Brand Management Assignment: Branding Issues Encounter by Airbnb

Question

Task

Write a well-researched and detailed report on brand management assignment evaluating the major branding problems encountered by Airbnb during pandemic.

Answer

1. Introduction of Three Core Branding Problems
Airbnb is a system built on trust between two strangers. One person would earn some extra money renting a room in their house, the other person got a great deal and avoided the corporate hotel life. It made people feel like they are at home when they travel. Airbnb which has over 7 million accommodations worldwide and over 50,000 handcrafted activities, across over 220 countries and regions, amounting to over 750 million Airbnb guest arrivals, which is more than the top five hotel brands combined. Airbnb has become one of the top communities and platforms for tourists to book unique homes and experiences.

The onset of COVID-19 has dramatically changed everything in recent days. Governments around the world have implemented various containment measures, such as travel bans and lockdowns, to prevent the spread of the disease. These travel restrictions along with other disruptions have created a direct and huge impact on the travel activities. The travel industry is considered as one of the hardest-hit by the outbreak of the coronavirus disease (COVID 19), with impacts on both travel supply and demand. And, Airbnb is not an exception. These are three core branding issues that Airbnb has been facing during COVID 19 period.

1.1. Consumer behaviour
Airbnb used to give people a feeling of enjoying a cheaper holiday. Because of COVID 19, individuals have been choosing to limit travel, and some states and local governments have put restrictions on short-term rentals. Airbnb hosts have had to adjust both short-term and long-term revenue estimates. Hosts do not feel safe renting to guests while guests are fearful to stay at an Airbnb. They either have cancelled or plan to cancel an Airbnb booking since the pandemic started. Since the onset of the outbreak, the number of Airbnb listings on offer has remained relatively steady but the number of bookings plummeted due to travel bans and health concerns. For example, the number of bookings in Beijing5 shrank from 40,508 in early January to only 1,655 reservations in the first week of March. These lost bookings had a devastating impact on Airbnb’s revenue, as seen from the recent layoff of about a quarter of its work force. As the global travel and tourism sector grinds to a halt, many owners of short-term or holiday rental homes on Airbnb, especially those with heavy mortgage, are struggling to maintain their income and keep their business. Faced with slow demand, hosts are expected to adjust the listing price if they choose to continue with their business amidst the outbreak. Many may exit the short-term rental market for long term leasing, as the future is uncertain for the short-term leasing market. Across the world, Airbnb bookings have tanked. Bookings across Europe collapsed in March, dropping 80% compared to the previous week in the week beginning March 9, and another 10% on top of that in the week of March 16. In the U.S., where virus response lagged, the figures for falls in booking are uneven, but scarcely less dramatic. By the middle of March, bookings in New York City, San Francisco and Seattle had already dropped more than 50% compared to the week beginning January 5, with drops of over 35% in Washington, D.C., and Chicago12. This led to a dramatic decrease in Airbnb’s revenue and considerably the marketing budget of the company.

1.2. Marketing activities
Ditching its marketing is a big mistake of Airbnb. To save money, Airbnb halted all its marketing activities at the end of March in order to save an estimated $800 million in 2020 as the company may think it does not need to invest in marketing id consumers are not spending money on products and services. However, this is not right. if there was ever a time Airbnb needed marketing, it is now. Its hosts are so angry about the company’s recent removal of cancellation fees. If hosts lose revenue and feel unsupported by the company, they will leave (and many of them already are) and may not come back. How they allocate their marketing budgets at the moment (and how much they cut them) should reflect the shift from spurring demand to maintaining the customer relationship. Otherwise, marketers are in danger of losing the connection with their customers. Marketing cuts deprive a brand of any still existing sources of revenue, like through email marketing or social commerce. They also fail to mitigate the damage of a negative impression.

1.3. Trends in the future of travels and tourism
As the world slowly recovers from COVID-19 and borders gradually start to open, we expect travel to look a little different than it did pre-pandemic. Although nobody knows exactly what will happen, one thing is clear that we won’t be able to travel as freely as we used to at least for the foreseeable future. Governmental regulations, health awareness and the long-lasting attitude effects of a global pandemic will mean changes for the way Airbnb may operate. Travellers will be much more cognisant of the need to travel to destinations that make it easy to maintain social distancing practices. Places that avoid public transport and crowded tourist areas such as remote locations where travellers are less likely to come into contact with others. This will challenge Airbnb in innovating its platform to make sure the safety of customers or in connecting with hosts in remote destinations with a good profit.

