What is Airbnb? How they became a $30 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 Trump’s move.

How Airbnb Started
How they became a 30 Billion Dollar Company!

 

Introduction to Home-Sharing

While Airbnb is famous, many people still do not know anything about this company or how it works. Here are the questions you may have been afraid to ask and the answers to help you understand this unique lodging opportunity that helps you live like a local and save money

How does Airbnb work?

Basically, Airbnb is a platform that connects people with space to rent in their homes with travellers looking to cut lodging costs. To make a reservation you have to create an Airbnb profile on their website, use the filters to find the right place to stay and when you do, you contact the host and make your arrangements. If it’s your first time as a guest using Airbnb use our discount code to get a $35 bonus booking for free.

If want to become a host for the first time using out $70 bonus code.

What exactly is an Airbnb?

Airbnb is an online platform that connects budget-minded travellers with hosts who have extra room in their home or apartment to rent. You can also rent entire homes, unique places like cabins and RVs plus you can bring pets to some of those places.

Airbnb does not own any property but is a marketplace where owners rent to visitors.

Why is Airbnb so cheap?

The reason Airbnb is so cheap is that it owns none of the real estate or any real estate, that homeowners rent out. These are all private places that have extra space for those travellers wanting to avoid hotels or high lodging costs. The hosts get to set the price and unlike hotels, their overheads can be a lot lower as they don’t have employees to pay, nor insurance as Airbnb covers this.

Do the owners stay with you in Airbnb?

This would depend on the rental space you agree to use. If you are in a room or two in a home or apartment, then yes, you would be living with the host. If you are renting the entire space, then no the host would not be staying with you. The latter situation would only have minimal contact with the owner. Stay with a host can be a great experience as you can get to live like a local.

Is booking through Airbnb safe?

The company does everything it can to make renting a place safe for both the hosts and the travellers. But it is like any other travel company in that its protections can only go so far. The company makes sure the risk is very low when accepting reservations, they do compare names against watchlists, provide safety workshops for hosts and guests, make sure your payment and account are secure and also watch for scams.

Using Airbnb is as safe as using a credible hotel. Just make sure to read all the reviews before booking a place to stay. The Airbnb system build trust through the review system.

What are the risks of using Airbnb?

If you are renting to strangers, you face the risk of damage to your property, extra insurance costs if your current policy doesn’t cover paying guests, in some countries you may be charged taxes. Airbnb covers each host with $1million dollars insurance in case of property damage. However, large damage in property is rare. Unless you end up renting your property to a group of teenagers over New Year’s eve, then your just asking for trouble. Common damage that you might find in your property is a broken wine glass or plate, but these are cheap and easy to replace.

These are just some of the basic risks of using Airbnb and you should do more research before you leap to sign your home up.

Is Airbnb Legal?

Then it may not be legal to rent out your space to travellers in your town or city. You should check local government guidelines on renting out your property before venturing into home-sharing. An example of this is London, where you can legally rent out your property for up 90-days in a year.

Can you make a living off Airbnb?

The best answer is that this depends on many factors. Those factors include how good you are as hosts and are you business-minded; the location of your property plays a large role in this; the city you are located in or near; how often you rent your home out; who you rent to and more.

Why do people like it?

From the hosts’ side of the issue, they like it as they can turn extra space into revenue-earning space. Or they can earn enough to cover extra expenses or save for a dream vacation. Plus, they can rent that space out whenever they feel like it and do not have to do it full time.

For travellers, it is a great way to see different locations, experience different cultures as well as save money. If you want to experience something different then living with a host can be much more rewarding as you may get to see the town and city like a local.

Is it Easy to Book?

The process for booking a place to stay is simple and easy. The platform is said to be very easy to use. Both the host and guests have filters to pick that help them find the right guests and location.

Then Airbnb handles the payments for both the hosts and guests and the accept major credit cards, PayPal and Google Wallet. The host can be paid through direct deposit, Pay Pal and other payment options.

Can you trust the people?

The first thing you should know about is that no one can make any travel arrangement completely safe for anyone. The home-sharing company does everything it can to ensure that both the hosts and guests are able to trust each other.

The company uses 3 principles to help them build that trust between host and guest: first, they maximize safety. Second, the make transparency a top priority and third, they provide a 24/7 customer service so both hosts and guests know they are not alone.

What is Airbnb Plus?

Airbnb plus are properties that what they classify as exceptional properties and that they have verified with a member of their team. To give guests the confidence in booking something they know has been inspected by Airbnb.

For hosts to qualify for the Airbnb Plus program they need to meet the following requirements:

  • They must have a 4.8/5 minimum rating from bookings that have been made in the last 12-months.
  • The property can be an Entire home or a Private Bedroom with its own bathroom.
  • The property undergoes a 100 point inspection, which includes
  • No booking cancellations over the last 12-months

What is Airbnb Luxe?

It doesn’t stand for Airbnb Luxembourg, but this is the companies offering for high-end vacation rentals. In 2017 acquired Luxury Retreats for $300 million to add to their portfolio with now over 2000 luxury homes. On Airbnb Luxe you can find properties from villas, castles and even private islands. Each property has a minimum of 300+ inspection points and they only list the highest quality in properties.

What do Airbnb Charge?

Airbnb work on a commission model that they take for each booking. Unlike more traditional websites like Booking.com & Priceline 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.

What are the most popular places?

The top countries for that use the home-sharing platform are the USA with 660,000 listings, France with 485,000 listings and Italy with over 340,000 listings. According to AirDNA data, London rules the roost with over 60,000 listings followed by Paris with 38,000 listings and New York on 35,000.

Airbnb Top Competitors

Airbnb wasn’t the first to create a home-sharing business model but they got a lot of things right including branding, trust and an easy to use platform. Other competitors include:

 

What is Airbnb’s Future?

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, the 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

The home-sharing company boosts the tourism industry by encouraging tourists to 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 the company, the number of tourists visiting the involved countries rises. The reason for the increase in the number of travellers 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 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, the 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 travellers. 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 in 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 at 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.

 

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