Chat with us, powered by LiveChat How Airbnb Works: Airbnb Business Model & Revenue Model

How Airbnb Works: Airbnb Business Model & Revenue Model

3456 Views | 6 min | Published On: August 24, 2022 Last Updated: August 24, 2022
Airbnb Business Model

Amidst the hustle and bustle of umpteen travel companies, breaking the traditional records, Airbnb pops up to be an exclusive travel company. Airbnb, a company that started as an “Air Bed and Breakfast Service” for property owners to rent out their spaces for travelers, today needs no introduction. The success of the company is indeed an integral aspect for the business owners to look upon. Hence we have brought you the highlights of the Airbnb Business Model & Revenue model with utmost scrutiny. 

If you want to take your business from scratch to the zenith point of success then this is the right page for you. Activate your bullseye mode and keep reading!

Airbnb Business Model Stats & Facts: Funding and Major Milestones

Airbnb grew up massively as a technology masterpiece in absolutely no time. It was launched in the year 2018 by Nathan Blecharczyk, Joe Gebbia, and Brian Chesky. From one rental to 5.6 million listings and 4 million hosts, Airbnb portrays vivid accomplishment and phenomenal growth. The sky-scraping user interface is another astonishing factor. The company has 150 million and counting users, coupled with half a billion guests per annum. Also, their listings are in more than 220 countries and regions. 

Consistent growth of Airbnb

For a business-oriented company, it is very crucial to have target demographics, and this is where Airbnb Business Model made a jackpot. The target demographic of Airbnb is broad and covers all consumer age groups. In light of accommodation, Airbnb demographic is aged 18-45, whilst for the experiences, there is a wider range, dwelling between 18-60 years. 

  • Founders: Nathan Blecharczyk, Joe Gebbia, and Brian Chesky
  • Launched in: August 2008
  • Headquarters: San Francisco, California, United States
  • Number of Airbnb Users: Over 150 million
  • Industry: Travel information and booking services
  • Total Valuation of Airbnb: $86.5 billion
  • Funding Amount: $6 billion (latest 2022)

While maintaining a great upsurge, Airbnb’s guest and host community managed to generate over $117 billion across 30 countries in 2019. Furthermore amidst the pandemic also, Airbnb hosts earned $ 1 billion.

Airbnb also won the “App” award from the Southwest Conference in March 2011. Furthermore, when the ratings and reviews were analyzed in 2020, in light of the employee work satisfaction, Airbnbs secured the Best Company Perks & Benefits Award. 

Airbnb Business Model & Revenue Model- Success Story

The big endeavors usually begin with simple startups, likewise, Airbnb made its phenomenal image from a mediocre start. The success story of Airbnb and the Airbnb Business Model is an inspiration for every business owner and adapting their mindset would nonetheless be a guide to success. The idea of Airbnb came into existence after its founders, Joe Gebbia and Brian Chesky rented a space for travelers. In the room of their San Francisco apartment, they placed an air mattress and turned their space into a makeshift bed and breakfast. Further, along with their former roommate, Nathan Blecharczyk developed a website for short-term rentals which gradually evolved into the well-known travel company Airbnb. 

Airbnb business model success

The main link between the startup and the success of Airbnb is the Airbnb Business Model. They invested in their strategies and took the flight of success. The company started investing in the year 2009 and after a few years, it expanded to the international market. Gradually, their offices open in the United Kingdom, Spain, Russia, Brazil, and Germany. Additionally for generating maximum revenue, Airbnb initiated providing sections like:

  • Airbnb Experience: Intending to provide the best, Airbnb also caters to an experiences option, where a renter can take part in various activities like cooking classes, adventures, and tours.
  • Airbnb Plus: Considering the needs of travelers, this section provides homes that have A+ ratings coupled with standard amenities. 
  • Airbnb Collections: This section provides a platform for travelers to find properties for special occasions or trips in general. The listings under this section comprise private rooms, full homes, ensuite bathrooms, etc. 

Keeping an eye on the latest requirements, Airbnb provided the best in the market. And based on the extensive reviews and ratings, coupled with the marketing strategy, today we know Airbnb as a leading travel company. However, being a business owner, comprehending the Airbnb business model is a must. Keep reading, there’s a lot on the platter!

How Airbnb Works: Airbnb Business Model Canvas

Airbnb’s Business Model is simple yet impactful. Just like Uber and OYO, Airbnb also uses the aggregator model.

Check out – What Can You Learn From Uber’s Success | 5 Takeaways

This business model is unlike the business models of hotels like Hyatt, Marriott, or Hilton. Instead, Airbnb uses an online platform to run its business, wherein every component in the model gets connected. The main assets of the Airbnb business model are the hosts and individuals who are also the key components in the process. Airbnb acts like a platform for hosts and travelers simultaneously. Here the hosts put their properties for stay, and if someone stays there, the host gets rent for the same. 

