Background of Airbnb

This report shall elaborate on the macro and micro environmental analysis of Airbnb, an Australian based company in Russian marketplace. The main objective of this paper is to explore the present opportunities and threats for Airbnb in the Russian market. Lastly, it shall also provide some recommendations for the part of Airbnb in order to operate its business successfully in this country.

Airbnb is a private company that is headquartered in California. It was founded in the year 2008 by Joe Gebbia, Brian Chesky and Nathan Blecharczyk. With more than thirty lakh lodging listings in over 60,000 different cities and 190 nations, Airbnb is one of the virtual hospitality service which empowers people to rent accommodation on a short term basis (Oskam and Boswijk 2016).

Its accommodation service comprise of the apartment and vacation rentals, hostel beds, homestays, hotel rooms etc. It is widely known to be one of the most affordable, cheapest as well as comfortable hotel alternatves. Most of the individuals rent their houses, rooms or other accommodation for the guests or the needy in an exchange of money so as to bring an income for themselves as well as the hosts of the company (Lee 2016).

One of the strengths of Airbnb is that it has a well-established brand image in the places it is operating. It has a very unique business model that is helping it in competing with the low prices. Furthermore, it has a very well-trained and competent staffs in its business and both the travellers and the guests could focus on the review and the rating systems that provide safety and trust to the Airbnb online community. On the other hand it is known to be violating the housing regulation in most of the countries and this is said to be one of the most significant weaknesses of Airbnb. With the same, its business is dependent on the hosts, which means if the host does not follow the standard guidelines, it could damage the reputation of the company.

PESTLE Analysis of Russian market

Political Factors-

• Tax regulations
• Political conflicts
• Unregulated housing laws
• Wars and conflicts in the country

The legal system of Russia is dependent on the statutory laws rather than that on the case law (Kaiser 2014). The major legal actions of Russia are the ones of federal constitutional laws, governmental regulations, presidential decrees, the constitution and federal laws.

• Slowdown of the Russian economy
• The Local hotel chains that are present in Russia recognizes the prevailing threats
• Competitors

Airbnb is considered to be a leader in the Shared economy. It is a growing trend in the market where it shares the available resources among the individuals as well as the corporations. It is also one of the main competitors of the present motels and hotels (Zekanovic-Korona and Grzunov 2014). Airbnb offers several alternatives for the purpose of renting and these are cheaper from the other rental suppliers. This company has also developed extraordinarily in a very less period of time. As per the data of 2017, Airbnb is serving more than nine million individuals all around the globe and it also possess the capability to serve the Russian market effectively (Gurran and Phibbs 2017).

Strengths and Weaknesses of Airbnb

Social factors-

• Changing trends in the lifestyles of  Russian people
• Changes in their frequency of travelling
• Media
• Ethical issues
• Population growth

Russia has long been transformed into a democratic character from an autocratic character. Just like other different parts of the globe, there is also a notable change in the trend in the lifestyles of the people of Russia. Airbnb is regarded as a social business (Richter et al. 2015). It is considered to be the platform in which it blends the societies along with the cultures taking from different regions of the world. In this country, social media is also playing its notable part in spreading up the voice of the tenants along with their host. At present, Airbnb is carrying out its business in 191 different nations.  

• Easy access to Information Technology systems
• Growth in the use of internet and social media among the Russian people
• Efficient data collection
• Substantial market research

Russia is very rich in scientific tradition and AirBnb depends greatly on the technology. The visitors are allowed to go through and book their rooms by their own either through the mobile application or by means of the company website. After experiencing the services, the tenants also review their about their likes and dislikes about the services.  With the same, this company also make use of the technology of automation (Irani 2016). In absence of technology, it could not function in the way that it is doing in present days.

Legal Factors-

• Corruption
• Governmental laws

As per the transparency global organisation, in the year 2014, the rate of corruption in Russia was stayed at the rate of 2.1 and this is why Rusia is considered to be one of the country that have very high rate of corruption. Furthermore, for attracting more and more investment, the government of Russia has passed several laws that make no difference in the foreign investors as well as the national investors (Gans-Morse et al. 2017). There is also a need for changes in order to reduce the rate of corruption in Russia in the part of legal system. It should be more open to its investors.

• Extensive system of automatic telephone exchanges
• Fiber to the x infrastructure

Russia is serving by an extensive system of automatic telephones exchanges that are connected by the modern networks of the coaxial cables, domestic satellite system, fiber-optic cable, and cellular telephone service ad microware radio relay (Fouchard 2016). The cellular telephone service of Russia is widely available and is expanding rapidly in the recent years. It also includes roaming service to the foreign nations.

