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Airbnb - Everything you need to know

  • Mallika Rangaiah
  • Jun 25, 2021
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It's those rare times when we wish to take a breather from our bustling lives and escape for short weekend getaways that matter. It could be a quick detour with a friend, a stop after a grand party or a comfortable place to reside during a wedding. For events like these we’ve got Airbnb, a housing service that emerges as the perfect solution.  


Airbnb is the intriguing saga of how what started as 3 men renting out their apartment’s air mattress has now become a multi-billion dollar company. 


This popular leading housing service allows people to rent their home for one or more nights. Established as exclusive places for reclining and enjoyment, Airbnb is a business which has offered fresh sources of income for people across the world, revolutionising and offering a whole new pathway for the travel industry. 



About Airbnb


Airbnb is actually a short version of the platform’s original name, AirBedandBreakfast.com


This is a private, global housing company that provides an online marketplace platform for hospitality services. The platform is available via its official website as well as through applications. Airbnb’s members can make use of this platform for arranging and providing lodging for homestays or tourism experiences.


The company’s founders are Brian Chesky - the co-founder as well as the Chief Executive Officer of Airbnb, Nathan Blecharczyk, Airbnb China’s co-Founder and Chief Strategy Officer, and lastly Joe Gebbia, the co-founder and chairman of Samara and Airbnb.org. 


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The platform of Airbnb has been established for individuals who are private owners of any of the listed properties lying in the range of the 220 countries that the platform caters. The platform works through a total of 5.6 million Airbnb listings over the 220 countries, and over 4 million people make use of Airbnb to gain access to leasing, rental property insights.


Airbnb’s platform enables individuals like “host members’” to host any events as well.  The maximum amount of the company’s revenue is gained from these host members. The host members have the responsibility of posting and offering properties or events alongside their details. 


The potential guest would be able to make use of the Airbnb platform for viewing the vast house listings. The members can generally book a trip to nearly anywhere across the world.


As per the data gained from the platform’s official website, there are around 4M hosts on Airbnb as of March 2021 and around 900M all-time guest arrivals. The platform gains a commission through every completed booking. $9,600 is the average annual earnings per Host (as of April 30, 2021). 


In the month of May 2021, the platform has announced its latest fresh update with a focus on flexibility, in response to the gradual beef up in travel with the Covid-19 pandemic subsiding in several parts of the world. 


Alterations for Airbnb guests: Airbnb is all set to add three fresh search options, which include flexible dates, listings as well as destinations.


Updates for Airbnb hosts: Airbnb is also updating its platform to help lure more people into listing their homes. 



How Airbnb works


The Airbnb process primarily comprises of five steps namely : 


Step 1

The properties of the hosts are listed by them on the website of Airbnb alongside the essential facilities they will be offering that include meals, WiFi, number of bedrooms, and so forth. 


Step 2

The platform sends photographers to the places uploaded on the website who have the responsibility of taking high-definition snaps. 


Step 3

The website is then scrolled through by the travelers who select the property they prefer to reside in. The dates, the number of residing days as well as the number of guests is also selected by them prior to making the payment. 


Step 4

Once the stay is approved by the host, the payment is carried out and a couple of extra charges are also included.


Step 5

Upon the conclusion of the stay, the platform pays the host after the reduction of the commission fee.



How Airbnb came to be


It all began when Brian Chesky and Joe Gebbia, who had moved from New York to San Francisco in 2007, were facing troubles in paying their rent and were looking for some ways to raise a bit of extra cash. 


A swift notion led them to revamp their loft into a Bed and Breakfast by supplementing it with three air mattresses, while also assuring breakfast on the following day for their guests. 


A website was set up overnight, airbedandbreakfast.com, and the founders endeavored to gain attention and promote their new service by emerging as tour guides for the audience who had come to attend one a popular design conference in San Francisco.


The primary idea was offering the visitors a place to sleep and then to breakfast in the morning. Around $80 was charged each night. The success of the idea led to the first Airbnb guests emerging. 


Although a promising team was put together the platform encountered a great degree of trouble in getting hosts, i.e in getting people who were willing to open their homes up to strangers. So the platform decided to promote ads on small local blogs.


The move became a great success, leading to a high rate of attention from the press and supplying promising results. With the leading newspaper New York Times running an article on the service, around 800 people signed up as hosts, ending up in many successful bookings.


The duo joined hands with their old roommate, Nathan Blecharczyk, for making Airbnb into a full-fledged running business. 


