Question

This week you listened to an episode of “How I built This” featuring AirBnB. This company has an interesting story in that it created a unique business model inside of a competitive hospitality industry. For this assignment you will be analyzing the external environment of AirBnB. Please do whatever additional research is necessary outside of the podcast to satisfactorily answer the following questions. Remember to justify your answers with evidence.

Questions:

1. What area(s) of the general external business environment do you believe changed in order to provide an opportunity for a company like AirBnB to form. Is there a changing area of the general environment that you believe will be a threat to their business model in the future?

Answer 1

What made Airbnb form?

• People have spare rooms and space in their houses, which remain unproductive, or even an additional burden upon the owners who are supposed to pay bigger mortgage rentals for bigger homes.
• Everytime a major business event or sports tournament or trade fair is conducted in a particular city, that city's all hotels run out of rooms. Travellers find themselves struggling to find accomodation for short periods.
• Both of the problems co-exist in every big city.
• Airbnb matched the two and created history.
• Airbnb offered lodging to travellers at much affordable rates and it focussed upon quality of accomodations and their correct online rating as well at the same time.

Possible threats to their business model in the future:

Actually as Airbnb is growing, it has been lately adding more bells and whistles to its business model than focussing on the core, well perhaps. A thought going high on existing and potential customers' mind is that, the distinction between a traditional hotel and Airbnb lodging is fading away. There is one more potential threat which may be easily overlooked today, but only up to the dire consequences tomorrow. The world is seeing the travelling reducing. For example, business travelling is getting thinner by everyday. Companies desperately want to replace business travel with meetings over internet in different ways. If organizations like Airbnb do not effectively help businesses keep their travel and lodging costs in perfect control, the trouble becomes more evident.