Analyzing Airbnb's Business Model: A Case Study of Pandemic Impact

This case study analyzes the challenges faced by Airbnb due to the global pandemic, focusing on issues such as maintaining collaborations with hosts and customers, lack of effective leadership, and cost-cutting measures. The report utilizes PESTLE analysis to evaluate external factors influencing Airbnb's operations, including political, economic, social, technological, legal, and environmental forces. Findings reveal the significant impact of the pandemic on the hospitality and tourism industry, leading to decreased revenue and operational disruptions for Airbnb. The study proposes solutions such as strengthening management, adapting to changing social preferences, and leveraging technology to navigate the crisis. Ultimately, the report offers recommendations for Airbnb to enhance its business practices and ensure long-term viability. Desklib provides a platform for students to access this and many other solved assignments.

Case Study Analysis

EXECUTIVE SUMMARY
This project report has summarised the case study analysis for a company of Airbnb
which indulges is an American company and are essentially indulges in providing home stays for
vacation rentals as well as tourism activities. This project report illustrates an understanding of
problems which are faced by Airbnb due to global pandemic. It also delves into providing a
proposed solution for solving those problems. The project will also cover key recommendations
which are to be followed by Airbnb to deliver best and suitable business practices

Contents
EXECUTIVE SUMMARY ............................................................................................................2
CHAPTER 1 ...................................................................................................................................4
Introduction to the case study ....................................................................................................4
CHAPTER 2....................................................................................................................................5
Case brief: Description of the situation ......................................................................................5
CHAPTER 3 ...................................................................................................................................6
Problem of the statement and plan of analysis ............................................................................6
CHAPTER 4 ...................................................................................................................................9
Analysis and Findings .................................................................................................................9
CHAPTER 5..................................................................................................................................11
Proposed solution to problem ...................................................................................................11
CONCLUSION .............................................................................................................................13
REFERENCES..............................................................................................................................14

CHAPTER 1
Introduction to the case study
This project report is based on a case study which encompasses of problems and
challenges faced by Airbnb due to global pandemic. It also encompasses of background and
history of Airbnb for understanding their situations and business statistics in an effective manner.
Due to covid pandemic, numerous business houses face issues in operating their activities in an
effective manner. Strict government guidelines and covid protocols has made travelling a
difficult job which has hamper their operations in a significant manner. By analysing external
factors, top management of Airbnb have developed some measures and strategies in order to
withstand with the downturn economy in an effective manner.
Statement of the problem in context to research is concerned with a critical issue which needs to
be addressed in an effective manner (Al-Fadly, 2020). Problems in relation to the presented case
study of Airbnb are related to global pandemic and issues they faces for establishing their
company.
Aims and objectives of research
Aim of this research is to discover the ways in which founders of Airbnb can solve
their issues and pave the way for the success in an effective manner.
Objectives of the research
 To discover suitable solution for the organisation which help it in mitigating varied risks.
 To frame efficient leadership as well as management strategies for accomplishing goals.
 To solve the critical issues in relation with maintaining the viability of the brand.

CHAPTER 2
Case brief: Description of the situation
This presented case study is based on the operations of Airbnb. It encompasses of varied
issues which are faced by managers of Airbnb in formation their company and challenges which
they come in contact due to global pandemic. Airbnb is an American organisations which
provides vacation rentals to numerous people by collaborating with the owners of the property.
This company is based on a very basis idea of two friends of providing bed and breakfast to the
visitors in order to provide them a homely touch. They have launched a website which laid them
to collaborate with property owners who are ready to give their houses on rent. At their initial
phase, they face several hurdles and criticism in operating their activities in a significant manner.
Their vision is to provide warm hospitality as well as unique experience to the visitors in an
effective manner. Founders of Airbnb started to face issues and gets lot of complaints from hosts
and travellers regarding misrepresentative, physical assaults and many more. As they are
growing in an exponential manner, their business model also gain popularity (Alameeri,
Alshurideh, and Kurdi, 2021). They also helped government in framing regulations regarding
short-term rentals in an effective manner through their programme called Community Compact.
They have enhanced their operations and become an end-to-end-travel company. They also
starting to provide adventure trips to visitors in a strategic manner.
Impact of covid on hospitality as well as tourism sector was a sever one which has laid
close down various operations in a strategic manner. Managers of Airbnb cancelled online
bookings and start refunding money of their prospective guests. They also provide a little
compensation to property owners which has criticised their positions in a significant manner. In
order to meet the global crisis, founders of Airbnb has take some strict decisions for cutting
down their costs and adopting new leadership approach for maintaining a balance among them in
a strategic manner.