The founders had initially aimed for the company to be a service that matched the guests who were on the lookout for roommates for around four months until they realized that there was already a roommates.com who had been executing this notion. As a result, the founders switched back to their original idea. 



Airbnb Business Model


Not much unlike the business model of our Uber and OYO, Airbnb has an aggregator business model. Yet the platform’s business model is quite apart from the business model of leading luxurious hotel chains like Hilton and Marriott. 


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The company has an online platform through which it connects all the components in the model. The most integral components in the Airbnb process are its guests and hosts. Airbnb, unlike big hotels, has a minimum cost and doesn’t require a massive amount of capital.  


The image shows the business model canvas of airbnb, that ranges from its key partners, key activities, key resources, cost structure, value propositions, customer relationships, channels, revenue streams to customer segments

Airbnb business model


The hosts can put up their property for stay and the guests can sign up and stay there if they wish to, giving rent in exchange for their stay. Residing at an Airbnb allows the guests to gain a completely fresh and intriguing experience as it allows them to remain closer to the locals. 


The platform also has photographers that are capable of taking high-definition shots of the properties, allowing the travelers to select from among the places and opt for the most preferable option.


Airbnb Revenue Model


Airbnb’s revenue model comprises a fee that gets charged from the hosts and the travelers. The platform’s revenue model operates on the stays as well as the listings. The company proposes a platform in which these bookings and listings are carried out and this is where Airbnb earns from. The platform’s revenue is generated from two major sources:


  • Commission gained from hosts: Each time a guest selects the property of a host and makes the payment, Airbnb gains 10% of the payment amount as commission. 


  • Transaction fee gained from travelers: When the guests pay for their stay they are charged a 3% fee for the transaction. This amount in turn adds up to the Airbnb revenue.



Technology in Airbnb


Technology is at the core of Airbnb’s platform. Each reservation undertaken at Airbnb interacts with machine learning or the artificial intelligence technology generated by the platform. 


AI is employed across Airbnb for minimizing the friction encountered by the platform while enhancing search, preventing fraud, and while aiding hosts in optimizing pricing. 


Machine learning models had initially been adopted by the platform back in 2013 for enhancing their search and discovery capacity. 


In the case of the guests, for instance, the technology is adopted for matching people with the best suitable listings, services, and experiences across the world. 


To help out hosts, the platform has introduced fresh approaches of improving Smart Pricing to aid in predicting the chances of a listing being booked at a specific price at a specific calendar date. This plays a role in driving the search engine and the hosts can determine the price of the listing in accordance with what they wish to optimize. 


You can take a look at the video below to learn more about the technology behind Airbnb



It's #FiresideChat time! We're getting into AI with Airbnb’s Mike Curtis & EyeEm’s Ramzi Rizk 🙌

Posted by Factory Berlin on Thursday, March 15, 2018



Airbnb Funding


With the objective of boosting reservations, the founders churned up the striking idea of serving election-themed cereals. By repackaging cheap cereals and selling their created products as collectors’ items they earned around $30,000


The image shows the repackaged election themed cereals developed by Airbnb founders

The repackaged cereals - source Business Insider


The hype created by the cereals gained the attention of the tech billionaire and Y Combinator founder Paul Graham. Although Graham hadn’t really been intrigued by the notion of Airbnb, yet, upon learning of the cereal he appreciated the steadfastness of the team and offered them a mentoring period of three months. This led to the platform raising their first funding of $20,000


Coming to the present scenario, in spite of the boost in revenue, the COVID19’s impact still hovers in the platform’s earnings in different ways. The platform reported a loss of almost $1.2 billion in its Q1, as the company repaid debts. Around the month of April, 2020, the platform raised $1 billion in debt and equity to aid it in navigating the COVID crisis.


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Airbnb Inc. shares rallied to a record high in the month of January 2021, pushing its market valuation above $100 billion.


Airbnb's IPO took place on Dec. 9, and the platform’s shares began trading on Dec. 10. 


Advantages and Disadvantages of Airbnb


The image shows the advantages and disadvantages that Airbnb offers, ranging from wide selection, free listings, hosts can set their own price, customizable searches, protection for guests and hosts and additional services in case of advantages and what we see may not be what we get, taxes, potential damage, added fees and it isn't legal everywhere in case of disadvantages

Airbnb’s advantages and disadvantages



Among the most crucial and integral tactics that have contributed to Airbnb’s success rate is the platform’s ability to offer home listings at a global scale, capturing populations from over 220 countries.


Airbnb remains as one of the leading platforms when it comes to hosting prospects. In the same regard, the platform offers high-quality listings of locations and events for those who are on the lookout for a getaway.

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