Brand Management Assignment: Impact Of COVID-19 On Airbnb

Question

Task:
COVID-19 has shifted consumer behavior and consumer spending around the world. In Australia, the travel and tourism industry has been strongly impacted with closures of stated borders. Similar circumstances can be observed in many countries.

Airbnb has identified that they have impacted because of hosts fearing to rent out their homes and guests being fearful of renting an Airbnb. However, this is not enough to establish the overall the impact on the Airbnb brand to drive strategies for 2021 and beyond. However, it is evident that Airbnb is called to re-think their brand strategies around the world. Note that despite the pandemic, some of the unknown hotel brands appear to have maintained operations.

This fall in sales for Airbnb may just be the beginning of many challenges for the company’s brand. Your company has been appointed to advice Airbnb about prioritizing their brand strategies.

You are supposed to write a report on brand management assignment identifying 3 core branding problems.

Answer

Introduction
Airbnb is an American company that provides lodging, homestays and vacation experience through renting properties. The company does not own any property but earns commission as a brokerage through renting property or from each booking. The company was established in 2008 in California, United States and with the stint of 12 years the company value has reached to USD 35 billion (Statista, 2020). In the first quarter of this year, the pandemic Covid-19 has hit the world and impacted many people, businesses and industries. And hospitality and tourism industry are one of them. Due to social distancing and closure of borders in many states and countries around the world, it has impacted the tourism and hospitality industry the most. Similarly, Airbnb was also affected because of the adverse effect of the pandemic. However, it has been observed that there are some of the hotel brands that have maintained the operations despite of this pandemic. Therefore, it is necessary to evaluate the problems and issues observed by the company in brand recognition and strategies to build their brand image.

Impact of Covid-19 on Airbnb
Due to the spread of Covid-19 around the world, government of all the countries have imposed many restrictions on travelling and maintaining social distancing. Due to which Airbnb has suffered a huge loss in the business. According to a survey, it has been identified that more than half of the Airbnb hosts are scared of renting their property and 70 percent of the guests are afraid to stay in the property. As a result, the company has seen significant decline in the revenue which is observed to be 44 percent till the month of August. Further, there has been layoffs about 25 percent of the workforce in the company (News Editor, 2020). In other words, people are afraid to rent their properties, even people are scared for the stays. Moreover, in Australia there is fall in GDP by 7 percent and the country has observed recession after 30 years. As a result, it has impacted the economy in many ways which includes- layoffs, unemployment, fall in revenue, closure of business and the most importantly affects the spending capacity of the people negatively.

Branding Issues

• Consumer behavior and their learning process- Due to Covid-19, $30 billion equity valuation has been dropped. Moreover, the company loses its position from 7th to 41 in the CNBC disruptor 50 list. These facts have affected the brand image of the company and consumer behavior towards the company as well. Due to the closure of bars and restaurants, people are preferring to rent Airbnb property, this behavior of customers has also affected the business and the image of the company (Business Today, 2020). Further, sudden closure of the tourism because of the lockdown has created the stress among the customers regarding the refund of the bookings already done. There has been certain delay in the refund which has also ruined the image of the company. These factors have affected the consumer behavior towards the organization. And the steps taken by the company to protect and prevent the guests and the hosts are not being communicated adequately, which resulted in fall in the customer’s trust towards the health and safety measures adopted by the company.
• Integrated marketing campaign (IMC)- To develop the brand image the company releases $250 million fund towards the hosts to meet the crisis. But because of the inadequate IMC, the company fails to spread the awareness and the knowledge in the market which would have built the image of the company (CNBC, 2020). It has been noticed that the company is using social media as a main marketing technique to promote its business. Other IMC’s observed in the business are word of mouth, advertisements, direct marketing which needs to be developed as people are not aware of the information and services adopted by the company to maintain and monitor hygiene and other safety measures. It can be assessed as 75 percent of the people are afraid of booking property through Airbnb. Therefore, to develop brand image the company needs to adopt IMC’s to attract potential customers.
• Customer expectations- With the increase in globalization and adoption of technology and innovation in the industry. It has been assessed that there are already many hotel chains who are consistent in providing services despite of the circumstances. These factors have spoiled the customers already by expecting much from the service providers. There are already many options in the market, this is the reason Airbnb is required to build branding strategy to build its image and attract potential customers as there is no room for any mistakes in the present scenario. Therefore, trends in the future of travel and tourism has changed a lot and many hotel companies have already adopted the change and innovation. Airbnb with the view to build its image and to comply with the rules and regulations of limit on gatherings, the company has bans unauthorized house parties globally. More than 75 percent of the listed properties have banned the party organizations. Further, there has been suspicious rentals in some places across borders and various other reasons that has ruined the brand image of the company. All these factors cumulatively impact the customer expectations which is one of the main reasons for branding issues observed in the company.