Hence, there is a notable slowdown in the economy of Russia. This in turn will help the company in causing more number of travellers to abandon the expensive and costly hotel chains in order to save their money. Furthermore, the trends in the lifestyle of the Russian people can increase their frequency of travelling over the world. This would be greatly advantageous to the companies such as AirBnb that relies on such opportunities in order to maximize their income (Ward and Linehan 2013). With the same, it has been seen from the above analysis that there is an ever increasing amount of users in Russia who could access internet. They use internet and social media every now and then. With the advancement in technology, the people in Russia can now access to the things anywhere and from everywhere, sitting at their homes alone. They now seek to access internet for every minor requirement of theirs and so are in case of hotels and lodging. Russians access internet in order to shop for hotels and rent at the very first. This has provided a great opportunity for AirBnb to expand its business in the Russian market. Lastly, the access to the Information Technology (IT) system has allowed a more effective and efficient data collection methods (Sobel and Clark 2017). With the same, it has also enabled substantial market research in order to address every threats present for it and weaknesses of its own so as to develop more.

PESTLE Analysis of Russian market

One of the major competitor for Airbnb in Russian market is My Linker. It offers thousands of rooms for rent to people from diverse background and diverse need. It also allows people to check the number of gay people who live in the area where they book accommodation. The other competitors of Airbnb include VRBO, HomwAway and Flipkey. All these companies are the best alternatives present for Airbnb in the Russian market. One of the most significant challenge for the company is that like any other successful companies, the business model could also be copied. With the same, the increase in the local housing demand has left low amount of hosts’ offering their housing to the travellers in Russia could act as an obstacle. It is also to be mentioned that the change in lifestyle of people living in Russia could also have an opposite impact. With the same under the social factors, the ethical issues like irresponsible travellers or hosts could bring bad publicity and this would jeopardize the business image. Furthermore, one of the notable challenges that are also to be considered under this section is the media. Media can have an influence on the company both positively and negatively. To consider the negative one, highlighting about the bad or low quality aspects of the business of the company would affect it in serious ways.

The target segment of Airbnb is divided into two different segments- the people who are looking for the places (travellers) and the ones who are willing to rent their places (hosts).These two are the center of the company’s profitability. However, it is also to note that Airbnb not working much on the branding and marketing of its products and services. This is in turn is the main reason behind the fact that the customer satisfactory level of Airbnb is not that high as it should be. Hence, it should carry on working more on its branding as well as should remain competitive by providing high quality services to its customers and by having a strong workforce. This in turn would assist it in increasing the customer satisfactory level. 

Conclusion

To conclude it can be said that Airbnb is moving at a fast pace and its business has begun bearing the results in the present years. It is running in profits and is therefore in a plan of expanding its business in Russia. However, in the Russian market, Airbnb would face several legal as well as political issues in order to operate. As there are several opportunities present for the company to expand in Russia, there are several threats too that have the potential to destroy the business. But still, the company has generated few exceptional social and economic values that are indeed working in favour of it and it has gained huge popularity in many parts of the world and so it can in the Russia as well.

• It should consult an appraiser regarding the properties. This would help in determining of the property is worth the asking price. It should also need to get an inspection to ensure that there is no deal-breakers.
• As a new host in Russia, Airbnb should ensure to set lower price for its services in order to give the users an incentive for picking up their listings over the well-known. It should give mesmerizing locations to the users so as to bring in competitive advantage. If in case, it fails to select best locations, then it should shower the place with some really special amenities as well as should provide them great services.
• It should develop its profile in a way that it tells the users why they should select its property over the others. Attention seeking and professional pictures should be posted as this is something that every customers care about the most. It should also try to be very transparent in its business operation as well as in the provided description of its property and personal bio.

References:

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Gans-Morse, J., Kalgin, A.S., Klimenko, A.V. and Yakovlev, A., 2017. Motivations for Public Service in Corrupt States: Evidence from Post-Soviet Russia.

Gurran, N. and Phibbs, P., 2017. When tourists move in: how should urban planners respond to Airbnb?. Journal of the American planning association, 83(1), pp.80-92.

Irani, L., 2016. The hidden faces of automation. XRDS: Crossroads, The ACM Magazine for Students, 23(2), pp.34-37.

Kaiser, D.H., 2014. The Growth of the Law in Medieval Russia(Vol. 637). Princeton University Press.

Oskam, J. and Boswijk, A., 2016. Airbnb: the future of networked hospitality businesses. Journal of Tourism Futures, 2(1), pp.22-42.
Lee, D., 2016. How Airbnb short-term rentals exacerbate Los Angeles’s affordable housing crisis: Analysis and policy recommendations. Harv. L. & Pol’y Rev., 10, p.229.

Richter, C., Kraus, S. and Syrjä, P., 2015. The shareconomy as a precursor for digital entrepreneurship business models. International Journal of Entrepreneurship and Small Business, 25(1), pp.18-35.

Sobel, R.S. and Clark, J.R., 2017. The use of knowledge in technology entrepreneurship: A theoretical foundation. The Review of Austrian Economics, pp.1-13.

Ward, A. and Linehan, M., 2013. An Investigation into the Impact of Airbnb on Hotel Accommodation in the Cork City Area. Tourism and Hospitality Research in Ireland, p.95.

Zekanovic-Korona, L. and Grzunov, J., 2014, May. Evaluation of shared digital economy adoption: Case of Airbnb. In Information and Communication Technology, Electronics and Microelectronics (MIPRO), 2014 37th International Convention on (pp. 1574-1579). IEEE.