Synopsis-
After sporting losses worth 900 Mn USD since the COVID-induced lockdowns over the world began, AirBnB was in a precarious position. Having laid off 25% of its workforce, and being forced to raise 2 Bn. USD if debt financing while cutting down on other operational expenses only added fuel to the fire! But come September, AirBnB reported a net profit of 200 Mn USD for the previous 3 months! Wondering how the company came out of an existential crisis when the entire travel industry is suffering as a whole? Read the article! Or read our synopsis!
Why is this important for you, the MBA student?
Well, no matter what domain you're planning to specialize in, or have already specialised in, AirBnB's return to profitability is a business case reflecting not just the times but some age-old strategy lessons taught at b-schools. Whether you're a marketing student or a strategy enthusiast, there's something in AirBnB's story for you!
So let's talk strategy. Basically, like every other business, AirBnB and other travel businesses too were looking for a successful pivot option. How could they make their offerings more relevant in the times of COVID? But for sometime there, people had just stopped traveling and companies could not do much. Slowly though, the various stakeholders in the travel industry started to take stock of options. Still looking for a pivot, AirBnB's team started studying the "new normal" version of customer behavior. They discovered an interesting insight.
AirBnB found that while traveling per se was not undertaken, consumers were getting out of their homes for staycations in nearby locations. Whether for finding a better location to work from, or just to get a break from staying at home and get a change of scenery and air, people were choosing to go to nearby properties and bunking out there. This insight was taken into due consideration and AirBnB's website was updated to reflect this trend. Ergo, there was an upsurge in bookings and people started actively using the service once again. The company reported a 77% upsurge in their domestic business, where the renters did not have to cross country borders, as compared to 52% in January. They also found that people tended to travel short distances and stayed for longer periods of time. This remarkable bounce back is one for the strategy case study lessons.
What do you think? Will the travel industry bounce back with news of a COVID vaccine doing the rounds? Or will companies like AirBnB still face losses? Share your thoughts and opinions in the comments section below!
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In Other Highlights:
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