CHAPTER 3
Problem of the statement and plan of analysis
Founders of Airbnb have faced varied problems as well as challenges in facing and
overcoming the situation of covid pandemic in a strategic manner. They faced issues in relevance
with maintaining collaboration with host and their customers as they have to return the booking
prices. Lack of effective leadership style in top management of Airbnb also cause varied
problems for them. They have implemented an approach called hiring freeze in order to cut down
the costs of their operations in a significant manner. They are not in a position to pay their
employees and cover their operating expenses in a strategic manner. Lack of proper management
and planning also created problems for them as they are confused in managing their which
resource or stakeholder which help them to cut costs in a strategic manner. They have many
alternatives such as supporting shareholders by cutting down their operating expenses. In order
to support the hosts, they have to remove refund policy which permits them to keep rental
deposits with them which would not be appreciable and can hamper their brand image in a
sizeable manner (Amankwah-Amoah, Khan, and Wood, 2021). They face immense challenges
regarding their hosts, guests, employees as well as communities in which they are operating.
For analysing their situation in a far better way, founders of Airbnb have determined to
perform PESTLE analysis which help them in gaining knowledge about varied external forces
which can influence their operations in a significant manner.
PESTLE
PESTLE analysis can be described as a strategic technique or framework which is
undertaken by organisational managers in assessing macro external factors which have their
influence in business operations. It is considered as advantageous for organisational managers as
it aid them in formulating effective strategies for performing the operations in a significant
manner. Varied forces of PESTLE analysis in relevance with Airbnb are mentioned below:
Political factors- It essentially encompasses of government regulations, administrative system,
fiscal policy initiatives and free trade disputes of a specified country (Ar, 2020). Political
landscape of USA is stable and promotes foreign direct investment and other business related
practices in a strategic manner. Managers of Airbnb have to evaluate the political landscape as

after covid pandemic situations are changed. This lead to greater domestic repression as well as
high diplomacy in country. It is imperative for managers of Airbnb to assess political conditions
through a strategic means effective utilisation of strategies.
Economic factors-It majorly concerned with increase in unemployment rates, foreign currency
fluctuations and rise in GDP rates in relevance with a particular nation. Economic environment
of USA has been suffered a lot due to global pandemic which led in lowering the employment
and GDP rates in a significant manner. Operations of Airbnb has also been severely suffered due
to covid pandemic. This led to decrease in their revenue, even they have to refund their bookings
amount to their customers.
Social factors- This force of PESTLE analysis is concerned with lifestyle trends, consumer
beliefs and demographic conditions of population in context to a specified country. USA is a
diversified country where differential sort of people exist with different thoughts. Major
population of USA is indulgence in nature which led them to make plans for visiting. However,
covid pandemic has destroyed their plans and led them to stick to their houses. Business model
of Airbnb gets huge success with the population of USA. However, they needs to formulate
varied strategies for attracting the people after the covid pandemic (Bai, Zaid, and Ahmed,
2020). They need to ascertain the dynamic and changing needs of people at the time of global
crisis. People started to use the services of Airbnb for relocating themselves in order to take care
of their relatives. They belief the houses provided by Airbnb as most secure rather than hotels.
Technological factors- It essentially comprises of automation practices, technological
infrastructure and new advancement in technology in relation with business houses of a
particular nation. Speed as well as scale in relevance with technological disruptions which are
present in business environment are considered as unprecedented. USA is a leading
technological-driven company which support organisations in a strategic manner. Founders of
Airbnb have devised their business model which supports online operations and have a website
for operating their activities in an effective manner (Berawi, 2020). They also use cloud-based
computing system as well as automation processes for performing in a better way which help
them to gain competitive advantage. However, their operations have been disrupted due to global
pandemic which leads to reduction in proficiency as well as revenue generated exemplars.
Legal factors- This force comprises of industry legislations and laws relating to protection of
intellectual property, employees as well as customers of business organisations in regards with a