Branding Strategies
Airbnb has always been a driver of change and evolution in the industry. In this pandemic Covid-19, the company in order to sustain in the market and for the growth and development, needs to adopt branding strategies to gain the market share. To develop the image and for branding purposes, the company has to adopt many branding strategies, which includes-

• Airbnb has already taken an initiative through extenuating circumstances (EC) policy to provide possible assistance to hosts, guests and front- line workers in order to protect the community from the adverse impact of the pandemic Covid-19.
• The company also have developed online platform to connect the hosts with the guests and further allow guests to share their experience regarding the measures taken for safety and hygiene of the property and the people.
• One of the steps taken by the company is providing more than 100,000 places across 160 countries to support health care workers and for the well- being of our community (TOI, 2020).
• Adapt and innovate is another strategy to build its brand image. It is integrated in the business with the help of management chain and can be achieved by designing the operations to adapt in the prevailing circumstances and innovate to mitigate the issues.
• To grow and generate business, the company incorporates a strategy of shifting towards long stays rather than short- term stays. Like companies and offices are closed during pandemic, as a result there has been trend of working from home. Airbnb can take it as an opportunity by offering different properties or homestays away from city to remote locations for few days to professionals and working people.
• Moreover, the company can offer various other activities to their customers by providing several services like- spa, therapies, naturopathy, fitness and other relaxing activities to the nearby or local people.
• Communication is the core of developing brand image for any business organization. Ensuring the hygiene, new safety standards, cleaning protocols adopted by the company are to be informed to the guests and prospective guests precisely so that there will be no miscommunication that can harm the image of the company.
• Proper communication and quality services will ignite the marketing technique of word of mouth which plays a significant role in the service sector industry.
• For developing communication channels, Airbnb can use emails, social media, hotel association and direct marketing technique to contact to the mass potential customers (Mauguin, 2020).

Therefore, it has been assessed that customer expectations have been changed with the homestays and hospitality services. This is the reason Airbnb must adopt new ways by adapting the circumstances fast and provide the services as per the customers preferences and requirement. Also, keeping in mind the trend in the future of hospitality sector, the company needs to adopt branding strategies to compete with the big chains of hotels and other competitors.

Conclusion
Therefore, it can be concluded that branding plays a crucial role in the success of the organization. As it assists in attracting people towards the company and its products and services. In the given report, there is an assessment of Covid-19 impact on the hospitality sector in Australia and around the world. To assess the impact, business of the Airbnb company has been examined and its branding issues have been identified with. Because of which the company is facing lot of issues from gaining market share. It has been observed that there are many issues like consumer expectations, their learning and behavior and IMC’s have impacted the brand image of the company which needs to be mitigated by developing branding strategy in the business. The strategies to build brand image has also been identified, with the help of which company can gain market share and competitive edge subsequently.

References
Business Today. 2020. Covid-19 impact: Airbnb bans house parties globally; to limit occupancy to 16 people. [Online]. Assessed from. https://www.businesstoday.in/current/corporate/covid-19-impact-airbnb-bans-house-parties-globally-to-limit-occupancy-to-16-people/story/413642.html

CNBC. 2020. Airbnb is poised for a comeback after a brutal spring. [Online]. Assessed from. https://www.cnbc.com/2020/06/16/airbnb-poised-for-comeback-after-brutal-covid-19-spring.html

Mauguin.M. 2020. What hotels can learn from Airbnb’s response to the Covid-19 crisis. [Online]. Assessed from. https://www.hospitalitynet.org/opinion/4100678.html

News Editor. 2020. 70 percent of guests are afraid to stay in an Airbnb: Covid-19 Impact. [Online]. Assessed from. https://realtynxt.com/2020/06/01/70-of-guests-are-afraid-to-stay-in-an-airbnb-covid-19-impact/

Statista. 2020. Company Value of Airbnb from 2016 to 2019. [Online]. Assessed from. https://www.statista.com/statistics/339845/company-value-and-equity-funding-of-airbnb/

TOI. 2020. The impact of Covid-19 on the hospitality sector. [Online]. Assessed from. https://timesofindia.indiatimes.com/business/india-business/the-impact-of-covid-19-on-the-hospitality-sector/articleshow/75290137.cms