2. Roadmap for Each Branding Problems and Strategies

2.1. Roadmap for Each Branding Challenges

2.1.1. Roadmap for Consumer Behaviour
Consumer behavior is one of the most valuable aspects of the hospitality and tourism industry that influences business growth and sustainability. Airbnb has made a strong impact on consumers in feeling at home while they are traveling to different states or countries. Although the Covid-19 has decreased the booking and reservations largely. The main valuable insights in consumer behavior mapping are,

a. Valuable Insight
Researchers have been studying consumer behavior to explore the diverse and increasing changes at the societal, economic, and technological states around the world (Peighambari et al., 2016). It helps to gain the customer's expectation during the branding steps by assessing their experience and requirements.

b. Customer’s Expectation
Valuable insights will encourage Airbnb management to get specific touchpoints and areas that can influence the customers to engage with the brand successfully. It generates a positive outcome on newly structured services to attract travelers during the Covid-19 scenario.

c. Influence the Prediction on Consumer Behavior
Recently, studies have seen that sustainable consumer behavior comes with effective planning in tackling environmental problems as well as approaching any pandemic situation (Trudel, 2019). Once the management gets their hands on the consumer's expectation, they can make a positive prediction and influential points that can drive profitable branding.

The ideal roadmap for dealing with consumer behavior at Airbnb during the Covid-19 situation can be,

• Conducting detailed market research to understand the target market. Airbnb strongly targets hosts and travelers and ensuring them in providing the utmost safety.
• Stating the marketing strategy efficiently, as for Airbnb, they must convince the local community, such as rental places, restaurants, tourist spots, and car agencies to fit the new Covid-19 safety criteria in attracting tourists
• Airbnb believes in increasing hosts to increase guests – the company needs to incorporate with the hosts in managing safety policies to not get feared in providing shelter to the tourists
• Consumer emotions and touchpoints are also important in making them feel comfortable and safe during the current pandemic situation

2.1.2. Roadmap for Marketing Activities
Airbnb has already made a mistake in restricting its marketing activities from the end of March in saving a whopping $800 million during its 2020 fiscal year. On the other hand, the company had also canceled returning the cancelation fees to its consumers after facing the pandemic and lockdown situation from the Covid-19. It gave the company a large number of negative marketing situation from the consumer feedback and business loss. The positive marketing in gaining benefits and innovations are depending on 4Ps – product, position, process, and paradigm (Akgun et al., 2017). On the other hand, there are 4Ps in successful marketing strategy – product, price, place, and promotion. Airbnb needs to ensure its services position in the contemporary market and how its customers will be benefitted from their new offer. Critical performativity is a marketing theory that helps in scrutinizing new marketing concepts (Tadajewski, 2016). Social media is both effective and negative for an organization if they succeeded or failed in promoting a positive marketing plan.

The effective roadmap for marketing activities for Airbnb in the current situation will be,

• Assessing the company’s current financial situation to calculate and planning on new promotional activities on marketing; Airbnb requires a fresh start after letting down a large portion of audiences. The only way to getting it right is to tough the emotional aspect among the consumers.
• After understanding the targeting market, Airbnb will be listing down their marketing goals to work on 'new normal' – such as taking high priority on safety and sanitization process, regular health measurement among the staffs, providing guests comfort and encourage them to spread about the new policies among their known ones.
• Generating new marketing tactics, such as offering secure online transaction, contactless room services, regular cleaning and sanitization, and offering discounts to influence the market

2.1.3. Roadmap for Future Tourism and Travel Trends
The future traveling situation after the lockdown will largely affect the business and revenue in the hotel industry. People might be still in fear of traveling around and prefers staying at their home. The new governmental regulations will also affect the management and regulations of Airbnb in its operational process.

The potential roadmap for future travel and tourism trends for Airbnb will be,

• Airbnb will need to revamp their platform to plan for new traveling destinations for the consumers to influence them in leaving their homes.
• The traveling industry is still under the impression of getting back the normal market like a pre-pandemic situation if there is constant growth in the international market. Countries such as Australia, Norway, New Zealand, Iceland, etcetera need to rethink their business approach in adventure tourism for the uncertainties faced in the Covid-19 situation (Nepal, 2020).
• Online interaction and effective usage of the website and social media is a sustainable idea in promoting the new tourism planning among the target consumers

Figure: Travel Industry in Post-pandemic (Gavira, 2020)

2.2. Different Between the Newly Provided Strategies with Current Airbnb Strategies
The company has lost its face during a pandemic. The company now should analyze the market while implementing any kind of business strategy. Meeting the customers' needs can help them to grow also it will attract new customers too. Implementing new and innovative market strategies like the storytelling process in social media can also give them strategies to do well in the business. Currently, Airbnb has doing business traditionally. But implanting the eWOM strategy can give the customers insights about the hotels. Other customer reviews can help others to decide accommodation for future travel purposes. After pandemic people are concerned about hygiene and clean rooms and foods. Airbnb also considered the options, while people can find hygiene and clean inhabitants while traveling. The hotels should maintain sanitization and also maintain social distancing. Innovative business strategies can help Airbnb to grow more in the post-pandemic situation.

