How Airbnb Works: Business Model and Revenue Model

Updated On: August 24, 2022

Updated By: appsrhino

blog-image

Airbnb: A Marketplace for Travellers

Airbnb is an American-based online marketplace company that connects travelers with a place's local inhabitants who want to rent their property to earn money. Airbnb provides services to travelers to get an affordable place and get a chance to know the residents of the place.

Salient Features of Airbnb

Let’s look at some interesting facts related to the Airbnb marketplace:
  1. Airbnb Company was founded in 2008 by Brian
  2. Chesky, Joe Gebbia and Nathan Blecharczyk.
  3. The company’s headquarters are located in San
  4. Francisco, California.
  5. In 2012, Airbnb overtook Hilton Hotels for
  6. night booking, with over 1,500,000 listings in 34,000 cities and 190 countries.
  7. Airbnb launched a travel guide known as
  8. Neighborhoods enabled travelers to book a place in the neighborhood according to their choice.

Airbnb Business Model Canvas: How Does It Work?

Airbnb business model comprises some key components essential to define Airbnb and Airbnb business concepts. Let’s move forward and discuss them one by one in detail.

KEY PARTNERS

Key partners play a major role in defining and shaping up the Airbnb business model. 

 

i. Hosts: The hosts in the Airbnb

business concept are the ones who bring their homes or property and provide the customers' various options to live in. The customer's satisfaction and comfort are directly proportional to the quality of the place offered by the hosts. There are two types of hosts:

  • Rental hosts provide houses, rooms, condos, etc.
  • Event hosts provide a tour guide across the
  • local streets, food, fashion, and culture.
 ii. Investors: The Airbnb business model involves the partners involved with the funding segment to acquire customers, mobile app development, balance the cost of capital, and other important business operations.

KEY ACTIVITIES 

Airbnb's business model follows such key activities that involve such functions that reduce negative operations and inculcate such practices, which lead to profit in the business. Such key activities are mentioned below:
  • Airbnb's business concept is maintaining a bond with the customers to gain their loyalty and trust towards the company and persuade new customers to join and participate.
  • Airbnb business model concept smartly deals with the customers by taking their complaints into account, working on the improvements, and making the transactions between the hosts and the customer easier.
  • Airbnb business model works on the concept of spreading their reach to as many areas as possible, which entices many guests to join and provides offers to the customers to keep their trust intact. Providing the customers with a great experience is what defines Airbnb.
 

KEY RESOURCES

In the Airbnb business concept, key resources are the hosts and the guests. Airbnb hosts ensure that the guests do not feel like total strangers at the new place. The hosts try to make the guests comfortable by guiding them about their travel region. The hosts recommend various places to visit, or the cuisines to try and other things to do that work for the convenient visit of the guest. Such quality services define Airbnb.

 

VALUE PROPOSITIONS

The Airbnb business model operates on the demand and supply chain system, i.e., demand for the hosts and the supply to the customers.

a. Airbnb business concept works on the host value propositions through following ways:

  • Generating income
  • Easy Transactions
  • Interacting with new people
  • Coverage of the Insurance
b. Airbnb business model canvas functions to provide the guest value propositions through the following ways:
  • Booking convenience
  • Ample number of choices
  • Better cultural experience at the destination city
  • Cheaper rooms availability
  • Cashless transactions
  • Sharing the experience through reviews
 

CUSTOMER SEGMENTS

Airbnb business concept defines the customer segmentation through two divisions which are mentioned below:

Guests are divided based on their travel reasons or time. For instance, some guests travel for business purposes while some travelers come to enjoy their leisure time, while others travel to a single destination. In contrast, others want to explore multiple destinations.

Hosts are divided based on the accommodation type (room, house, etc.), location (country or city), and location type.

 

CHANNELS

  • Digital marketing: Promoting Airbnb for work through digital advertisements, content marketing, social media platforms, etc.
  • Word of mouth: Reviews and ratings, messaging applications, influencers, and so on.
  • Communication channels like Airbnbmag, Airbnb newsroom, Facebook pages, etc.

Airbnb Revenue Model: Airbnb Business Concept to Earn Revenue

As per Airbnb revenu model, It charges a service fee per transaction from the hosts and the guests.
  1. Guests pay a little more money than the hosts due to the supply and demand. Hosts are harder to get as not many people own a separate place to rent while the guests try to save the hotel's accommodation fee.
  2. The hosts have to pay some fee on canceling any booking, which accounts for 3% fees on a flexible cancellation, 4% fees on a moderate cancellation, and 5% fees on a strict cancellation policy.
  3. Event fees involve no service charges for the guests and a 20% charge for the event hosts as the event hosts are easily available as such hosts get a chance to earn additional income from their hobbies.
Airbnb earn revenue through two medium: Guests and hosts

In Airbnb revenue model, it offers a platform to the hosts to earn revenue through their free space and enables the guests to experience the local culture and stay at cheaper places rather than spending at expensive hotels. Each booking helps Airbnb to earn a commission of 6-12% from the guests and a 3% fee on every transaction.

CONCLUSION

Airbnb is one such marketplace that can act as an inspiration for many upcoming start-ups. The business model of Airbnb has taken the marketplace to more than 190 countries across the world and is expected to grow its reach to other parts of the world.

If you are also thinking of building a marketplace like Airbnb, then contact AppsRhino for your next Airbnb clone.