Airbnb PESTLE ANALYSIS: A Complete Airbnb Guide

Guests, hosts, and the planet will all benefit from Airbnb’s home-sharing model. A PESTLE analysis of Airbnb takes into account the factors affecting its political, economic, social, technological, legal, and environmental aspects.

In spite of Airbnb’s rapid global expansion, there have been some challenges along the way. There are several external factors that could affect the company’s future growth, from housing regulations to legal compliance and environmental concerns. For Airbnb to remain competitive, it must remain flexible as consumer behavior changes and government regulations tighten.

Table of Contents

Introduction of Airbnb

Recent years have seen Airbnb revolutionize the lodging industry around the world. Their customer base is loyal and they have a global presence. Trooly Inc., Lapka Inc., etcetera are subsidiaries of the company, which is headquartered in San Francisco. Hosts and tenants are connected through Airbnb’s online platform all over the world. PESTEL analysis requires a thorough understanding of a firm’s basic characteristics.

Despite offering accommodations to tourists, the brand does not own a property. Tenants can stay in a shared home for a lower rate than hotels because they operate on a sharing business model. Through their philanthropic works and income opportunities, they help the economy grow.

Overview of Nintendo

Company Name:	Airbnb, Inc.
CEO:	Brain Chesky
Company Type:	Lodging and Hospitality
Year Founded:	August 2008
Employees:	6132 (in 2021)
Annual Revenue:	$4.805B (FY2019)
Founder:	Brian Chesky, Joe Gebbia, Nathan Blecharczyk
Area Served:	Worldwide
Headquarters:	San Francisco, California, US
Operating Income:	$0.429B (in 2021)

Airbnb PESTEL Analysis

In contrast to traditional lodging companies, Airbnb operates worldwide. There is an exciting growth rate for this company, which provides temporary accommodation for tourists. The company was affected by a variety of circumstances, both positive and negative. The company’s business was impacted by a number of factors.

Political Factors

The business model of Airbnb is very different from that of traditional rental companies. As a result, they face issues that negatively affect their business. In order to conduct business seamlessly, the company must abide by the political system and government laws of each country it serves:

Renting services are regulated differently in different countries. Airbnb will face harmful consequences if its owners fail to comply with the law, since Airbnb relies on people renting out their houses or living spaces.
In countries with high political conflicts, the hotel and tourism industry sometimes suffers. As a result of the political disruption currently taking place in Ukraine, Crimea, and Palestine, Airbnb’s business has declined in these regions.
Many countries have policies governing residential complex rentals that influence Airbnb’s business. Airbnb’s business concept does not generate much revenue for the government. There are some areas where putting the house on rent requires the owner’s physical presence. Taxes should be paid by both owners and hotels in some regions. In addition to following the local government’s short-term accommodations rules, the brand must also follow its own rules.

Economic Factors

Compared to hotels, Airbnb is a cheaper option. Families with middle incomes travel a great deal from country to country. Airbnb is more affordable than hotels, so they choose it. The reason Airbnb is so successful is because of this.

A partial lockdown has been imposed in some countries due to the pandemic. In order to reduce the spread of Covid, many states restrict tourism. The Airbnb business also experienced some lag in growth as the tourism industry was affected by the pandemic. In addition, the global economy is contracting. In this way, Airbnb’s operation is affected.
As a result of Airbnb, lower and middle-income groups have been able to find employment. Renting out their houses can help them earn extra income and pay off their loans. Over 6000 employees have been recruited by the company for various positions.
While meeting the people’s demands at a lower rate than the conventional system, the company has created an alternative system. The economy benefits from it. Rental properties can be rented by people with properties, while middle-class people can afford them at a low cost. In addition to creating a balance in the economy, they are also helping people to earn money.

Socio-cultural factors

With its worldwide presence, Airbnb pays attention to its positive impact on societies. Their services are available in 191 countries and more than 34000 cities around the world. With such a large area of operation, their socio-cultural environment has a significant impact on them.

In its role as a shared-economy business, Airbnb respects the culture and social values of every region. In the “Help” and “Hosting” Community rooms, hosts and tenants can share their experiences or enlighten each other.
Through them, visitors can get to know the local culture and interact with the locals. In addition to booking experience-related activities, users can also attend local events. A brand can also offer “social impact experiences.” It can distribute wealth to different communities and income levels.
According to the Airbnb income statement, the company’s primary goal is not to earn high profits. Multiple expansion projects have been focused on that can positively impact society.