specified country. In USA, legal laws in relevance with customer and employees protection are
strict which needs to be considered by establishments while devising their strategies in an
effective manner (Christa, and Kristinae, 2021). Managers of Airbnb make compliance with
these laws as they provide compensation to their employees at the time of global pandemic.
Environmental factors- It is essentially concerned with effects of carbon footprint, impact of
climate change and stewardship of natural resources in accordance with a specified nation. This
force also covers elements such as corporate social responsibility and corporate governance
which are to be undertaken by organisational managers for making their positions viable. In
USA, environmental laws are very strictly formed and needs to be followed by organisations in
an effective manner. Managers of Airbnb make compliance with environmental laws as well as
indulge themselves in sustainable practices effectively for making their business operations more
viable.

CHAPTER 4
Analysis and Findings
Hospitality as well as tourism industry has suffered immense drawbacks due to covid
pandemic on a global level. It has been found that growing economic development on a global
scale has been a cause of wide transmission of the Covid pandemic which has deteriorated the
productivity level of varied organisations (Ferneini, 2020). Airbnb has also saw its impact in
their operations as they have to break the collaborations with the property owners. As they are
paying back the booking amount of their customers. They focused on strengthening the
management and cutting down their cost in a significant manner.
It has been analysed that managers of Airbnb are facing issues with managing their
operations due to global pandemic. As Covid guidelines has laid people to stick to their houses
and follow the protocols in an exponential manner. Lack of proactive approach and leadership
skills in managers have laid them to face disruptive operations and starting to cut down their
costs. It has been evaluated that political landscape of USA is stable which lead them to grow
their operations in a safe environment Žižek, 2020). However, government regulations during
corona pandemic has impacted their business operations as they have to refund the booking
amount of their customers. They have decided to cut down the operating expenses while
performing their operations. Social factors are in favour of Airbnb as they can balance their
revenue model after covid pandemic as their business model is unique.
It has been discovered that social choices of people have been changed due to global
pandemic. They start using the rental rooms for taking care of their relatives (Jasmine, 2020). By
overseeing this initiative, founders of Airbnb have acted in a quick manner by providing virtual
experiences to their customers. Through this practices, they have sought the ways in which they
can contribute for wider community needs.
Airbnb is always a technological-driven company which operated their operations
through their website but it offers physical services which can not possible at the time of global
pandemic. However, they have used their technology in providing experiences in relation to
virtual as well as augmented reality to their customers in a significant manner. In order to lead
the competition in a specified period of time, it is necessary for the companies to take essential
actions according to contemporary business environment. Most of the companies at the

