Posted on: | Posted by: Rahul

HOW AIRBNB WORK: BUSINESS MODEL AND REVENUE MODEL

Can you name something more fun than travelling? Travelling and exploring new places have always been one of the most memorable parts of someone’s life. But there are times people face problems in terms of reservation in a hotel, or cannot enjoy a different culture which leads to mood-bombing experiences.

Such issues led to the rise of such businesses that offered solutions for the travellers regarding booking a hotel, or experiencing the new culture, different places to explore, and so on.

Let’s move forward and learn about a marketplace that has changed the travelling experience for the travel-lovers.

Airbnb: A Marketplace for Travellers

SAirbnb is an American based online marketplace company that connects travellers with the local inhabitants of a place who wants to rent their property to earn money. Airbnb provides services to the travellers so that they can get an affordable place and they get a chance to know the local 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 Chesky, Joe Gebbia and Nathan Blecharczyk.

2.The company’s headquarters are located in San Francisco, California.

3. In 2012, Airbnb overtook Hilton Hotels for night booking which has over 1,500,000 listings in 34,000 cities and 190 countries.

4. Airbnb launched a travel guide known as Neighbourhoods that enabled travellers to book a place in the neighbourhood according to their choice.

Airbnb Business Model Canvas: How Does It Work?

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

1. KEY PARTNERS

Key partners play a major role in defining and shaping up the business model of Airbnb, hence they cannot be replaced easily.

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 is directly proportional to the quality of 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 who are involved with the funding segment to acquire customers, develop the app, balance the cost of capital and other important operations of the business.

2. 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 the profit in the business. Such key activities are mentioned below:

Ø Airbnb business concept is maintaining a bond with the customers to gain their loyalty and trust towards the company and at the same time persuading new customers to join and participate.

Ø Airbnb business model concept smartly deals with the customers by taking their complaints into account and working on the improvements and making the transactions between the hosts and the customer easier.

Ø 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.

Ø Providing the customers with great experience is what defines Airbnb.

3. KEY RESOURCES

In the Airbnb business concept, key resources are the hosts and the guests. Airbnb hosts make sure that the guests do not feel total strangers at the new place. The hosts try to make the guests comfortable by guiding them about the region where the guests wish to travel. 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.

4. 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 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

5. CUSTOMER SEGMENTS

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

§ Guests are divided on the basis of their travel reasons, or time period. For instance, some guests travel due to business purposes while some travellers come to enjoy their leisure time, some travel to a single destination while others want to explore multiple destinations.

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

6. 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.

Revenue Model of Airbnb: Airbnb Business Concept to Earn Revenue

Airbnb for work charges a service fee per transaction from the hosts and the guests.

The revenue model of the Airbnb for work is described below:

1. Guests pay a little more money than the hosts due to the supply and demand. Hosts are harder to get as there are not many people who 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 the cancellation of any booking which accounts to 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 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

Airbnb 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 the expensive hotels. Each booking helps Airbnb to earn a commission of 6-12% from the guests and 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.