Porter’s Five Forces Analysis of Airbnb 

Airbnb is a homestay experience service providing an online rental lodging American multinational company. Joe Gebbia, Brian Chesky, and Nathan Blecharczyk launched the online rental lodging and homestay platform in 2008. Today, we’ll discuss Porter’s five forces analysis of Airbnb; bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.

Porter’s five forces analysis of Airbnb would analyze the bargaining power of suppliers and buyers; the threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management. Here’s Airbnb Porter’s five forces analysis of online rental lodging business as follows;

Porter’s Five Forces Analysis of Airbnb

Let’s discuss Porter’s five forces analysis of Airbnb as a competitive force in strategic management and they’re as follows;

Bargaining Power of Suppliers in Airbnb

The bargaining of suppliers is lower in Airbnb as a competitive force in strategic management. Usually, the company deals with and depends on two types of suppliers;

• 3rd party booking platforms
• Homeowners

Some of the main factors impacting the bargaining power of suppliers in Airbnb Porter’s 5 forces analysis of online rental lodging business are as follows;

I-Renting out Extra Space

Often the suppliers on Airbnb are ordinary homeowners and they rent out an extra room in their house on an online rental lodging platform. It allows them to earn some extra money as a side gig by renting out extra space in their house. However, they don’t have any other option except Airbnb, and it decreases their bargaining power.

II-Commission of Booking Platform

3rd party booking platforms could be businesses or traveling agencies. They have a bit higher bargaining power, and they charge a particular amount of commission for every booking on the platform. Otherwise, they would make the booking reservation of their guest at any other hotel that offers them better commission.

III-Variety of Properties

Airbnb offers a wide variety of properties and rental lodging places of various categories; premium, affordable, and economy. If customers want a premium quality experience, they could rent a top-quality stay on the platform. However, a wide variety of online rental lodging options helps the company to decrease the bargaining power of suppliers.

Bargaining Power of Buyers in Airbnb

The bargaining of Buyers is moderately Higher in the online rental lodging business as competitive forces in strategic management. Some of the main factors impacting the bargaining power of suppliers in Airbnb 5 forces analysis of online rental lodging business are as follows;

I-Multiple Alternatives

Customers have a wide variety of online rental lodging options available to them both online and offline. They could easily book a room in the hotel or any other online rental lodging platform. It amplifies the bargaining power of ordinary customers.

II-Lower Switching Cost

Customers would love to experience something new and different every time they go out and rent a platform. Their objective is to rent lodging in the new area, new hotel, or platform. They could easily switch from one hotel to another without incurring a lot of costs and resources. In fact, many platforms welcome new customers and visitors and offer them a variety of options.

Threat of New Entrants in Airbnb

The threat of new entrants is moderately lower in the online rental lodging business and Airbnb is a competitive force in strategic management. Some of the main factors impacting the threat of new entrants in Airbnb 5 forces analysis of online rental lodging business are as follows;

I-Large Customer Database

Airbnb has the unique advantage of pioneering the online rental lodging service providing platform. It has allowed the company to establish a worldwide network of properties and a loyal database of customers. Many new online rental lodging platforms won’t have this option and it is highly difficult for them to maintain their position in the presence of tough competition.

In order to maintain the top position of the online rental lodging platform, it is significant for Airbnb to include innovative features and new properties on the platform.

Threat of Substitutes to Airbnb

The threat of substitute products and brands is moderate in Airbnb as a competitive force in strategic management. Some of the main factors impacting the threat of new substitutes in Airbnb 5 forces analysis of online rental lodging business are as follows;

I-Hotels

Even in the digital age of applications and web platforms, many people still prefer to make a reservation in traditional hotels. It is because they have professional expertise, years of experience, authenticity, loyalty programs, and reputation.

II-Sharing Economy

There are various other sharing economy platforms available to the customers. They’re like booking.com or HomeAway and they offer a similar service of online lodging to the customers. However, they’re different in terms of the following;

• Partnerships with other companies
• Property listing types
• Target audience

Competitive Rivalry in Airbnb

The competitive rivalry among Airbnb is very high in Airbnb as a competitive force in strategic management. Some of the main factors impacting competitive rivalry in the Airbnb 5 forces analysis of the online rental lodging business are as follows;

I-Established Reputation of Hotels

Traditional and chain hotel brands are the top competitors of Airbnb. They have earned a great market reputation; and follow the professional protocols, authenticity, and experience of serving guests. That’s why chain-branded hotels are the top priority of guests.

II-Tough Competition

The online and offline rental lodging business has become highly competitive in recent years. There are various hotels, chain hotel brands, and online rental lodging options available for customers. However, they all offer almost similar types of service with unique customer experience.

• 9flats
• Wimdu
• Flipkey
• Vrbo

Conclusion: Airbnb Porter’s Five Forces Analysis |5 Forces Analysis of Airbnb |Competitive Forces in Strategic Management 

After an in-depth study of Porter’s five forces analysis of Airbnb; we have realized that Airbnb is the world’s leading online rental lodging service providing platform. If you are learning about the Airbnb 5 forces analysis of the online rental lodging business; then you should keep in mind the abovementioned bargaining power of suppliers and buyers; threat of new entrants and substitutes; and intense rivalry as competitive forces in strategic management.