Founded in 2008, Airbnb rates second among most valuable private start-ups in the United States today with more than USD 100 million in profits in 2017; the company continues to expand aggressively to meet customers’ demand. Based in San Francisco, United States, the company runs an online hospitality service that allows members to access accommodation facilities. The services are accessible through the mobile application or the company’s website. Despite the massive global presence, the company does not own any accommodation facilities or real estate properties since it allows users to interact directly while the firm only gets commissions from every booking made. The success of the company mainly centers on sociological, technological, and economic growth. The platform offers guests and host options. The guest searches for accommodation facilities through filters such as location accommodation type, and price whereas the host provides listings for guests to choose. Although the company has witnessed massive global expansion, some markets have not been receptive due to differing political policies, and while there has been minimal competition, the company has also failed to penetrate markets with cultural boundaries.
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The company opened its first international office in Germany in 2011. In effect, Airbnb considered international expansion primarily because of the massive global opportunity outside the United States. The world experienced massive international travels during the period of the company’s founding. Tourism growth was also on the rise. As a result, the company saw an opportunity for expansion. Also, the need to provide travelers with unique experiences in various destination led to international expansion (Solomon, 2016, par. 4). The main idea behind the company’s business is to offer a unique local experience. Therefore, travelers from the United States wanted similar local experience when they traveled abroad and to satisfy their customers’ want; they had to expand into international markets. Furthermore, minimal competition in the industry also led to the company’s international expansion (Solomon, 2016, par. 6). Additionally, the strategy is a key success factor in the industry because a countless number of people travel for various reasons either locally or internationally and seizing the opportunity by solving accommodation and housing problem for guest and host allows for company’s growth.
The company’s first international expansion was Germany and France followed by Australia. In effect, these countries have a similar culture and economic prowess with the United States. Therefore, expansion offered a convenient strategy to explore outside markets for Airbnb . Besides, international tourism growth offered the company an opportunity to offer travelers an alternative to conventional hotel stay. Countries such as Australia where there is a massive number of tourists, expansion offered limited risks as the idea of online home-sharing was embraced by the population.
Today, technology has become an indispensable part of humanity. For travelers especially, it is essential for finding travel guides and offers solutions whenever challenges occur during international trips. Conversely, owing to the dramatic growth in the use of technology and international traveling, the company should continue its international expansion because of the open opportunity available to offer customers convenience whenever they travel. According to Wei (2018, p. 8), the Chinese market has favored the company in its global expansion strategy. The large population consisting of young and middle age population provides a distinct chance for the company to grow its international customer base. Moreover, the company has partnered with local content creators such as photographers and videographers to help market the online home-sharing mobile application . The partnership is essential in the growth strategy as it helps register more members to the platform.
In addition, following Obama’s government easing of restrictions for American companies to do business in Cuba, Airbnb expanded to the country. However, due to licensing limitations the services are only available for United States citizens. In particular, the company has not seen expected growth in the Cuban market due to the limiting policies available for US-based businesses to operate in the country. Although this is external factors that the company cannot control it aims to seek approval from the government to allow non-US traveler to access the service. International expansion may be challenging when the political factors are unfavorable . Unfortunately, political factors may be uncontrollable for companies while expanding. Therefore, in less successful markets such as Cuba, the company can consider investing in local start-up companies which are not limited by US policies — thereby giving the company an opportunity to benefit when the political-economic climate is not favorable indirectly.
Airbnb’s international expansion may be attributed to society’s structural changes that the world has experienced over the last few decades. In many markets today, people have moved from an industrial economy to an experience economy. In particular, people search for more meaningful living in daily experiences . Therefore, the concept of home-sharing by Airbnb resonates well with massive populations across the world. As a result, global expansion became essential for the firm. Additionally, technological advancement also gave the company an edge in its international expansion strategy capitalizing on the growth of internet and smartphone usage across the universe.
In sum, Airbnb has experienced strong international reception due to the relevance it offers its customers. Although the international expansion was seamless, important partnerships were essential to create awareness and to bridge the cultural gap between diverse hosts and guests in different destinations internationally. The international expansion was sufficient as the company offered their clients the freedom to interact directly within themselves. As a result, Airbnb has become an international business through the leverage of technological and social changes that the world has witnessed over the last few decades.
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