This entry will analyze AirBnB main bold moves, aiming to collect them into a strategic framework: the Blue Ocean Strategy, focusing on the Create-Raise-Reduce-Eliminate Grid applied on the main competing factors in the industry. The grid will outline possibilities of enhancements as well and would not reflect only what is known to be available at the moment of writing.

Let us analyze the industry's landscape through the lens of the Porter's 5 Forces Framework, depicted on the left hand side.

Bargaining Power of Suppliers

The power level: LOW.

The brand reputation relies on suppliers and these have a lot of choice to register on various platforms in order to diversify their acquisition channels and to optimize their income streams. Suppliers do have though low switching cost from one platform to the other, unless some of the platforms provides them distinct earning advantages which make them stick longer there.

Bargaining Power of Buyers

The power level: MEDIUM.

The sheer number of travelers in the world, which are hundreds of millions, are many in comparison with the tens of companies that offer lodging services, acting as marketplaces aggregating the supply and balancing it with the demand. Also the number of vacation rental properties is limited, which means that the bargaining power of buyers is limited by these constraints.

The likelihood of buyers to go to alternative services such as hotels and hostels are also limited for the niches where the unique value proposition offered by peer-to-peer lodging services matters, which would make them to stick to the peer-to-peer lodging providers and pay the price demanded.

Industry Rivalry

The power level: HIGH.

The competition is fierce and this is caused of the rate of growth in the industry, averaged at 150% YoY in the USA in terms of growth of the sharing economy which gets more popular worldwide. This perspective for solving a problem of short term vacation rentals with pervasiveness in the market has the potential to attract more and more players into the game.

The diverse positioning in the market via focusing on an older audience (HomeAway) or on families with kids (VRBO) or on group bookings (FlipKey) or on total check-in/check-out freedom (TurnKey) makes the industry quite welcoming for creative ways to compete on various niches with tailored offerings.

The brand reputation and awareness is another factor which is a key influencer in the rivalry fight across brands and usually this is an equity each brand would get in time, after years of successful presence in the market.

The switching cost to another peer-to-peer lodging provider in a certain region, with a clear competitive advantage is low for the buyer.

Due to the aggressive competition, the overall landscape of the peer-to-peer industry looks like a red ocean, the differentiation being low if focus, divergence and a compelling tag line is not setup as a clear blue ocean strategy, meant to innovate and reset the market boundaries.

Threat of New Entrants

The power level: LOW.

Time of entry is very important and to have the first mover advantage in this industry is paramount. The funding, the word of mouth and the brand awareness are very important to gain market share, which happens usually during a few years and it involves significant capital and a clear strategy for international expansion. Once established, such incumbents would be hard, but not impossible to disrupt, especially in specific, targeted regions and possibly for certain niches.

The amount of investment needed for such a business, which can reach billions of dollars is something that signifies a very high entry barrier for any potential disruptor since once a player dominates the market, it will be very difficult to convince investors to give the requested amounts to any new player.

The legal and regulatory barriers for entering this space are also high since in some countries and cities property owners would need to perform a registration process or have some license or permit needed in order to be able to list their property for short term rental. Without a famous brand and influence, for a new entrant it will ne very difficult to have a word to say with regulatory authorities so that they overcome such hurdles.

However, due to the attractive sharing economy growth perspectives as such, indirect competition could be likely and quite dangerous, especially if their brand is established in some way. As an example here would be Uber which tapped into the sharing economy with Uber Eats.

Threat of Substitutes

The power level: MEDIUM.

There is no direct substitution for peer-to-peer lodging services due to the fact that hotels and hostels are not able to offer the location, amenities such as a kitchen or a garden where children can play. Therefore it is difficult for customers who appreciate such advantages to switch to some other provider of lodging services. Still hotels offer more security while hostels offer more in terms of socializing which means that if such aspects become important for the target market segment, then the threat of substitution could increase.