PESTLE Analysis of Airbnb
When it comes to short-term homestays and experiences, Airbnb will definitely come first. It is a USA company that was founded in 2008. It is headquartered in San Francisco, California, United States. The company rapidly expanded worldwide, so it faced various problems in operations. It is also called a comfier and cheaper hotel alternative. Airbnb generates profits for both hosts and itself by allowing individuals to rent their rooms to visitors for payment. Moreover, Airbnb is very suitable for the environment and guests as well. Today, we are going to perform a PESTLE Analysis of Airbnb.
PESTLE refers to Political, Economic, Social, Technological, Legal, and Environmental Factors. It is a powerful tool for critically analyzing the business of Airbnb. So, let’s get started.
Political Factors: Housing Laws That Are Not Subject to Regulation
No doubt, the business of Airbnb is quite impressive. People rent out their rooms, apartments, or even homes to visitors or guests. However, Airbnb has been in legal matters since its launch. Several locations and places need to follow state housing regulations and laws. Some states mandate that property owners must reside on the premises to legally rent out rooms, apartments, or homes for a short period. However, these establishments must pay tourist and hotel taxes when leasing their houses during the holiday season.
They have faced lawsuits and fines in different cities such as Barcelona, New Orleans, and New York. The reason behind it is that they didn’t follow the local laws and regulations of the tourism department. It is imperative for Airbnb to make sure that they are following the rules and guidelines of each state. Otherwise, they can face serious consequences in the form of court proceedings and fines.
Economic Factors: Providing Benefits to Both Hosts and Cities
Airbnb is a market leader in the shared economy. In such a short time, it has grown immensely. Both individuals and corporations share resources and it is a healthy trend. Uber is another example of a shared economy. Right now, Airbnb is one of the biggest competitors of motels and hotels because of its affordability and comfier features. It provides a lot of affordable options that every guest or visitor can afford.
Currently, they are catering to more than 9 million customers globally. Plus, this concept has offered jobs to people as they can earn money by renting out their apartments, houses, or rooms. This kind of service is very popular in remote locations where hotels and motels have no visibility. It has also offered benefits to states and contributed a big role in generating revenues. New York generated 600 million dollars and offered 4,000 jobs to people just because of it.
Social Factors: Amazing “Experiences” | PESTLE Analysis of Airbnb
There is absolutely no doubt that Airbnb is a complete social setup. Individuals offer their houses to visitors for the sake of money. Guests book these apartments or homes online. This allows Airbnb to increase its awareness on social media. In addition, individuals can also share their thoughts on this setup. Visitors can also share their experiences. Both guests and hosts can talk about their requirements and experiences on Reddit. It is the major factor in the growth of Airbnb.
The company’s “Experiences” program allows customers to book 3-day experiences such as attending events or burlesque classes. Moreover, they can also take part in “social impact experiences” where hosts receive profits earned.
Technological Factors: Essential Technology Requirements
The dependency of Airbnb on technology is huge. As it is an online booking platform, you can book a room or apartment on the app. You can also book a room through its site. If a guest gives good remarks about the room or the apartment, it will be easier for the host to get more bookings in the future. Moreover, Airbnb also uses automation and gives replies to guests if the host doesn’t reply to the guests regarding booking.
So, the role of technology is colossal in booking rooms. Without it, no one will be able to book a room, apartment, or home. So, the functioning of Airbnb is more challenging than it looks.
Legal Factors: Comprehensive T&Cs | PESTLE Analysis of Airbnb
As we mentioned above, Airbnb can face lawsuits or court proceedings if they fail to follow the state’s housing regulations. They have clearly mentioned housing regulations for hosts on their site. It is obligatory for hosts to follow the terms and conditions fully. This is the only way to prevent the risk of bad publicity and legal issues.
Environmental Factors: More Healthful Than Hotels
Compared to hotels, Airbnb saves more energy and is really useful for the environment. The risk of high water consumption, greenhouse gas, and waste is very low. In other words, Airbnb is a good option for the environment and nature.
The Bottom Line | PESTLE Analysis of Airbnb
If we talk about the sharing economy, Airbnb is unarguably a market leader. They have offered jobs to people in various ways. All they need to do is strictly follow the state’s housing regulations to avoid the risk of lawsuits. They should improve the working of their app and site so that people can easily book rooms or apartments.
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