PESTLE Analysis of Airbnb

Airbnb provides people short-term lodging, lease and rent services. It is cheaper hotel alternative. There are average people take advantage of Airbnb business model. They rent out spare rooms to guests, tourists and earn money in reward.

The company growth is amazing in the recent years. According to fortune.com the company projecting revenue is 3.5 billion per year by 2020.

Besides the tremendous growth, Airbnb is facing many political and legal issue. But still, they have a positive impact and hosts earning, providing cheap space and the environment.

If you are interested in my other tutorial SWOT Analysis of Airbnb, Find out Strengths, Weaknesses, Opportunities and Threats of the company affecting its business strategy. 

Here I will discuss Pestle analysis of Airbnb.

Political Factors

Airbnb is a unique business model. People rent out their spare rooms and apartments to outsiders, visitors and tourists. But this company is also facing some legal and regulatory issues in many countries. Many people rent out their locations don’t follow country housing laws.

This business model conflicts with many state housing laws and regulations for example in many locations, those people renting their property must live on property. But there are people who purchased separate houses for Airbnb rental services. Clearly, this is the violation of housing laws.

The Tax rates are varying in different states and countries, the company must cope with this issue.

They don’t have any protection mechanism for their customers in war and conflict zones.

Airbnb has already faced court proceedings in Florida, Barcelona, New York, Toronto, San Francisco and many more places because they did not follow the housing laws and regulation in the respective places.

Airbnb needs to address the state housing laws where needed otherwise it will face more court proceeding in the future.

Economic Factors

Airbnb is a good example of shared economy also collaborative consumption where people share their resources with those who need it for a short period of time.

It has two aspects to consider, it is considered a source of income for those who rent out space. On the other hand, it has shown itself a proven competitor to the hotel industry. cheaper prices is a good opportunity against its competitors “hotels and motels”.

This is the reason why it has grown a loyal customer base around the globe and its net income reached to $93 million in 2017. Its mobiles App is downloaded over 10 million users.

It has more than 3100 employees. It’s also providing jobs to hosts, who are providing their spaces to guests. Due to cheaper prices, Airbnb service is a good choice over hotels and motels.

Social Factors

Airbnb is a platform where it blends cultures and societies from different parts of the world. Every host and tenant submit their expectations and experiences. In this case, social media also play its role and spread the voices of both host and tenant.

Airbnb is operating in 191 countries and more than 34000 cities. Both tenant and host have their own culture, norm and issues. It must understand and respect each culture and society to say in the shared economy business.

Airbnb has Community Center and discussion rooms like “Help” “Hosting” where hosts and tenants share their experiences, ask questions. They are different webinars to educate and help the community.

Technological Factors

Technology is a connection between communities around the globe. Airbnb is using technology to connect people. Visitor can download app and use website for booking. This type of business model is totally relying on reviews and rating. A bad view can hurt the reputation of the host. Few bad review and you are out of the business.

Airbnb is fully automated and helps both hosts and tenants to get connected in a positive manner. It uses a messaging system to verify personal profiles of guests and hosts.

Without technology, Airbnb cannot perform its basic operation like booking, cancellation and payment verification systems etc. Everywhere hospitality industry is using technology to serve its customers and this sharing economy model is one of them.

By using technology Airbnb can collect data and perform environment analysis to identify opportunities and threats.

Legal Factors

As I earlier said Airbnb is operational in more than 193 countries. Every province, state and country have a unique set of housing regulations, Taxation Laws. It is quite difficult for Airbnb to meet the regulations of every country. The reason is Airbnb is relying on people hosts and guest and they should meet the local laws and regulations.

This why Airbnb is facing lawsuits and court proceedings in New York, Florida and many cities.

Hosts know their local laws, housing and tourism regulations and they must follow the rules while agreeing to Airbnb terms and condition while renting space.

Environmental Factors

The Airbnb home-sharing model is a suitable choice for hosts, guests and the planet. By choosing it you can reduce waste usage, energy, and wastes.

Recently, Airbnb published a report pointed out that home sharing has a positive impact on environment. Their shared economy business is based on utilizing the existing resources and travelling in a more friendly and green environment.

Conclude the Discussion

Airbnb has a made a dent to the hoteling industry. Based on shared economy they are using the existing resources and offering jobs to those people “hosts” who are offering space to visitors.

Every state and country have different housing and taxation laws and it is difficult for Airbnb to meet these laws and regulations. This is the reason they are facing lawsuits.

By using webinars and social media platforms they can aware the hosts to understand local laws and regulation. Once you accept Airbnb terms and condition you must fulfil required regulations.

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