AIRBNB, INC.
Q1. According to Brian Chesky, what is Airbnb's mission? What are
the strategic implications of this mission?
As per Brian Chesky, the AirBnB’s mission is to build an end-to-end travel app for global travel
community.
This implies that with the conventional lodging facilities provided by AirBnB and newly introduced
AirBnB Experience which encompass the local activities of popular tourist destinations; AirBnB will
be expanding its horizon towards facilitating Air travel, visa process and local transportation.
All the probable expansions for AirBnB, being in line with the mission statement, will be a very
capital-intensive activity and to bring a huge capital on board Chesky must jump the ship from
privately owned company to public holding company.
Q2. List Airbnb's internal and external stakeholders. As a leader what
should be Chesky's strategy?
Internal Stakeholders:
For AirBnB the internal stakeholders are the Founders (Brain Chesky, Joe Gebbie and Nathan
Blecharxzyk), investors and the employees. Chesky’s strategy should be to align the
founders/investors/employees with the company’s vision. Employees should be offered stocks in the
company to increase their stake and improve productivity.
External Stakeholders:
The external stakeholders for AirBnB are the hosts, guests and regulators. Chesky should further
scrutinize the hosts and guests to ensure security at both ends. The idea of bringing in the loyal hosts
as shareholder will increase the service quality and host’s exclusivity/commitment to the company.
The greater challenge in terms of stakeholders are the regulators, where Chesky has to work around
the bureaucracy and judiciary to get favourable regulations that doesn’t hamper the prime
operation of lodging.
Q3. Who is Airbnb's competition? What should Chesky do to counter
this competition?
Following are the main competition that AirBnB faces;
Traditional Hotels:
Although AirBnB has largely impacted the business of hoteling giants, but the counter
measures taken by these hotel companies can result in greater competition to AirBnB. Hotel
companies have increased their spending per guest and are now focusing on experience.
Instead of providing uniform experience, hotels are transforming to provide a taste of local
cuisine, artists and cultural activities. Furthermore, the largest hotel company Marriott has
invested in PlacePass, a tour and activity booking startup, thereby diversifying its portfolio
and entering into the market where AirBnB is expanding.
Chesky should diligently work on the “Boutique” listing, as they are intended to provide
hotel like experience at much lower cost. Further, the AirBnB horizon needs to expanded to
include more and more local activities so an end-to-end solution can be provided to
customers.
Online Travel Agents:
With the advent of online booking website, AirBnB is facing a direct competition as websites
are now offering non-traditional accommodations like apartments and vacation rentals too.
Traditional hotels are partnering with online traveling agents to provide amazing deals to
consumer, hence increasing the company’s revenue.
Chesky has stepped in the right direction to counter online travel agents by introducing
“AirBnB plus”, these will be some of the featured properties that will be providing premium
quality service. Further AirBnB has embraced the segment of traditional hotels on its
platform and is offering booking with lower commission charges in comparison to online
travel agents. This provides an enticing opportunity to the hoteling industry.
Q4. Identify key issues that Brian Chesky faces in the case. What
recommendations would you give to Chesky to address each of them?
Be specific.
The key issues that AirBnB faces are listed below along with their recommended action plan;
Regulatory Authorities:
Internationally and in USA, local governments have been concerned over housing shortages
and due to negative externalities (such as noise pollution caused by partying by short-term
tenants). Hence severe laws has been introduced globally to counter short-term rentals and
heavy fines had been imposed on personnel defying the said law.
Chesky had been successful in working out a deal to legalize short-term rentals in New
Orleans, while in San Francisco registered properties are allowed to offer short-term rentals.
Similar lobbying with local governments needs to be done in other states to regulate the
business of short-term rentals and the collection of hotel taxes on each transaction can be a
good selling point for AirBnB to lure in the governments to support required legislation.
Internationally, where AirBnB is working to expand business; a central legislation committee
should be set with legal experts to help governments set up the required legal structure for
AirBnB to expand its business.
Safety:
Another greater challenge the AirBnB had faced during its tenure of operations is the safety
of both guest and hosts. There had been an incident of gas asphyxiation which resulted in
casualty of a family, while multiple cases of sexual assault had been reported.
Chesky needs to work on 02 fronts here, first by introducing checks to ensure optimum
quality of residences had been listed with proper safety gears. This can be aided by
introducing survey forms among the guests and by getting feedback on the safety
standards. The guests can be offered loyalty points if they provide honest feedback.
Secondly a basic background check of guest and host had to be ensured, to guarantee the
safety of both owner and tenant.
Diversity:
There had been some concerns raised by guest against hosts who had refused to issue a
booking on the basis of race or other characteristics.
Chesky should deal with this problem very seriously because if this turns out to be a greater
concern among the host then it could hit the brand name immensely. To deal with issue
Chesky should take help from data analytics experts where any repeated incident of
booking refusal based on colour, class, creed, religion or nationality can easily be highlighted
and show cause notices can be served to such owners.
Q5. Discuss various leadership styles. What leadership styles did
Chesky adopted in the case?
The leadership styles can be broadly classified as following;
Autocratic leadership style
It is a one-dimensional leadership style where full authority lies with the leader at the top. All the
decision making is centralized at the top and minimal consultation from subordinates is taken.
Democratic leadership style
Democratic leadership style is more participative in nature unlike autocratic leadership style. The
decision making is made by taking inputs from the team and active participation in sought from the
team in critical times. Usually a highly skilled and experience team thrives under such kind of
leadership. The communication channel is open both ways, i.e. upwards and downwards.
Coaching leadership style
It is one of the modern leadership styles and is being adopted by several organizations. In this
leadership style the role of leadership is more like a coach or a teacher and team members work in
the supervision of the leader, this results in boosting employees motivation, increased productivity
and immense grooming.
Strategic leadership style
Strategic leadership is the ability to influence others to voluntarily make decisions that enhance the
prospects for the organization’s long-term success. In other words, a leader with greater potential
and capability express a strategic vision for the company and devise execution plan to fulfil the
desired vision.
Transformational leadership style
Transformational leadership style is one of the most desirable leadership style, where focus is on
high goal setting and strict deadlines. The overall job is performed in a union and through certain
level of strategic vision and intellectual stimulation exceptional results can be achieved.
Laissez-faire leadership style
The literal meaning of the French word laissez-faire is ‘let them do’ which can be translated as ‘let it
be’ in English. In such a leadership style, leaders delegate the responsibility to team members and let
them work on their own with minimum or no interference.
By analysing the case study, it can be deduced that Chesky was a leader with Strategic leadership
style as he was adamant that IPO of the company should be done when it is beneficial for the
mission of the company. He went against all odds to avoid IPO of AirBnB and to ensure that decision
making can be done to support the vision and mission of the company.
