Airbnb – Hospitality & Accommodation Redefined

The success of Airbnb clearly highlights the immense potential that’s present in the sharing economy. What’s astounding is that this billion dollar entity doesn’t own any property, yet it remains the largest accommodation provider in the world. The birth of Airbnb is just as remarkable as its success. Back in 2008, three friends living in San Francisco, California were having troubles paying out their rents.

They decided to set up a simple website consisting of a map and rented out three mattresses along with a promised homemade breakfast. Soon after, they redefined the whole website by using money earned from selling cereal boxes during the 2008 Presidential Campaign.

In order to boost the click-rates, they began uploading high-quality images of the rented space. That did the trick! In the winter of 2012, the website overtook Hilton Hotels in terms of the nights booked. It currently has a staggering 1,500,000+ listings in 34000 cities, spanned across 190 countries. Bookings can be done online or using the smartphone app. Most recently, the value of the company is said to be $30 billion.

So what could this success be accredited to? Quite a few things. First, the simple idea of bringing travelers and locals on a single platform with the help of technology. Second, people can explore their favorite destinations in a less expensive while still a more vibrant way as the locals would. Next, it brings about a sense of community, people get to know each other, read reviews and ratings from other’s experiences and decide who their host/ travelers should be.

There’s no doubt, the introduction of Airbnb has placed the future of Hotel industry in a jeopardy. Not long ago, the American Hotel and Lodging Association’s nationwide campaign against Airbnb was a clear manifestation of the uncertainty felt across the industry.

How Airbnb Works?

 How Airbnb Works

As cited earlier, Airbnb is a platform where hosts, people wanting to rent out their property, and travellers, who avail the rented property, can come and meet each other on the platform.

Travellers can look up all the listings whenever they like, but in order to book any reservation, they have to create an Airbnb profile. Travellers can contact the hosts by filling in an online form that can be found on every listing page. Once they’ve found the right type of property, they can go ahead and submit the reservation form by clicking ‘Book It.’ That takes the traveller to the secure payment system. Airbnb charges anywhere between 6-12% service fee, in addition to the reservation, for services such as customer support and the Host Guarantee. It accepts all the major credit cards including MasterCard, Visa, AMEX, JCB and Discover), Google Wallet, PayPal as well as some debit cards that can be processed as credit. The travellers aren’t charged until the host confirms the reservation.

The payment to the host, however, isn’t immediately transferred. It stays with Airbnb for 24 hours after the check-in. Payout methods differ based on the currencies and country of the host. Airbnb charges another 3% service fee to the host for processing the transaction.

An additional fee, both hosts and travellers will be subject to, if they happen to reside in the European Union, Switzerland and Norway is the VAT(Value Added Tax). Furthermore, Airbnb’s Exchange Rates also apply to travellers who pay in a currency different from the one mentioned by the host in the listing.

Experience Life Like Locals

Experience life like locals

It’s can be said with some certainty that Airbnb’s initial attempts were to crack into the low to medium earning demographics. People, for whom the hotel prices were not always affordable. But, that’s no longer the case. There’s a group of people who are opting into Airbnb as it gives them an opportunity to meet new people and experience local life at a more personal level. This could be in the form of exploring the most popular spots in a city, learning to cook local food, learning the language, culture etc. All that at a much lower cost compared to what the hotels would normally charge.

On the flip side, the hosts also get a chance to meet new people and obviously earn money from renting out their space. 

Open Platform

Open Platform

Airbnb is an Open Platform. Anyone with a spare space, wanting to make some extra cash from it could list his/her property on Airbnb. Same goes for travellers. They can look up places for accommodation in their favourite destination and get in touch with the hosts – all in a super-quick and hassle-free manner. Airbnb, in a way, fulfills the needs of both the parties. Bringing people, who can satisfy each other’s needs close to each other.

Space In Many Forms

Space In Many Forms

When you think of accommodation, normally an apartment or flat comes to mind, something that defines a living space. But, Airbnb isn’t just about the most quintessential forms of accommodation. Other than the houses, condos, apartments, one could expect to find, strange as it may sound, castles, tree houses, barns, mansions, houseboats and even caves! So there are all sorts of ‘weird’ and out of the box accommodation ideas you’re likely to come across on Airbnb. It may not be for everyone, but if your idea of adventure comes anywhere close to that, Airbnb is ready to help you experience it.

Challenges Facing Airbnb?

Challenges Facing Airbnb

Working on this ‘simple’ concept of creating a marketplace for hosts and travellers, Airbnb has turned into a multi-billion dollar organization and still growing strong. That’s however, not to say that it doesn’t have any challenges to contend with:

People are Airbnb’s greatest asset and their happiness and convenience is their first priority. Yet the idea of renting out your space to an unknown host or sharing the space with outsiders doesn’t appeal to everyone. It’s fair to have qualms about what you’ll eventually get after the booking. Airbnb has no doubt made attempts to ease those concerns with the setup of its confirmation procedure for each host and traveller.

Airbnb also requests users to join with their Facebook accounts for better user transparency. Yet, the fact remains, you’re unsure of what you’re getting yourself into and many tend to err on the side of caution by not going for it.

There are also a number of legal issues surrounding Airbnb concerning Housing affordability, taxation and its privacy and terms of use. It’s a must that Airbnb take measures and do the necessary before its users start losing their trust in it.

The biggest of all challenges, however, is the local competition. Local players can easily work and improvise on Airbnb’s concept to suit their locality’s needs, which they better understand, and gain an upper hand. They’ll also have the first-mover advantage if they can respond in time to Airbnb’s expansion.

Airbnb Is Kickin’

Airbnb Is Kickin'

Despite all the controversies, Airbnb remains mighty successful.  Their team keeps coming up with creative and helpful ideas to make the user-experience better every time. In 2017’s holiday season as many as 3 million guests were using the service, according to Airbnb’s CEO Brian Chesky. The number of guests just seems to be doubling every 12 months, a clear indication that the service is peaking new heights and showing no signs of stagnation. Airbnb hasn’t only changed the way people travel, book accommodations and indulge in a foreign culture but it’s also brought to light the immense success that lies in store for entrepreneurs wanting to tap into the sharing economy.


May 8, 2018



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