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1  Copyright © 2024 Pearson Education, Inc.Case 1 – Airbnb, Inc., 2022 Teachers’ Note by Fred David, Kendrick Chapman, Alex Cox, and Lindsey Ruff Case Abstract

(NASDAQ: ABNB); www.airbnb.com

Headquartered in San Francisco, California, Airbnb, Inc.

is a U.S. company that operates an online lodging business via its website and mobile app, primarily homestays and vacation rentals. Airbnb is a shortened version of its company’s original name, AirBedandBreakfast.com.Airbnb owns none of its “million” listed properties, instead profiting by receiving a commission from each property rented through its website. Airbnb connects owners of properties with people desiring to rent a property on vacation or for relatively short periods of time being a few weeks or months or less.Airbnb is an online marketplace that promotes and facilitates residents and commercial operators to lease residential units as tourist accommodations. While home sharing and subletting is a practice as old as housing itself, Airbnb is different from traditional house sharing and online bulletin boards. Airbnb offers a variety of financial services and insurance-like products to hosts and guests, maintains centralized control of all listings, and charges a 9-15% service fee on all bookings. The success of this business model has led to its valuation at $25.5 billion USD, soundly beating valuations for Hilton, Marriott, and Hyatt, while operating with little to no regulation or oversight. There are millions of hosts who benefit from Airbnb.Although performing exceptionally well financially, Airbnb has been criticized for possibly driving up home and vacation rentals and creating nuisances for those living near leased properties. Airbnb operates under different regulations in different jurisdictions and cities globally. Airbnb is the stalworth company in the new “sharing economy” whereby people share what they own with others for a fee, including other such companies as Uber, DoorDash, Hubble, Lyft, Lime, JustPark, Zipcar, Fon, Spotahome, Stashbee, Omni, Fiverr, Silvernest, and VRBO (vacation rental by owner) that is owned by HomeAway.com, Inc. (Airbnb’s major competitor).Airbnb is credited with starting the “sharing economy” business, that is, the peer-to-peer business model in which people can access the assets and services of other people through short- term rentals. Thanks to the relatively new sharing economy, anyone can rent a car parking space, Wi-Fi, storage space, cars, cottages, flats, rooms, offices, bicycles, and even a lawnmower or picnic basket – all on an on-demand basis. Airbnb turns property owners into hospitality entrepreneurs.Vision Statement Analysis Effective vision statements exhibit five characteristics that can be used as guidelines for writing or evaluating vision statements. Any vision statement that scores a 5 out of 5 on these characteristics is exemplary. In Chapter 2, this vision statement assessment technique is referred to as “The 5 out of 5 Test.” St rategic Management A Competitive Advantage Approach, Concepts and Cases 1 8e Fred David, Forest David, Meredith David (Solutions Manual All Chapters, 1 00% Original Verified, A+ Grade) 1 / 4

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1.Clear: reveals type of industry and what firm strives to become

2.Futuristic: reveals what the firm strives to become or accomplish within 5 years

3. Concise: one sentence in length

4.Unique: reveals the firm’s competitive advantage

5.Inspiring: motivates the readers to support the firm

Current Vision Statement “Belong Anywhere” Proposed Vision Statement Your first platform choice for traveling safely and cleanly, while simultaneously being your home away from home.Mission Statement Analysis The 10 desired characteristics of an effective mission statement are as follows: 1.Broad in scope; does not include monetary amounts, numbers, percentages, ratios, or objectives 2.Concise; fewer than one hundred words in length 3.Inspiring 4.Identifies the utility of a firm’s products 5.Reveals that the firm is socially responsible 6.Reveals that the firm is environmentally responsible 7.Includes nine components: customers, products or services, markets, technology, concern for survival/growth/profits, philosophy, distinctive competence, concern for public image, concern for employees 8.Reconciliatory; resolves divergent views among stakeholders 9.Enduring but never cast in stone

• Attracts customers; is written from a customer perspective

The 9 desired components of an effective mission statement are as follows:

1.Customers—Who are the firm’s present and potential customers?

2.Products or services—What are the firm’s major products or services?

3.Markets—Geographically, where does the firm compete?

4.Technology—Is the firm technologically current?

5.Concern for survival, growth, and profitability—Is the firm committed to growth and financial soundness?

