Airbnb SWOT Analysis 2024: In-Depth Analysis Report

Airbnb is the world’s 236th largest company by market cap. The company essentially operates on collecting, analyzing, and providing market data, which has netted the business a TTM revenue of $8.02 billion in 2022. Let’s take a deeper look at this company’s success through the Airbnb SWOT analysis and understand how it can sustain its growth in the future.

Airbnb: Company Overview

Airbnb officially started its journey in February 2008 when Nathan Blecharczyk joined up with Co-founders Brian Chesky and Joe Gebbia to create a website that offered places to rent for short terms. The company started as AirBed & Breakfast, but the name was shortened to Airbnb in March 2009.

In 2022, Airbnb had a market cap of $ 63.55 billion and operated in more than 220 countries and regions. The company has over 6 million listings on its website and a total client count of over 1 billion. On average, a host on Airbnb was reported to make $13.8k in 2021.

Product & Services of Airbnb Inc.
Property Rental | Hospitality Services | Vacation Reviews

Airbnb Competitors
Vrbo | Wimdu | Booking.com | Expedia | TripAdvisor | Agoda | HomeToGo

Did You Know?

The “air” in Airbnb is a tribute to the company’s founders’ humble start. After they had moved to San Francisco in October 2007, Founders Brian Chesky and Joe Gebbia rented out a mattress in their living room as a bed-and-breakfast service.

Strengths – Airbnb SWOT Analysis

Profitable Business Model: Airbnb is a multisided platform that creates a digital marketplace for renting real estate. The company sells market data and its virtual platform to both landlords and renters. The company essentially retails a product that it exclusively owns and sets rates and terms to its advantage. As a result, Airbnb’s 2021 revenue saw a 77.37% increase from 2020 to $5.992 billion.

Intuitive Interface: Airbnb’s UI is cleverly designed to provide information without overwhelming the user. It offers understandable and simple filtration options such as amazing views, tropical, beach, and more. It utilizes user data and location to instantly suggest real estate nearby that suits their budget and taste. Also, its clever use of SDUI makes the experience seamless and easy to use.

Fast and Convenient: Airbnb is known for being a fast and easy way to book rental spaces. Compared to Zillow, Redfin, Realtor, and other real estate agencies, Airbnb lets you find and rent properties almost instantly. Unlike these services, renters can stay 1 night or up to 90 nights. Most importantly, Airbnb handles payment in a way that benefits both landlords and renters.

A Superior Renting Experience: For 82% of landlords using Airbnb, it’s a way to share their homes and pull in an average of $925 per month. The upfront cost and maintenance fees of the properties are less than typical hotels. For renters, the cost for their stay is often up to $100 or lower than hotels. Most Airbnb renters also report that they find the properties to be spacious and have more amenities, better Wi-Fi, kitchens, washers, and driers.

Wide Selection: From high-value properties to shared living rooms, Airbnb has just about every kind of housing option for its renters. You can find lakefront homes, mansions, camps, yurts, beach condos, farmhouses, private rooms, or just a room to share. With such a wide range, the company can easily attract landlords and renters with all types of preferences.

Weaknesses – Airbnb SWOT Analysis

Legal Restrictions: Airbnb’s business model leaves it vulnerable to legal restrictions. Airbnb’s feared to cause high-profit temporary rents, high traffic in quiet neighborhoods, and a lack of accountability. Amsterdam, Barcelona, Miami, Paris, and Santa Monica have banned Airbnb, while Berlin, London, New York, and San Francisco heavily regulate its business. Airbnb cannot expand to some countries as their laws work against the company’s policies.

Susceptible to Market Trends: Airbnb is highly susceptible to failure due to external change drivers. After the 4th quarter of 2021’s, the company reported a record $834 million in revenue generated due to the rise in vacationers following the pandemic. But now that high traffic is gone, Airbnb has seen an increase of 23.2% in listings but a lowering number of renters. The company has been predicted to have a 24% chance of failure in 2023.

