The business model of Airbnb is considered to be the multi-sided market place because it connects hosts with travelers as well as the experience providers. The booking fee paid by the guests enables the company to generate money. In this regard, the guests must pay for the stays as well as experiences. This business model is different from the normal model applied by the hotel company such as the Marriot. The current business model has enabled Airbnb to move the hospitality industry to a new level. Airbnb is able to address various ambitions through the use of this model because it has captured the mass market. The mass market is connected in a special way as the model connects the hosts, travelers as well as the experience providers (Chua et al 2019). Through the use of the rating system, the company is able to maintain its community.
The brand partnership is one of the strategies that has enabled Airbnb to grow faster. Partnering with other companies has made Airbnb grow as it provides exposure and business opportunities for the company. Through the partnership, the customer is able to choose the brand of his choice. In this regard, the brand crossover has made the customers to get unique experiences. A good example is the KLM contest that ensured that the winners spent a night in the luxurious plane for free. However, the company faces a number of strategic issues. One of the strategic issues is the unnecessary competition resulting from some businesses that have taken advantage of the Airbnb marketspace which operate without even a license. The second issue is the issue regarding regulations and this might affect the operations of the company.
The strategy employed by Airbnb is not currently working because it has recently recorded a slow growth. The company is facing stiff competition from other businesses that offer similar services. This competition has made its business to slow down in the mature markets like the U.S and Europe. According to the AlphaWise survey that involved 4000 consumers it is evident that the company is slowing down in these more established markets because of competition (Ting,2018). According to the Morgan-Stanley researchers, the company is slowing down because of various reasons. One of the reasons is that the company has reached its peak of about 86% for the regions that were surveyed. Another important reason is that Airbnb is facing competition from the agencies dealing with online travel. According to this research, online travel is expected to grow by 7% when compared to six 6% of the Airbnb company. In addition, they expect online travel global accommodation businesses to increase 1.3 times more than Airbnb in the next two years. According to the same research, online-travel agencies remain to be the most utilized when it comes to booking travel because of about 59% use these agencies to book (Farronato & Fradkin, 2018). According to the Swiss Investment Bank report of 2017, the regulations were greatly affecting the growth rate of the company. The bank used 127 cities to look at how the regulations affected the growth rate of the Airbnb. USB established that the growth rate of the bank has been facing a downward trend from October 2016 because during that time the listings of the bank grew by about 110% but in 2017 during the month of February the growth slowed by about 35% (Gap, 2017). However, the bank is still growing but the above issues may continue stagnating its growth in the future. In this regard, the company should apply the resource-dependence theory whereby the company will as much as possible to control its internal as well as external resources in order to remain highly competitive in the market. The company is always involved in competition and cooperation and this means that they should adapt to the new environment in order to survive.
The company needs to take various steps in order to remain competitive and maintain a high growth rate. For example, the company is faced by the issue of competition from online travel agencies and other businesses that are using Airbnb’s market space to operate. If these competitors are unchecked it means that they will pose a big threat to the growth of the company in the near future. Airbnb should tap new markets in Asia because the US and the Europe markets have almost reached the peak and there is a need to control the new markets that have not been tapped by the other businesses. As such, the company will continue enjoying new profits in the new markets because of their no stiff competition in these markets. In addition, the company should continue expanding its partnership with other companies in the well-established markets because the company cannot grow in these markets if it fails to find new partners (Hajibaba&Dolnicar 2018). In this regard, the resource- dependence theory will be applied when it comes to managing competition because no company can survive in the ever-competitive market if it fails to interact with individuals and firms beyond their individual boundaries (Klein & Pereira 2016). On the part of the new regulations, the company should comply with new regulations regarding various matters like the safety of the clients because there is a need to ensure that the clients are provided with safe accommodation. It is evident that the company is facing challenges in markets where there are strict regulations (Interian, 2016). In this regard, resource-dependence theory will be applied in this case because in order to adapt to various environments there is a need to comply with the set regulations.
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