marketplace also perform analysis of strengths and capabilities which are essential for increasing
chances of growth and development. Airbnb is currently also facing operational and supply
related issues which are important for its overall development (Kaushik, and Guleria, 2020). The
main role of a business organisation is to ensure that all of its managerial functions are
performed in the right direction.
The companies in the competitive marketplace also focus on analysing demand and
situation of customers to deliver best business practices. In the recent times, all major business
organisations in the international and national marketplace. It is also major role of business
management to analyse the key strengths and capabilities in order to develop skills in the
employees. The case study analysis evaluates that most of the successful companies also prefer
to choose best business models which are appropriate for its growth and expansion. The findings
of business includes key perspectives along with personal analysis of all employees in order to
formulate business and leadership practices. Main task of a business is to ensure effective
working of business development and environment in order to increase chances of growth and
stability. Airbnb is also currently involved in making effective use of all the available resources
along with their optimum utilisation (Malik, Kumar, and El Zowalaty, 2020). The analysis of
external and internal factors is also important for the company in order to perform major
business development practices. In order to gain competitive advantage in a set period of time, it
is main task of Airbnb to formulate strategic approaches. The main role of business entity is to
ensure proper functioning of its systems and develop main approach in dealing with key
customers. The Airbnb and its top level authorities are involved in strategic development for
facing effective consequences and challenges with majority of focus on operations.

CHAPTER 5
Proposed solution to problem
The solutions to the problems should be considered by a business organisation in order to
deliver best practices. In the recent times, due to increased competition between companies it is
essential for Airbnb to follow certain solutions. The solutions will impact on functioning of a
company in a negative manner and will also impact on its overall development and profitability
(Zia, 2020). The key recommendations which should be followed by Airbnb to gain systematic
growth at the marketplace are mentioned below:
 Strategic management and planning- The strategic management is the major body of
the company which helps in systematic and precise growth. It is major role of a business
entity to develop strategic management and planning based approach to deal with the
consequences of Covid-19. Main task of a company is to ensure proper strategic
management and planning in order to evaluate best results. The Airbnb must hire
professional and expert employees in its department to gain desired success. The
strategies and their formulation is essential for the business organization in order to
facilitate company development (Manuel, and Herron, 2020). Formulation of planning
and strategies is required to handle risk associated with the business in international
marketplace. The formulation of strategies from time to time, according to major
competitors is necessary for the business in order to increase overall strength of the
business. It should be main function of the business organization to develop effective
strategies which are also helpful in dealing with competitors present in the international
marketplace.
 Information and technology- In the rapid business world, the information and
technology are two major approaches which helps a business to perform quick and
accurate operations. It is major role of business to support its functioning with the help of
IT tools and techniques. Airbnb can take support of major IT tools like Decision support
system, knowledge information system and customer relationship management software
to develop effective approach at the marketplace.
 Research and development- Airbnb should formulate to develop research and
development department to analyse the competition (Nah, and Siau, 2020). The situation

of marketplace is essential to know in order to develop key frameworks and planning.
Most of the successful companies in the global and national marketplace are taking
support of competitive approaches by conducting market research and survey.
 Focused operations- The main approach in dealing with the focused operations is
essential to be maintained in order to perform majority of business operations. Focused
operations will help company to deliver best business practices that are essential to deal
with marketing situation (SYAIFULLAH, SYAIFUDIN, and JUNAEDI, 2021). Focus on
key departments of Airbnb like human resource management, marketing and finance
department will help and support Aibnb to increase its effectiveness in major operations.
Companies at the marketplace should develop chances of success by putting emphasis on
employees as well. Training and development department of Airbnb should provide
solutions related to current situations of Covid-19.
 Leadership- Key focus on leadership will help the business organisation to increase its
chances in maintaining current employees. The leadership style which must be adopted
by management of Airbnb includes democratic leadership style. Application of
democratic leadership style will help the company to facilitate decision-making
(Syriopoulos, 2020). It will also assist the organisation in making crucial decisions on the
basis of contemporary business environment.

CONCLUSION
From the above mentioned information, it has been assessed that global pandemic has
severely disrupted the business activities of organisations operating in hospitality as well as
tourism industry. PESTLE analysis is used by organisational managers for devising the effective
strategies in the light of uncontrollable macro external factors. It is imperative for hospitality
organisations to evaluate their problems and issues as well as frame strategies for solving them in
a strategic manner.

REFERENCES
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