Dependent on User Data: Airbnb’s entire platform is highly dependent on collecting and using user data. Airbnb collects user contact, name, gender, image, language and location, and payment preferences, just like most other online services. But it also collects your live location, device specifications, IP address, browsing activity, and background information to process and predict your preferences. Airbnb needs to breach user privacy to run smoothly, which does not work well with the rising concern with digital privacy.

Fluctuating Income: Because Airbnb mostly gets its business from short-term, high-profit rentals, it does not have consistent sources of income. Many landlords rent out their homes seasonally, and renters rent more during vacation periods. This causes the income rates of the company to fluctuate heavily. For example, Airbnb saw a 3899.64% annual increase in income from continuous sources in 2019 but a 137.93% decline in 2022.

Opportunities – Airbnb SWOT Analysis

Growing Demand: Since the pandemic, around 76% of US adults have come to prefer online purchases and arrangements and instant sales. Airbnb’s business model is perfectly suited to this market trend, and it is one of the few real estate rental platforms that facilitate this behavior.

Workspace Rentals: Airbnb’s platform is perfect for mimicking workplace rentals. It can host rental spaces exclusive for working or studying. This practice is quite common in Japan, and it’s gaining popularity across Asia for its effectiveness in increasing performance and efficiency.

Explore Long-term Rentals: Airbnb can host longer rental terms on its website. Asking rents in July 2022 had been 77.1% higher than 2020’s nationwide median gross rent. 41% of tenants have to pay over 35% of their income on rent. Airbnb can profit by becoming a platform for these tenants to find cheaper rates and better accommodation, while landlords competing will reduce the fees.

Threats – Airbnb SWOT Analysis

Failing Economy: As the global economy continues to fall, Airbnb will see less interest in renting luxury and vacation homes. With mounting global unrest and a projected resurgence of Covid-19, the company will be at risk of receiving no business for months. If the company fails to generate revenue for a long period, it will collapse.

High Competition: Airbnb has had high competition from other online rental agencies such as Booking.com, Expedia, FlipKey, HomeAway, TripAdvisor, Vrbo, and more. Many of these competitors specialize in specific home styles or demographics. HomeAway focuses on older renters, Vrbo only lists private homes, while Booking.com, Expedia, and TripAdvisor charge way less than Airbnb. With enough competitors offering low rates and specializations, Airbnb will struggle to grow.

Frugal Renters: By September 2022, consumer purchasing power had reached -5.05, and consumer average monthly spending had fallen by more than 4%. As consumers become more and more frugal, their constrained spending can cripple Airbnb’s cash flow from high-value properties.

[Bonus Infographic] SWOT Analysis of Airbnb

Recommendations for Airbnb Inc.

Since its inception, Airbnb has always been at risk of collapse. It can be easily toppled by a shift in market trends and an oversaturated market. To survive, Airbnb should consider the following suggestions.

• Airbnb should consider listing long-term rentals on its website. Its payment methods and no-contact policies can be huge advantages in an upcoming pandemic.
• Airbnb can consider highlighting smaller rental spaces that are cheaper but modest instead of highlighting high-value properties. This will help the business adjust for frugal consumers and a falling economy before the market trends shift.
• The company should consider expanding its services to real estate sales in the USA. As rent is currently only 12% less than the average mortgage rate, many are leaning toward owning a home. Airbnb can use this shift in the USA market to access a larger demographic and higher profit ratios.
• Markets in South Korea, Japan, Singapore, and Malaysia favor office spaces, internet cafes, and gaming zones, and the clients prefer to have no-contact service. Airbnb can contract owners to use its platform for booking.
• Airbnb can offer users the choice to opt out of data collection and still use the website. It can give a disclaimer that the service quality will fall dramatically for the user, and the user can choose the cost.

Frequently Asked Questions (FAQs)

Final Words on Airbnb SWOT Analysis

Airbnb’s chief winning point is short-term, instant, no-contact renting across international markets. It’s also its weakest point, as the company is vulnerable to market external drivers and trends. To outlast a falling economy, a resurging pandemic, and crowding competition, it must look into long-term renting and real estate sales. Otherwise, its business model won’t sustain it.

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