Airbnb Business Model

The aspect of providing travelers with the experience of living with the locals is the major hype of the Airbnb business model. Below are some points that portray the Airbnb business model precisely and can also be used by you to fuel your business.

  • The hosts firstly list out their properties on the platform along with the amenities, pricing details, and more.
  • Then Airbnb sends its professional photographer to the site to take high-quality photographs of the property.
  • Travelers search for the properties in the cities or the places that they wish to make a stay and then browse the pricing and the amenities provided.
  • Further, the bookings are made through Airbnb, here the travelers pay the sum that is mentioned by the host coupled with some extra transaction charges.
  • Finally, the host approves the booking, the travelers make their stay and Airbnb pays the rent or amount to the hosts after deducting their commission.

Furthermore, Airbnb also keeps a section for reviews and ratings. Here the traveler and the host, both can rate each other and this, in turn, enhances the user experience of the app. 

How Airbnb Earns Money: Airbnb Revenue Model

The success of Airbnb portrays that its business model and revenue model have great synchronization. After having a glance over the business model it must have been clear that the bookings, as well as the monetary transactions, take place on Airbnb’s platform. This synchronization is where the company earns its share of the revenue. However, the revenue generation from both the resources is listed below.

Airbnb Revenue Model

Commission Generated from the Hosts (Property Owners)

The commission charges that Airbnb takes from its hosts are flat at 10%. Since the bookings and transactions are made on the app, there is no scope for loss.

Transaction Fee charged from Guests (Travelers) 

Airbnb charges a 3% commission from the booking amount upon every booking confirmation. 

Key Takeaways From Airbnb Business Model

As a business owner mindset, it is apparent to inculcate the best aspects of a leading business and incorporate those ideas into your own business. Therefore let us now explore the best 5 takeaways that need to be acknowledged.

1. Airbnb Business Model Portrays An App Must Resolve the Real Issues:

The co-owner of Airbnb Brian Chesky, states that while initiating a business, your idea must not be unique and must resolve genuine problems. In comparison to the only alternative, i.e., the hotels, Airbnb provides a platform for passionate travelers, to find a comfortable and pocket-friendly app across the globe. Furthermore, the app also provides an earning passive income for people having extra space. 

Today there is a myriad of similar travel apps, but back in 2008, this was an unexplored field and was much needed in the industry. Therefore, your ideas for your business should be innovative and such that the consumers also get profit from your business.

2. Your App Must Prioritize User Needs:

Understanding the needs of your users is the most prominent aspect of starting a business. Airbnb realized the problem of receiving payments for people who rent out their spaces. To curb this issue of the hosts they added advanced payment options. Furthermore, they initiated the effort of visiting the listed places and taking attractive images to attract consumers. Therefore, it is apparent that they gave proper emphasis on the marketing of their commodities. 

Also, they emphasized including 24/7 customer service. This clearly shows that if you prioritize the user needs then your company will reach good heights of success. 

3. Your Apps Must Include Disruptive Technology:

Today’s world is the world of technology, therefore if you make a normal app with certain features then succeeding like Airbnb is a fool’s paradise. Your idea and the technology that you incorporate both need to be innovative and disruptive. However, your will help you get funded, but in the long run, there is a lot that you would earn. 

The growth of Airbnb made a marketplace that was rare using the help of disruptive technology. Therefore, while initiating the idea of making a product and starting a business you must incorporate disruptive innovation and technology. By following this guideline you will certainly be able to have the potential to lead in the market. 

Airbnb business growth


 

4. Your App Needs to Have Astounding UX:

Having an exceptional UX must be one of the priorities for a business owner. The UX will enhance the user engagement by many folds as it will show suggestions as per their recent searches. Furthermore, the map listing will help the users to have an idea of the number of users probing for the place. The map integration will undoubtedly enhance the trust of the users for your app. 

Therefore, keeping yourself in the shoes of your consumers, you must use a UX that compliments their needs and requirements.  

5. Include Innovative Integration in Your App:

The use of innovative integration can help you get the success you want. As the Airbnb business model uses innovative referral and new-user discounts which helps in building loyalty for its product. 

Therefore, you must have a due focus on providing incremental value to your customers. Also, if you build a product that adds value and offers your users an incentive for better marketing, you will not only receive benefits for your business but also for the users. Hence it would be a two-way sword. 

Wrapping Up

We are one of the best mobile app development companies. With experience of over 9+ years, we are known to deliver apps that will give you a one-of-a-kind business. We understand the market needs and tailor your applications, giving you a complete win-win situation for your business. Inculcating the leading technologies, we scale apps that meet your goals. 

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