Airbnb Business Model & Revenue Resources

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What is Airbnb and how it all started?

Airbnb can be understood as a platform that connects people who are looking for local rooms for renting and those who have rooms available in the local area to rent.

It helps in connecting the hosts and the travelers on their online platform and facilitates the process of renting a room without even physically owning it.

Their story started way back in 2008 Joe Gebbia& Brian Chesky founded it. Their only problem was that they could not pay the rent. So they decided to rent out the three mattresses that they were having with a promise to give home-made breakfast.

Later in 2008 they redefined the website and started selling cereal boxes online when the presidential elections were happening.

To Boost up their click rates, they uploaded the high-quality pictures of the rented space. In 2015, the capital of the company was estimated to be $25.5 billion.

Business Model of Airbnb

Let’s understand the business model of Airbnb in 8 segments :

1. The customers :

This segment is divided into two subcategories:-

• Host – The owner of the property who welcomes the guests and provide accommodation to them on his property.
• Guests – Tourists and travelers who are looking for local rooms at lower costs and to have a great experience on their trip.

Also, the guests are categorized on their preferences –

• By Type of Customers: Single, Couples, Family, Business travelers
• Location: City, rural, suburban
• Price: very low to expensive
• Space: cottage, studio, farm, apartment, house
• Facilities: Wi-fi, TV, Pool, parking, Iron, etc
• Experience: scenic view, cozy, beach, etc.

2. The value theory of Airbnb :

The following theories help to add value to Airbnb:-

• For Host :
• The host can list any property on Airbnb as long as it does not violate the guidelines of Airbnb.
• They have the control of dates, property rules and pricing of the rent
• They are provided with the insurance cover of up to 1M$ for any damage or accident
• The host can ask for a professional photographer to take high-quality images of the property to increase click rates
• The platform is easy to communicate with guests
• 24*7 customer support available for Host via email, phone, and live chat
• For Guests :
• They can save a lot of money as it is a pocket-friendly solution for travelers
• The browsing is made very simple and one can easily find locations from over 1.5 million listings in 34,000 cities and 191 countries.
• They get big properties which are good for people with big groups
• They can choose facilities according to them
• They are provided unique experiences
• A background check has already been performed by Airbnb staff on all hosts
• Self-check-in option available that is helpful for guest to check in any time
• Secure payment options

3. Their key partners :

• Hosts – They provide travelers information about the property and help them to make the right decision
• Experience giving hosts – these hosts provide information about the special events that are happening locally and arrange tickets and bookings for them
• The investors – they are the one responsible for formulating and giving shape to the business of Airbnb. For innovating the online platform and tom do the research process large funds are used to enhance the user experience. Their main investors are Y Combinators, Google Capital, Sequoia Capital, Tiger management.
• Travel partners – the managers help to maintain and perform the daily tasks required to meet the company’s objectives.
• Professional photographers – the photographers that click the best version of your property to increase rental rates.

4. Key Activities :

• Platform Development – there should not be technical issues on the platform that the users face
• Marketing should be done to increase sales and expand the network
• Managing behaviors of customers to reduce risks
• Protect personal details and sensitive information of the users so that their information is kept private and only that information is disclosed that the user allows
• Customer service should be maintained especially for the traveler to avoid bad reviews and there should not be any negative impact from social media. Fulfilling the customer’s needs is most important.
• Development of a strategy to strengthen the partnership. The partners of Airbnb are Make a wish and fisher house foundation. They provide free medical stay to those children who are suffering from critical illness and those veterans who need medical attention
• To align contractual agreements to list services in particular countries
• To hire and retain employees

5. Customer relationships :

• The website and app of Airbnb are the primary tools to access Airbnb services
• They recommend relevant listings to guests personally to avoid extra listings confusion
• Customer service support is excellent in terms of satisfying customers

6. Key resources :

• The Airbnb platform and the app
• The employees working for Airbnb, the engineers and data scientists
• The properties listed there
• User-generated content
• Investors

7. Channels of Airbnb :

• The Airbnb platform through which it delivers its services
• Platforms like content marketing and digital ad campaigns that guide the hosts and travelers to the website or app

8. The cost structure of Airbnb :

• The development and maintenance of the website
• The cost of infrastructure
• Marketing
• Salaries of employees
• Insurance cost
• Legal and administrative cost
• Regulatory cost

How Airbnb generate revenue?

The main sources of revenue generation are :

• Host fee – the host is charged a fee for listing a property on the Airbnb platform. Once the listing is completed the commission is deducted. Also, there is a 20% service charge on hosts that offer experience.
• The traveler’s fee – the traveler is required to pay a certain amount for using the Airbnb app and platform to enjoy its services. These are :
• Reservation
• Cleaning fee
• Service
• Extra guest fee
• Currency exchange

Well, big thanks for reading this post regarding Airbnb business model and revenue resources till the end.

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