Analysis Of The Hospitality Industry: Airbnb Business Model And Competitive Advantage

Customer Segments and Market Segments in the Hospitality Industry

The report helps in analysis of the customer groups along with market segments in the hospitality industry of the respective company named Airbnb. The business model of Airbnb will be discussed along with analysis of the competitive advantage along with the sources. The Porter’s Five Forces Model will analyse the main players in the industry. The different trends and changes in the micro and macro business environment has to be analysed effectively and reflective analysis is required to be provided in order to understand the situation of Airbnb and the steps taken to implement the changes as well.

1. a) Main customer or the market segments of hospitality industry are as follows:

• Family is one the customer segments of the hotel industry wherein they have specific kind of needs and they require kid friendly atmosphere that is suitable in nature as well. The hotel industry targets these customers with the help of offering them discounted products as this will help them in gaining competitive advantage in the market (Wheelen et al. 2017)
• Business travellersis the other market or customer segment wherein as they are the prized customers as of their willingness is high in paying room prices and enjoy stable stay in an effectual manner as well. Proper attention from the hotel attendants is required by them as this will help them in gaining more customers in the future
• Backpackers and couplesare the other category wherein they will spend time on exploring the city and the couples will be requiring high quality services wherein the brand management plays a major role in the company as well. These kinds of customers prefer luxurious services and enjoy their stay effectually (Airbnb.co.in. 2018).

1. b) Business Model of Airbnb

The main customer groups or the market segments in the hospitality industry are as follows:

• Budgeted travellersare one of the market segments in the hospitality industry wherein it is seen that the customers who will be travelling to different places with a certain kind of budget. It is seen that the budgeted travellers want to stay comfortably with low budget and this can be affordable options for them (Moutinhoand Vargas-Sanchez 2018).
• Business Professionals are the one the other customer segment wherein the professionals will be requiring proper place to stay in a low budgeted hotel, then they can afford Airbnb company as they offer the same kind of hospitality services at a lower rate and budget as well
• Solo travellers are the other customer segment who travel all over the world and they are the ones who travel the world by spending their money on different kind of sight seeing and they prefer affordable kind of lodging that can be provided to them by Airbnb (Hill, Jonesand Schilling 2014).

Airbnb has entered into the strategic partnership with Uber, wherein both of the companies tried to increase their presence into the comprehensive company of travel. Both the companies tried to capture greater share of the spending of the tourists and both of the companies are trying to perform effectively in an appropriate manner in comparison to the different competitors in the market. It has been seen that the founders of Airbnb started the business as newcomers and they did not have any kind of knowledge or expertise in the field as well.

With the implementation of the Porter’s Five Forces Analysis, it is essential in nature for Airbnb to understand the different kind of competitive advantage that can be positive in nature for them to compete in the business. There is huge competition in the market wherein the analysis of the business environment is essential in nature to understand the main players in the market or the industry.

• Threat from the new entrantsis one of the forces wherein there is high barrier to entry due to huge cost and lack of the suitable kind of location. Proper adoption of the local culture under the scale worldwide is essential in nature that has to be ascertained by Airbnb as this will help them in adopting local and legal policy that can prevent settling place. The threat from new entrants is considered weak along with flexible in nature (Grant 2016)
• Threats from the substitutesis the other force wherein it is seen that the substitutes can be both domestic and international in nature and there are no real outside substitutes as well in Airbnb. Airbnb has to understand the different kind of threats in an effectual manner that will help them in reducing such threats as well (Lasserre 2017)
• Bargaining power of the suppliers is the other force wherein it is low in nature in comparison to the wide range and number of suppliers compared to the different industry players (Rothaermel 2015)
• Bargaining power of the buyers is the force wherein the strongly segmented buyers have low power and the tour operators are the only ones who are included in this segment. Both the political and economic situations will change the behaviour of the buyer as well
• Rivalry among the competitors is the strongly segmented market that keeps the rivalry aside with the effect of low price and Airbnb needs to introduce different kind of technological advancements that will help them in competing with other competitors in the market as well (Ginter 2018) 

The competitive advantage of Airbnb is that it is engaged in providing different kind of online services related to hospitality. It helps in making the individuals enable to rent or lease short-term lodging arrangements that includes different kind of apartment rentals or hotel rooms and beds. The company do not have any kind of owned lodging; however, they help in providing lodging to customers on commission basis. It has more than 3,000,000 listings of lodgings in 65,000 cities in more than 191 countries and the services provided by Airbnb is unique and it is the latest kind of disruptions in the industry in regards to manifestation in the industry of travel and lodging.

Airbnb is being able to work on large scale and this is helping them in finally gaining the competitive advantage in the market as well with the effects of the network. It is seen that the large number of hosts are listed on Airbnb and the greatest number of booking of customers are done through Airbnb as well(Johnson 2016). Airbnb is made unique and different in nature with the help of reviews of the individuals along with word of mouth and it is unique from the competitors as well. However, it is seen that Airbnb has to be work hard in achieving the competitive advantage on the entire edge of inventory that is niche in nature along with other complementary services as well.

Business Model and Competitive Advantage of Airbnb

Furthermore, it is seen that Airbnb is being able to grab the largest kind of market share by providing quality services and attractive offers. IT has been seen that Airbnb is the one of the best providers of the hospitality services with the help of the different reviews of the customers and it has been seen that the customers are satisfied with the services of the Airbnb Company as well(Goetsch and Davis 2014).