2.3. Implementation of Strategies

3. Forecasting Success and Failure for 2021-2025
COVID -19 has hit hard and flattened the profitability curve of Airbnb along with many other tourism businesses. The overall tourism market sphere has come to a screeching halt in the past few months. The crashing economy and the sudden change in border policies have been a major factor in the fall of the tourism industry all over the world and have in turn caused the hospitality sector to take a hit too. With lesser tourists coming to the country and overall government policies the tourism and hospitality sector experienced less to no traffic in the past few months. Major travel opportunities like traveling for business purposes, marriage occasion accommodations, conference hall bookings, and etcetera have also stopped getting bookings. Many tourism companies have shut down during the severe spread timeline of the virus.

According to (Gössling et al., 2020), Covid -19 has compelled the tourism researchers, policymakers, and the overall tourism industry to look at their business structure and adjust them according to the present situation. Extra safety measures to create assurance over the service like sanitization rituals at entry, regular room sanitization, contactless payments and food delivery, and etcetera. The ongoing pandemic is not a local but a global crisis that needs severe adoption strategies and policy upgrades to survive. According to (Kaushal & Srivastava, 2020), the future of tourism and hospitality in the global market need to focus on Human Resource Management, Media coverage of improvements, Crisis preparedness, and most importantly Health and Hygiene standards upgrades. The reducing severity of the Pandemic has opened opportunities for companies like Airbnb to resume operations in micro and macro-sized steps.

The future of travel does seem restricted and it won’t be possible to roam freely for almost a decade or so. Although it is not certain about the period of the effect of the ongoing pandemic, its effect on the industry is sure to stay and convert the future operations of the industry. Travelers will be more concerned in the future about their personal safety and how well the hospitality sector takes the responsibility for the demands. People will be more interested in remote locations than clouded cities to plan their trips. Airbnb can shine here as it can adjust its policies as per the rising demand of remote locations and select properties that allows them to execute their updated policies. Airbnb can benefit a lot from this policy update and gain good profits by heeding to the rising hygiene demands.

4. References
Akgun, A. E., Keskin, H., Ayar, H., & Etlioglu, T. (2017). Why companies go positive marketing innovations: a new theoretical prototype for 4ps of innovation. Journal of Business Economics and Finance, 6(2), 70–77.

Alisher, E. (2017). Innovative marketing strategy for tourism development. World Scientific News, 88(2), 58–68.

Chang, C.-L., McAleer, M., & Ramos, V. (2020). A charter for sustainable tourism after COVID-19. Multidisciplinary Digital Publishing Institute.

Gössling, S., Scott, D., & Hall, C. M. (2020). Pandemics, tourism and global change: a rapid assessment of COVID-19. Journal of Sustainable Tourism, 1–20.

Jauhari, V. (2017). Hospitality marketing and consumer behavior: Creating memorable experiences. CRC Press.

Kaushal, V., & Srivastava, S. (2020). Hospitality and tourism industry amid COVID-19 pandemic: Perspectives on challenges and learnings from India. International Journal of Hospitality Management, 92, 102707.

Nepal, S. K. (2020). Travel and tourism after COVID-19–business as usual or opportunity to reset? Tourism Geographies, 1–5.

Peighambari, K., Sattari, S., Kordestani, A., & Oghazi, P. (2016). Consumer behavior research: a synthesis of the recent literature. Sage Open, 6(2), 2158244016645638.

Reyes-Menendez, A., Correia, M. B., Matos, N., & Adap, C. (2020). Understanding Online Consumer Behavior and eWOM Strategies for Sustainable Business Management in the Tourism Industry. Sustainability, 12(21), 8972.

Tadajewski, M. (2016). Relevance, responsibility, critical performativity, testimony and positive marketing: contributing to marketing theory, thought and practice. Journal of Marketing Management, 32(17–18), 1513–1536.

Trudel, R. (2019). Sustainable consumer behavior. Consumer Psychology Review, 2(1), 85–96.