Technological factors

In almost every aspect of Airbnb’s business, technology plays a crucial role. A website or an application is used to make initial bookings and rent. Using technology is the only option that is stable and viable for creating communication between people from different communities.

An internet connection is required by the firm. Bookings, cancellations, and payments on Airbnb will be disrupted without a reliable internet connection. To provide the best experience for the users, both hosts and tenants, they need a dominant, secure system.
Online reviews play a huge role in determining a business’ reputation. Users can share their experiences on multiple social media platforms and question-answer websites. The brand’s image can be damaged by negative reviews on such platforms.
In order to facilitate communication between buyers and sellers, the company uses automation tools. A tenant receives an automated reply from this system when the host is unavailable. In addition to supporting communication and other processes like booking and cancellation, Airbnb can use AI-based services and automated systems.

Environmental factors

As a lodging business, Airbnb has no direct impact on the environment. Nevertheless, the company focuses on increasing environmental awareness while maintaining a sustainable approach.

The energy used by Airbnb accommodations is much lower than that used by hotels. Water and electricity are consumed in hotels in large quantities. As a result, Airbnb is an environmentally friendly company.
The shared home concept of Airbnb is an eco-friendly practice that utilizes existing resources, according to a recent Airbnb report. While hotels use a considerable amount of chemicals for cleaning, they have also taken steps to reduce their usage.
Waste reduction and energy conservation are also priorities for the brand. To minimize the wastage of natural resources, they want their hosts to make sure that the limited resources are used efficiently.

Legal factors

In order to avoid court cases and financial compensation, it is imperative that businesses adhere to the local laws. There are multiple locations where Airbnb operates. Therefore, they should take care of the housing and rental market in that area.
There have been court proceedings against Airbnb for not complying with local tourism laws in cities such as New York, New Orleans, and Barcelona. If the company wants to avoid legal issues in the future, it must keep track of local laws regarding housing, accommodations, and tourism.
If the host wants to list a property on Airbnb, he or she must follow some rules on Airbnb’s website. Once the host accepts the terms and conditions, further steps are taken. As a result, Airbnb is not liable for any legal issues concerning renting.
It is important for the company to pay attention to the taxation of the countries it serves. There are differences in the structure and renting regulations between different places. For running its business, the company pays more than 15% in taxes.

FAQs

What are the PESTEL factors affecting Airbnb?

Airbnb conducts a PEST analysis to determine how external macro environmental factors affect the company. Politics, Economics, Social, and Technology are these factors. Airbnb can adapt to changing market conditions by understanding these factors.

How do you analyze the Airbnb market?

Analyzing Airbnb investment properties
Identify the types, locations, and prices of properties that you are interested in, and review your options.
Review and research other similar Airbnb properties to determine their profitability and conduct market research.
Expenses, liabilities, and associated costs should be listed.

What is Airbnb data analysis?

A thorough analysis of booking patterns on AirBnB is crucial for a number of reasons: Understanding Market Trends: Analysis of booking patterns allows one to identify peak seasons, popular locations, and emerging travel trends. In order to optimize listings and pricing strategies, hosts need this information.

What are the key factors that contributed to Airbnb’s market success?

Its success can be attributed to its user-friendly platform and community-based hospitality model. In addition to providing accommodation, it is also able to provide a local and personalized experience.

What is Airbnb’s biggest problem?

Keeping occupancy rates high during off-season is a major concern for Airbnb hosts.

Who is Airbnb’s biggest competitor?

Most people consider VRBO to be the biggest Airbnb competitor. With over 2 million listings in 190 countries, it is the world’s largest vacation rental site. Since Vrbo is part of the Expedia Group, you are able to access its 112 million unique visitors monthly by listing on Vrbo.

Conclusion

With a massive user base, Airbnb has proven the success of its sharing model as one of the top lodging services. PESTEL analysis shows how Airbnb is affected or related to various factors, including political, economic, social, technological, and environmental factors. During their growth, they have faced several challenges and have put in place strategies to resolve them (fortune.com). In order to maintain sustainability, their business model should have a positive impact on the economy, society, and environment.