with a seamless experience. The visitors for Airbnb are always in
expectation of the new experience as it is not traditional hotel booking platform.
 Technological Environment: There has to be reliance on the technological
advancements as the platform for Airbnb is situated in the internet. On the
technological front UK is having a favorable space with improved Internet of Thing,
Artificial Intelligence and Machine Learnings that will be helpful for the
organizations to utilize them to facilitate the guests (Neuhofer, Buhalis and Ladkin
2015).
 Legal Environment: The legal obligations of the country needs to be followed
strictly. This is one of the major contributor towards the seamless operations. Tourism
is one of the major activity that is regulated by the government. The organizations that
are involved in the process of providing the accommodation it is a duty for them to
get abide by the rules (Legislation.gov.uk 2019). The legislations regarding the
privacy of the users need to be complied as it is one of the most significant aspect that
is associated with the safeguarding the information of the customers (Gov.uk 2019).

5A SITUATIONAL ANALYSIS: AIRBNB
 Environmental Factor: Sustainability is one of the major contributor towards the
development of a clean and green society. This is one of the major factor that is
associated with the utilization of the resources (Lim 2016). In present conditions it is
one of the most significant factor that will be contributing towards the development of
the aspects that are related to the promoting the usage of the renewable resources. For
industry giants it is one of the valuable message for the customers for building a clean
environment. Reducing the usage of the resources from non-renewable resources will
be impacting the nature in a positive way which can be a benefit for the organizations
and their brand image.
Analyzing the key areas for the macro environmental factors which is projecting a
positive image for the organization. The macro environmental factors are projecting the
perspective of how important it is for Airbnb to get involved in the process of abiding the
laws and follow the trend of environmental sustainability. This will be helpful for the
organization to incorporate the aspects that are related to the development of the market and
ease the process of decision making.
4. Micro Environmental Analysis
Micro environmental factors are the key factors that are influencing the organization.
These factors are inclusive of the activities that are projecting the key strengths of the
organization along with opportunities. These factors are also liable for the elaborating the
weakness of the organization and the threats that are associated with the organization. Thus,
the SWOT analysis is stated below for Airbnb.
4.1. SWOT Analysis
 Strengths: Being a market place for the accommodation is the key operations of the
Airbnb. Being the leader of the segment itself it is one of the major strength of the

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company. It has the experience in the business of that provides them a competitive
advantage. This is one of the major factor that contributes to the success of the
organization (Airbnb.com 2019). Airbnb being in the top of the market it has become
significantly important factor that will be responsible for the development of the key
areas that will be responsible for the development of the market. One of the key strength
of the company is the reach of the company. Its global presence in 191+ countries is one
of the viral strength of the company (Airbnb.com 2019). However, there is another
strength for the company which is the brand image of the company. Being a pioneer the
company does enjoys being in the top. This reach in the global market enables them to get
revenues from the every part of the world. Factors such as brand image, global presence
and the experience does provides the company with a good competitive advantage to the
company in the fierce market.
 Weakness: Airbnb being one of the top player in the sectors does enjoy some strength.
However, there are weakness that are associated with the organization. One of the key
weakness of the organization is the unit size of the business it is one of the smallest units
that is involved in serving the global customer base (Airbnb.com 2019). This is one of the
most significant aspect that is associated with the organization that will be liable for
influencing the customer service. There is another weakness that is associated with the
organization that is reliance on the places that will be liable for providing the
accommodation.
 Opportunities: Growth in the tourism and hospitality sector is one of the opportunity for
the organization (Pwc.co.uk 2019). Airbnb being one of the giants in the industry it is one
of the most vital opportunity as the market size is increasing day by day. The economic
growth in the UK is one of the major opportunity for Airbnb to utilize the growth for their
benefit. There has been a significant growth in the accommodation industry that is being

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driven by the growth in the tourism sector. People are in search of new experiences and
services and brand image being the strength of the company, this positive outlook of the
customers enables them to serve them with the right set of products. Desired
accommodation is one of the most vital demand of the guests which can be fulfilled by
the organization. This desire of the customer for the unique service does gives Airbnb an
opportunity in the market.
 Threats: Airbnb does also faces quite a few threats that can influence the organization an
adverse manner. This is one of the major contributor for the organization. The entry
barrier in the accommodation and hospitality industry is decreasing day by day. This is
one of the major contributor for making the industry filled with some capable competitors
in various regions, Oyo is one such popular in the Indian market who are involved in
giving Airbnb a tough time. The market share of the company is decreasing as there are
many players in the market. There is another threat as the fluctuations in the prices are
unpredictable which is affecting the decision making process of the organization. There
are financial risks that are associated with the accommodation industry as the rules and
regulations related to the financial frameworks can adversely impact the organization.
5. Relation of Micro-Macro Environment Analysis
Macro environmental analysis stated about the factors in the United Kingdom that can
impact the organization and influence their operations. Thus, it becomes significantly
important for the organization to analyze the relation with the micro and the macro factors of
the business environment (Bowie et al. 2016).
First micro factor is the strength of the company, brand image and the experience in
the industry does enable the organization to incorporate the changes with accordance with the
political stability and the legal environment. This will be helping Airbnb for smother
operations (Ingram et al. 2015). Another strength, which is the brand image of the company

8A SITUATIONAL ANALYSIS: AIRBNB
is known for the development of the key factors that will be responsible for the growth in the
business.
Second factors is the weakness of the company, which is its small business unit that is
responsible for serving the whole world. This is one of the major factor that needs to be
addresses as with the growth in the economic front and social trend of increasing the tourist
activities, does have an impact on the organization. However, the company can incorporate
the changes on the technological front to incorporate the changes that will be liable for the
development of the key areas that will be helpful for the organization to serve the large
customer base (Clawson 2016).
Third factor is the opportunities of Airbnb, being the leader and as the PESTEL
analysis of the UK market reveals the potential of growth in the sector of accommodation is
one of the major opportunity for the organization (Ingram et al. 2015). Thus, it is one of the
vital aspect for the organization to incorporate the decision making process by considering
the macro as well as micro environmental factors.
Fourth factor is the threat, with the positivity in the market it is liable for the new
entrants in the market. The fierce market competition is one of the major factor that have
contributed being a threat (Clawson 2016). However, the potential of the market is one of the
positives for the organization as the PESTEL analysis suggests that UK is one of the most
favourable markets for the company to utilize their resources.
6. Conclusion
The analysis of the macro and micro environmental factors have enabled the
organization to take the decisions based on factors that will be liable for influencing the
organization. Decision making being one of the most important function of the organization it
is one of the major activity to consider the positives from the analysis and strategize for the
risky factors. To summarize the study it can be stated that there are significant factors

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influencing Airbnb. The company just needs to take the right steps to look forward in the
market.

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References
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leadership. John Wiley & Sons.
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Legislation.gov.uk 2019. Hotel Proprietors Act 1956. [online] Legislation.gov.uk. Available
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Neuhofer, B., Buhalis, D. and Ladkin, A., 2015. Smart technologies for personalized
experiences: a case study in the hospitality domain. Electronic Markets, 25(3), pp.243-254.

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Office for National Statistics. 2019. Gross Domestic Product (GDP) - Office for National
Statistics. Retrieved from https://www.ons.gov.uk/economy/grossdomesticproductgdp
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Retrieved from https://www.ons.gov.uk/economy/inflationandpriceindices
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https://www.pwc.co.uk/industries/hospitality-leisure/insights/uk-hotels-forecast-2018.html
[Accessed 22 Mar. 2019].