Unveiling the Facts: How does Airbnb Earn

Unveiling the facts: How does Airbnb earn
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Aswathy Content Writer
2020-02-11
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Established in the year August 2008, Airbnb has attained a robust growth. It has reformed the way people travel With no doubt, this rental platform had a gainful development over the past years. Have you ever wondered how Airbnb’s revenue model works? How much revenue does Airbnb make?By the time you are done reading this post, you will have a clear idea on Airbnb and the ways in which the company earns. 

Airbnb business model

A Business should be able to define how you create, capture and deliver the value. Airbnb business model defines the customer base of the company, captures the trend and delivers the value to its customer. 

Airbnb is loved because of its cheaper prices and the different kinds of offers they serve, that fits the needs of travellers. The individuals and the hosts are the key components in the process. It has a minimum cost and doesn’t need a huge capital. 
It is Airbnb’s business model that provides great revenue to the company and innovative service to customers. If you are into vacation rental business, then you must know the ways to build a successful website like Airbnb. Read further to know more.

How it works?

    • Airbnb acts as a platform that connects guests and travellers. 
    • Hosts can put up their property for a stay on the website along with the amenities and services they are offering.
    • If someone wishes to stay there, the hosts get rent in exchange.
    •  Airbnb hires a freelance photographer to click a high-quality image of the property listed. 
    • Travellers can look for property or vacation homes as per their needs. Once the traveller finds the perfect spot, payment is done via Airbnb payment portal.
    • The host approves the booking and after the traveller stays there, the host receives the payment after deducting Airbnb’s commission.

Airbnb vs. Uber vs. Oyo rooms business model

Airbnb is an aggregator business model similar to Uber and Oyo.Oyo rooms have started to operate the entire building independently. They have expanded to co-living and co-working spaces. Coming to Uber, it acts as an agent between the riders and drivers ensuring a standardized service. However, this is different from Airbnb’s business model. The travellers are free to make choices from the listings after going through its reviews. Even though Uber has a rating and reviews for both riders and drivers. It doesn’t give the facility to the user to choose the driver they want to ride with. Also, the reviews are not as elaborate as you see in Airbnb. Uber can suspend the driver or rider if the ratings are too low. Uber pays its drivers a fixed rate of commissions for every ride. 

And, Oyo business models are based on standardization. In Oyo, the person books a hotel with the brand, not the individual hotel. In the case of Airbnb, it is just the opposite. The room is booked through a website with the host providing it. Oyo assures a certain level of services just like Uber. Oyo has now started to lease out the full property and run the building in its brand name. Airbnb earns through commissions mainly while Oyo earns through a take-up rate. Oyo focuses on hotel, guest houses whereas Airbnb focuses mainly on Homestays. 

Commission from property owners (Hosts) and Transaction fee from Travellers (Guests)

    •  Airbnb charges a flat 10% commission from hosts upon every booking done through the platform.
    •  Airbnb charges 3% of the booking amount as transaction fee from travellers upon every confirmed booking.
    • The platform charges guests a service fee between 5% to 15% of the reservation, while the commission from hosts is generally 3%.
    • They also charge hosts who offer experiences with a 20% service fee on the total paid amount.
Airbnbmag
Airbnbmag is a $15 magazine product that the company has added as a result of the partnership between Airbnb and Hearst. It has started with a motive to make the travellers feel that they belong to that particular place they visit. Apart from a normal guidebook it also helps the guests explore the places through the local’s eyes. 

Business travel
The business-ready homes by Airbnb fulfil certain requirements for home type, amenities, check-in, reviews, responsiveness, and host commitment. This is specially designed for travel managers of the companies for better transparency, accurate reporting for their companies. 

How Airbnb gets Guests and Hosts?
You might be thinking about how Airbnb reaches out to customers? It is quite simple.
An Airbnb client is a person who indicates the organization’s income. He can be a host who offers his space for lease or guest who books a space. The sources include:


    • Word of mouth
    • Digital marketing
    • Promotion offers
    • Social media 
    •  Affiliate marketing
    • Special offers, refer and earn etc..

How much is Airbnb worth?
In March 2017, the company was valued $31 billion in March 2019, and what Forbes estimated in March 2018. Airbnb made $93 million in profits on a $2.6 billion income. The funding until September 2018  is $4.4 billion.
The platform, which is reportedly to go public in 2019, is present in 34,000+ cities across 190+ countries. The company has 1.5 million listings and has served more than 35 million guests till date. The places listed on Airbnb have served 6,000,000+ people for their stay at comfort. Due to an enormous number of bookings, the revenue continues to grow with its user base.

The future of Airbnb & Aggregators
Airbnb is already a multi-billion dollar company almost present in all over the countries. People prefer this platform over hotels for its unique business model. It is now concentrating to further increase the daily transactions on its platform and is sure to grow further.

Hope you find this article useful. For further industry-related news or information stay in the know with our blog.