Airbnb is gaining the competitive advantage in the market over the cost structure and it acts as the host for the different customers who wants to book different kind of services through Airbnb are satisfied with different kind of room and other food and lodging services as well. It helped in bringing the C2C model in the entire industry and it is unique in nature as this provides platform for the individuals who are looking for the different rental places.

There are different sources of competitive advantage of Airbnb that are as follow:

• Technological innovationis one of the main source of competitive advantage of Airbnb wherein this helps them in providing the different kind of consumer products and services in a better manner in comparison to other companies (Gamble and Thompson 2014)
• Peopleare the driving forces of the competitive advantage of Airbnb wherein the people are better in creating, innovating and establishing the relationships and this helps in gaining the competitive advantage as well (Madsen and Walker 2015)
• Processes and practices is the other source of the competitive advantage of Airbnb wherein this has helped them in providing huge competition to the other competitors in the market. The different kind of processes adopted by Airbnb is better in nature in comparison to the others in the market and this will assist in gaining more advantage in the future as well.

Main trends/changes in business that affects competitive advantage of Airbnb

• The demographicsis one of the factors that can affect the competitive advantage of Airbnb as the household patterns are changing and the different kind of major changes in ethnicity is critical in nature to identify the changes as this will help them in coping up with the changes. The demographic changes have to be ascertained effectually as this will help in solving the issues and attract more customers in the future as well. Different kind of changes needs to be adopted by the company that will assist them in creating positive impact on the business.
• Secondly, the social and cultural trendsare the other factor that will affect the needs of the customers in a drastic manner. The preferences of the different customers are changing in an effectual manner wherein this is causing huge shift in the demands of the customers as well in the next ten years. Airbnb needs to create competitive advantage in the organization with the implementation of coping up with the different cultural trends as this will help them in solving the issues effectually (Ethiraj, Gambardella and Helfat 2016)
• The distribution channels and suppliersare the other major change in the microenvironment that is causing huge changes in the organization and proper accessible solutions has to be generated effectively with implementation of different strategies(Brewster 2017). Airbnb has to analyse the different distribution channels and suppliers effectually as they are the major kind of assets of the company who has to be properly provided with different facilities as they will help in providing more profitable business(Saeidi et al.2015).
• Investorsare the other factor who are responsible for affecting the business in both positive or negative manner. Without the help of proper funds, it is not possible to operate the business in an effectual manner. Investors play a major role in the organization to succeed in the long run. Airbnb needs to understand the viewpoint of the investors effectually as this will assist them in providing them business effectually.

These are the different kind of changes that can create positive along with negative impact on their business. The company needs to include the different kind of distribution channels and suppliers as this will help in creating huge number of customers effectually. The investors play a major role in the organization that will help in gaining competitive advantage as well.

Airbnb has to analyse both macro and micro environment effectually as this will help them in understanding the situation appropriately (Barney 2014). Airbnb needs to take proper measures relating to the investors along with suppliers of the company as this will assist them in gaining competitive advantage in the business. Airbnb needs to introduce new marketing strategies into their business as that will help them in creating their own space in the market and this will help them in providing power to compete with the competitors in the market as well in the next 10 years.

As a CEO, I would be taking care of different kind of activities that has to be ascertained and proper steps has to be taken by me in order to improve the situation for our hotel in comparison to Airbnb. In order to sustain the revenues and profit of the company, I will be implementing the steps that are as follows:

• Firstly, proper creation and promotion of the different special and reasonable packages hasto be adopted by the respective hotel. The packaging will help the hotel in adding value to the stay of the customers in the hotel. The different kind of additional services will help them in gaining competitive advantage in comparison to Airbnb (Sakas, Vlachos and Nasiopoulos 2014)
• New client segmentshave to be introduced by the respective hotel as this will assist in powering the strong growth. Proper identification and observation of the different activities will help them in creating a soothing environment for the customers at an affordable rate with same kind of offerings as Airbnb(Schilke 2014).
• Proper introduction of the new servicesis essential in nature that has to be adopted by the hotel(Bettis et al. 2016). The new services that is offered to the customers helps in making them enamored with the services offered by the hotel will help them in making more profitable business effectively. Proper introduction of aggressive new services will assist the hotel in competing with Airbnb wherein this will gain competitive advantage in gaining more clients from all kind of income groups effectively
• Proper increase of penetration in the existing marketwill help the hotel in competing with Airbnb. The different kind of foundational part of the hotel business will help in gaining the easiest and quickest sales in the market and this will help in inclusion of the extensions of the new product line in an effectual manner

These are the different steps that can be taken by me as the CEO of the hotel to help them in gaining competitive advantage in the entire market. With the implementation of these strategies, the company will be able to compete with Airbnb and this will assist them in increasing sales and revenues in the market as well.

Porter’s Five Forces Model Analysis of the Competitive Landscape

Conclusion

Therefore, it can be concluded that there are different kind of customer segments of the entire hospitality industry and Airbnb has spe3cific customer segments who creates huge impact on the business. The macro environment analysis of Airbnb has been done that provided proper view on the industry players and solved the issues in an effectual manner. The main trends and changes has been discussed that helped them in providing and creating value for Airbnb as well.

References

Airbnb.co.in. 2018. Vacation Rentals, Homes, Experiences & Places – Airbnb. Airbnb. Retrieved 20 April 2018, from https://www.airbnb.co.in/

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Saeidi, S.P., Sofian, S., Saeidi, P., Saeidi, S.P. and Saaeidi, S.A., 2015. How does corporate social responsibility contribute to firm financial performance? The mediating role of competitive advantage, reputation, and customer satisfaction. Journal of Business Research, 68(2), pp.341-350.

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