What is Airbnb? How they became a billion dollar company

What is Airbnb?


Airbnb logoIt is an online marketplace where potential renters known as “guests” can meet possible landlords known as  “hosts” to share their space. The type of space the hosts can list can either be a room and entire apartment, house or even a caravan. Pretty much anything, where guests can sleep, can be placed onto the online marketplace.  The duration of the stay of the guests could be long term or short term, depending on the lease agreement that both parties agree to. Most booking on Airbnb range from 1-day to 3-months.

You can access Airbnb by using your you PC or Mobile phone. The registration process is simple and open to anyone that is willing to join. Moreover, it is free to sign up and you only pay once a booking is made.

The guests can customize their respective search engines to filter results that fit their particular tastes and preferences of accommodation. The price of the accommodation is set by the host and real bargains can be found. Keep in mind that these charges are bound to change according to the season, just like the hotel industry.

The host and the guest can communicate with each other before booking.  Once the guest decides that like the hosts’ space they can make a booking. The host has a maximum of 24 hours to either accept or cancel the new guests request. If everything goes as planned, they both meet and agree on the terms and principles of accommodation. To learn more about how to start an Airbnb visit our guide

History of Airbnb

The initial title of the Airbnb was “Air bed and breakfast”. The original idea of this platform took place in 2007 where two roommates, Brian Chesky, and Joe Gebbia failed to raise enough cash to foot their rental expenses for their apartment. The two came up with the idea of getting an air mattress and renting their living room as bed and breakfast for a conference that was in town.

In 2008 the two joined forces with Nathan Blecharczyk to help build the site and respectively got their first two bookings at SXSW.

To help raise fund, they customised cereal boxes for the upcoming election. Called Obama O’s and Cap’n McCain’s. They sold all 500 boxes help them raise nearly $30,000 that they put into the business.

By the time 2009 was reaching, the economies of scale and the influence of their site in society had already spread and they joined Y Combinator.

During this time in Y Combinator, they realised they had an issue with traction in New York where they had most of their hosts. They flew to New York to attempt to figure out the problems. This resulted in hosts telling them that they were not doing a good job of showcasing their apartments. “The photos were really bad and you couldn’t see what you were paying for”. They rented a professional camera and started taking pictures themselves. The new photos attracted more bookings and the revenue they were getting from NYC had doubled.



When 2009 March came, the title of the organization changed to Airbnb.

In 2011, Airbnb began spreading its physical wings. It opened another branch in London. The increase of more international branches of the Airbnb created the idea that its economies of scale were skyrocketing every financial year. By 2013, the firm recorded over six million and close to 250, 000 property from all corners of the world. In 2015, Airbnb partnered with TESLA motors and Cuba International. Lastly, in 2016 when President Trump banned immigration in the United States, Airbnb donated 13 million to accommodate everyone that had been rendered homeless by the Trump’s move.

What is Airbnb and it history

What do Airbnb Charge?

Airbnb work on a commission model that they take for each booking. Unlike more traditional websites like booking.com where the hotel pays all the fees, Airbnb has spilt the fees between the guests and hosts.  Hosts are charged 3-5% per booking depending on the cancellation policy and guests are charged between 6-12% depending on the type of property they rent.

The Future of Airbnb

The future may have various effects on the tourism and business industry, what is Airbnb doing about this.

Positive Effects

• Effect on Airbnb Company
Currently, Airbnb Company operates in more than fifty thousand countries and has over one million homes. More than one hundred and sixty million visitors get accommodation from Airbnb homes every year. Judging by the trend at which the company is gaining profit, the company will be at an incredibly high business level come the next three or five years. The rate at which tourists are using the Airbnb to rent vacation homes increases with every season. Following the statements of Joe Zadeh, an Airbnb Chief based in the United States, Airbnb will soon provide other luxuries such as helicopters and yurts to allow visitors to have improved personal experiences.

• Airbnb and Tourism
Airbnb boosts the tourism industry by encouraging tourists flock countries every season. A lot of people love to travel, but the cost of luxury hotels may keep them from visiting various tourist destinations. Since the founding of Airbnb, the number of tourists visiting the involved countries rises. The reason for the increase in the number of travelers is that they are sure they will find high-quality properties to rent which are less expensive compared to the price of hotels. Suppose a guest finds a home that is affordable and matches the standards of luxury hotels, he or she will not think twice regarding renting the place. Many tourists look towards saving money while on vacation and Airbnb provides them with the opportunity to do so.

• Airbnb and Corporate Clients
The improvement of the Airbnb Company shows that it is ready to do business with high-profile clients. For instance, celebrities, politicians, high-class people in business and other individuals with high statuses show interest in Airbnb properties. The Company also provides high-class homes that match the standards of high-end hotel rooms. Moreover, corporate clients prefer exclusive privacy and hotels may not offer the level of privacy that such clients need. Airbnb’s future is bright because high-profile clients are a major benefit to the company. Suppose corporate clients begin to book vacation homes more than they pay for luxury hotel rooms, Airbnb Company will gain more profit than it predicted.

Negative Effects

• Uncontrolled Listing on Airbnb

The owners of Airbnb properties are benefiting as the number of tourists continues to hike. Soon every homeowner with a luxury home will want to list their homes under Airbnb Company. The uncontrolled listing of vacation homes under Airbnb will make it difficult to decide the best properties for travelers. Also, tourists are likely to have a difficult time selecting spaces that match their expectations. Airbnb listing is incredible, but overcrowding of properties is not good for the company.

• Effect on Hotels
The more the interest for booking Airbnb properties increases, the fewer tourists book hotel rooms. Hotels are also part of the tourism and hospitality sector. The future of Airbnb threatens the future of hotels because of the stiff competition that will arise between the two. Tourists will always choose high-standard spaces with affordable prices. Hence hoteliers will need to take their game to an advanced level to win the hearts of travels. Otherwise, hoteliers will have a hard time competing with Airbnb regarding customer attraction.