Marketing Strategy and Business Growth Of Airbnb

Airbnb is a platform business model that makes money by charging visitors a service charge ranging from 5% to 15% of the reservation price, while hosts typically pay a 3% commission. The company also charges hosts who provide experiences a 20% service fee on the entire amount paid.

Introduction

Airbnb is a process in which people may rent out their primary dwellings to tourists. Renters often want lodgings with a homey atmosphere that hotels cannot deliver, whereas most hosts aim to utilize home rentals as a source of additional money. Most of its revenue comes from service fees levied to visitors and hosts on bookings.

For example, for a $100 booking per night placed by a host, Airbnb might earn up to $15 in host and guest fees. Airbnb made $5.99 billion in service fees on $46.9 billion in Gross Booking Value in 2021. With over 4 million Hosts and over 1 billion guest arrivals in over 100,000 cities and towns in practically every country, Airbnb has grown into a behemoth without owning a single property.

Airbnb collected $6 billion in service fees in 2021 by an average of 13% on a $156 booking.

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Details About Airbnb

Type   Public Company          
FoundedAugust 2008; 14 years ago
FoundersBrian Chesky Joe Gebbia Nathan Blecharczyk
Services            Lodging Hospitality
HeadquartersSan Francisco, California, U.S.
Area served Worldwide

Airbnb, Inc. is a corporation based in the United States that provides an online marketplace for housing, principally homestays for holiday rentals and tourism activities. The San Francisco, California-based platform is accessible through a website and a mobile app.

Airbnb does not own any listed properties; instead, it earns from each booking through a commission. Brian Chesky, Nathan Blecharczyk, and Joe Gebbia launched the firm in 2008. Airbnb is an abbreviated form of the company’s full name, AirBedandBreakfast.com.

History of Airbnb’s Entrance Into The Hotel Sector

In 2007, Joe and Brian shared space in San Francisco and had financial difficulties. San Francisco was hosting a design conference that weekend, and hotels were booked out, so the couple inflated three airbeds and transformed their apartment into an Airbed & Breakfast.

Their contacts that weekend led them to understand the more significant notion behind homestays. Nate soon joined, and the trio devised a method for individuals worldwide to become hosts. Since then, they’ve expanded from two hosts in San Francisco to a global community of over four million hosts.

They strengthen their relationships with the locals in the locations they visit. The hosts provide this connection and a personal experience for guests; after all, guests are invited into their homes and live in their communities. In addition, Airbnb provides lodgings that differ from standard hotel rooms, prized by clients searching for a homey ambiance.

The firm went public on December 10, 2020, after obtaining $3.5 billion in an initial public offering. Hosts were given the option to purchase business equity at the opening IPO (initial public offering) price of $68 per share. The stock closed at $144.71 on its first day of trading.

Strategy Behind Airbnb Generating Revenue And Profits

More than 200 nations have listings on Airbnb totaling more than seven million. More than 150 million people use the website, and six tenants check into an Airbnb-listed apartment on average every second. Airbnb’s primary source of income is the service fees on bookings levied against both visitors and hosts.

Guests are obliged to pay a nonrefundable service charge based on the kind of listing, typically under 14.2%, depending on the reservation amount. Because families or groups making more significant bookings can save money for other travel expenditures, a more expensive reservation results in cheaper service fees for visitors.

Each completed booking entails an additional 3% fee for hosts to pay for handling visitor payments. If you list on Airbnb Plus, this charge can be more. Unless the owner cancels or removes the listing, guests pay the service charge when a reservation is made. To accommodate users, Airbnb modifies service prices whenever the reservation is changed.

The Benefits Of Airbnb For Hosts

Hosts can serve global clients. Within four days of becoming available, 50% of hosts get a booking; within 16 days, 75% get a booking. On its platform, Airbnb handles all payments for hosts, including receiving payments from visitors and processing payments to hosts.

Host Guarantee Program: In the case of third-party claims of personal injury or property damage, hosts are provided with property damage protection of up to $1 million for each listing. As a result of reviews left by other hosts and the site itself, hosts are informed of the caliber of their visitors.

More sophisticated scheduling and pricing tools are available to hosts. These tools assist hosts in setting prices depending on the nature and location of a listing, the time of year, anticipated demand, and other variables. With the use of Airbnb, hosts can control their calendars and approve, quickly locate, and manage upcoming reservations.

Airbnb Value Proposition For Visitors

  • Visitors experience local life: Visitors may feel like a part of the community (unlike while staying in a hotel) and learn about the world just outside their door by visiting neighborhood coffee shops, stores, supermarkets, restaurants, bakeries, parks, hikes, and bike trails. In an Airbnb poll, 74% of visitors stated that wanting to explore a particular neighborhood played a role in their choice to use the service.
  • Visitors might feel at home even on vacation: The luxuries of home are present in every Airbnb space. Guests may stay in houses of varied sizes with washers, pleasant living rooms, fully equipped kitchens, swimming pools, and libraries, among other amenities.
  • Guests are guaranteed a reliable platform: In addition to our guest return policy, which guarantees that Airbnb will rebook or reimburse a visitor if a property does not match Airbnb’s hosting standards, guests may depend on reviews from the traveler’s community to help them feel confident about what they are renting.

Challenges Faced By Airbnb

Long-term rental properties turning into de facto hotels, driving up rental prices and boosting competition for hotels, has alarmed lawmakers and the hotel industry. The $5.6 million yearly budget was for lobbying in the $1.1 trillion hotel sector. The American Hotel and Lodging Association effectively declared war on Airbnb in 2016 by presenting a “multipronged, national campaign approach at the municipal, state, and federal level,” according to the New York Times.

Conclusion

The way the globe used to holiday has altered due to Airbnb’s disruption of the conventional hotel sector. Due to Airbnb, homeowners can strategically use unused space to generate income instead of keeping it to themselves. Despite its size, Airbnb does not take itself too seriously.

It appears like Airbnb has a sound expansion plan. By implementing new initiatives, Airbnb hopes to increase the quantity and caliber of its community of hosts and guests. For instance, Airbnb planned over 150 platform changes for 2021 to enhance every part of the Airbnb experience.

How does Airbnb generate revenue?

●        By charging hosts and guests for the use of its platform, customer service, and payment processing, Airbnb generates revenue.

How much does Airbnb make?

●        On average, Airbnb hosts make $924 per month.

What proportion of the total is taken by Airbnb?

●        A fixed service fee of 3% of the booking subtotal is typically what hosts pay.

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