Airbnb’s Business Model and Source of Income

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The Airbnb Business Model and Revenue Source

Since its inception in 2008, Airbnb has grown in popularity as a hotel option. This online marketplace allows travelers to locate a home-like environment in a foreign location and hosts to rent out their property.

There are already 2.9 million hosts and over seven million postings on Airbnb in over 200 countries. Airbnb is used by more than 150 million people, with six renters checking into an Airbnb-listed accommodation every second, according to the company.

Airbnb’s one-of-a-kind service has propelled it to prominence in just a few years since its inception. We’ll now go through the Airbnb business concept and revenue model in further depth.

What does the Airbnb business model entail?

The Airbnb business model, like Uber and OYO, is an aggregator business model. They don’t have the same business plan as Hilton and Marriott hotels. Airbnb’s business model, like Grub hub’s, is based on an internet platform that integrates all of the model’s components. Individuals and hosts, who are crucial components in the Airbnb process, are Airbnb’s most valuable assets. Airbnb serves as a connecting point for both hosts and travelers. Hosts can list their property for rent, and if someone wants to stay there, they will be paid rent. Individuals who stay at Airbnb have an entirely different experience than those who stay in hotels since they are closer to the locals.

Airbnb has photographers that capture high-definition photos of the properties, allowing tourists to choose from a variety of realistic-looking options and make the best decision possible.

Airbnb’s Business Model

Airbnb’s revenue model is similar to that of Postmates, which charges a fee to both hosts and riders. Postmates generates additional revenue through fees. As the number of properties listed and guests who stay grows, so does Airbnb’s revenue. As a service provider, Airbnb makes money by facilitating listings and bookings. In order to make money, there are two major ways that Airbnb gets it:

  • Airbnb collects 10% of the payment amount as a commission from hosts whenever someone chooses and pays for a host’s property. This is one of the fees charged by Airbnb.
  • Passengers’ transaction fee: A transaction fee of 3% is paid to passengers when they pay for their stay. This sum contributes to Airbnb’s earnings.

Market Segmentation on Airbnb

Our knowledge of Airbnb and how it works has progressed. Take a look at how the Airbnb industry is splintered.

Hosts:

  • Hosts are people who offer their spare rooms on the website, and if they are hired, they will receive rent in exchange.
  • By reading the reviews of previous hosts, hosts have the option of accepting or rejecting the travelers.
  • They can include their property, the features it will have, the rental price, and the arrival and departure schedules for guests.

Travelers:

  • Travelers are those who rent living space from hosts.
  • Their search might be narrowed down based on their needs. They can select the rental pricing range, the basic amenities they need, and the number of guests they intend to host.
  • There is an online payment option for those who wish to reserve their spot. This is considered to be the most convenient method of making a reservation.

Photographers:

  • Airbnb engages independent photographers to take high-resolution photos of their properties.
  • Airbnb compensates for the finest photographers with the most bookings.

Structure of Airbnb Fees

There are three key costs in the Airbnb cost structure. These are the following:

  • Permanent employees’ salaries: Anyone who works in the physical office of Airbnb is entitled to a monthly wage as well as additional benefits.
  • Airbnb will cover the costs of setting up and running the technology required to run the business, such as the website, servers, and so on. They also have to cover operating expenses such as utility bills and other small charges.
  • Airbnb has engaged freelance photographers to take the greatest quality photos for the website. Airbnb must pay the photographers the agreed-upon fee for this service.

The Most Serious Issues with Airbnb and How to Solve Them

There are always problems with any company idea, but how you deal with them is what defines whether or not the firm succeeds. The business model used by Airbnb is no different. Although they’ve faced certain challenges, they’ve overcome them with ease. A look at two major difficulties that Airbnb faced in its business strategy:

Trust issues:

Both hosts and guests faced the biggest barrier when it came to using Airbnb: trust. It was a hazardous decision for the hosts to allow any stranger to stay in their home, and the passengers felt the same way. When it comes to Airbnb, however, both the hosts and the guests may be verified. Airbnb has made it possible for both travelers and hosts to link their social media accounts to the service.

Traveler retention:

Retention techniques are critical for every organization because existing customers contribute significantly to the company’s success. Offering travelers discounts, credits, and other incentives on a regular basis is part of Airbnb’s business plan.

Competition:

Since its inception, Airbnb has experienced rapid growth. However, healthy growth comes with it its own set of challenges. Many websites have replicated Airbnb’s business model and fee structure verbatim. Despite the fact that Airbnb has become a well-known brand, they are continually working on their Airbnb market strategy to set themselves apart from the competition.

Airbnb’s Long-Term Future

Airbnb was never a billion-dollar business, but it has gone a long way since its early days as Airbed and Breakfast. Airbnb has consistently evolved and modified its business model and website throughout the years. Bookings were formerly only available through the website, but they have since expanded to include apps.

With the increased use of applications, mobile app development companies have been receiving an increasing number of projects from businesses. And, because the expense of developing a mobile app is no longer prohibitive, businesses are increasingly turning to them.

The daytime expenditure of Airbnb guests ($720) is higher than that of hotel guests ($520). Sixty percent of Airbnb visitors say they spend the money they save on the site. This raises the overall spending of Airbnb guests, which helps the local economy.

Airbnb is attempting to take over the hotel industry and become a better provider of services than hotels. By 2028, they want to serve 1 billion passengers each year. This can be accomplished by adding more cities to the list.

Here are some of Airbnb’s future business plans:

  • In addition to variable dates, Airbnb now offers flexible locations and listings.
  • Airbnb’s app or website may suggest some distinctive sorts of properties, such as adobe houses or castles, for travelers with flexible itineraries.
  • In addition, Airbnb is introducing a speedier checkout procedure, enhanced review systems, and more transparent cancellation policies.
  • They also intend to increase the number of customer service personnel by a factor of two.

This was our interpretation of the business concept of Airbnb. If you appreciated this blog about Airbnb business strategy, you can find more similar business models on the Next Big Technology official blog. You can contact reputable travel app development businesses if you want to design a travel app for your company.



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