6.Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the firm?

7.Distinctive competence—What is the firm’s major competitive advantage?

8.Concern for public image—Is the firm responsive to social, community, and environmental concerns?

• Concern for employees—Are employees a valuable asset of the firm?

Current Mission Statement 2 / 4

  3  Copyright © 2024 Pearson Education, Inc.To live in a world where one day you can feel like you’re home anywhere and not in a home, but truly home, where you belong.

Proposed Mission Statement Airbnb’s mission is providing quality, community-driven hospitality (7) through our online platform (4). We believe that complementary customer satisfaction through the hospitality industry is key to our success (5). We provide the finest facilities and services in the market in an ethical manner (6). Guests will feel “at home” when they stay with Airbnb (1). As a leading platform in the lodging industry (3), we enable hosts to rent their homes to customers as an alternative to hotels (2). Our philosophy of social and environmental responsibility (8) guides our operations by prioritizing the quality of our hosts’ spaces (9) for our guests (1). (94 Words)

External Factor Evaluation (EFE) Matrix Performing an external assessment for a company and assimilating that information in the form of an EFE Matrix is a cornerstone of effective strategic planning – because companies need to continuously strive to capitalize on key opportunities and mitigate or avoid key threats. Below is the EFE Matrix for Airbnb and the hospitality industry. The key opportunities are listed first, followed by the major threats for Airbnb.

Opportunities Weight Rating Weighted Score

• Travel globally has increased 18% in 2021 vs the prior year.

0.09 4 0.36

• Sales growth in the hospitality industry is increasing by 3.5%

annually since 2021. 0.08 4 0.32

• The cost of airline travel has declined since 2020 by 40%. 0.08 3 0.24
• Luxury property vacation rentals have increased in popularity by

30% annually since 2021. 0.08 3 0.24

• Studies have shown that more than 40% of people use online

platforms for vacation bookings. 0.07 2 0.14

• Global expansion for the hospitality industry is increasing by

25%.

0.04 2 0.08

• The hospitality industry contributes to more than 40% of travel.

0.03 1 0.03

• Mobile apps have allowed the hospitality industry to better

innovate their services by 50% versus the traditional ways of strictly using desktop computers.

0.02 2 0.04

• The travel and tourism industry's total GDP accounted for 5.5

percent of the global GDP in 2021.

0.02 3 0.06

10 More than 20% of countries and cities globally are loosening Covid-19 restrictions, which allows global travel to increase versus the previous year as Airbnb's brand recognition grows stronger.

0.01 3 0.03

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Threats Weight Rating Weighted Score

• Regulations are permitting or limiting Airbnb's hosts' abilities to

provide their listings, which impacts 45% of growth and penetration in certain geographic areas.

0.09 4 0.36

• Booking.com offers more than six types of services such as

flights, flights & hotels, car rentals, attractions, and airport taxis versus Airbnb offering two types of services such as experiences and host rentals.

0.08 4 0.32

• Vacation Rental by Owner's pricing is 5% less than Airbnb's. 0.07 3 0.21
• The hospitality industry was hit by new Covid-19 variants in

2021, which saw a 20% decline in revenues in 2021.

0.06 3 0.18

• Booking.com's company is growing by 15% a year. 0.05 2 0.10
• Vacation Rental by Owner's company is growing by 10% a year. 0.04 4 0.16
• Hospitality industry’s revenue averaged $194 annually last year;

it is rising 10% annually.

0.03 3 0.09

• Booking.com is investing $10 million in marketing and

expanded their services by more than 20% in 2022.

0.02 2 0.04

• Incumbent booking websites are including apartments from

regular owners to appeal to Airbnb guests and they can take lower service fees from guests to undercut Airbnb's profits by at least 15%.

0.02 4 0.08

10 Covid-19 's new variants may affect 30% of the business operations in 2022.

0.02 2 0.04

Total EFE Score 1.00 3.12

Competitive Profile Matrix (CPM) Any excellent strategic plan includes a detailed analysis of major competitors in the industry. In this vein, careful development of a CPM enables in a nutshell the class or audience to see the major strengths and weaknesses of the case company compared to major rival firms.

Below is the CPM for Airbnb, comparing the company against two of its competitors in Booking Holdings (Booking.com) and Tripadvisor.  

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