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The business model of Airbnb has been the talk of the town ever since it was launched. Though the rental business is a blooming venture all over the world, Airbnb has made it more popular among young entrepreneurs. It is for this reason, an Airbnb-like app is one of the most fruitful mobile app business ideas today. You must understand how Airbnb functions and leads the vacation rental market.
It is no secret that Airbnb has set a precedent for how a vocational rental app should be. Ever since the Airbnb app has come to the market, it has witnessed staggering growth. The Airbnb app business model is a solid strategic step the company has taken to lead the market. Statista, a research giant, quotes that in 2023, more than 448 million Airbnb nights and experiences were booked. The report further says that the global revenue of Airbnb has reached close to US $10 billion in 2023 and is likely to grow at a significant pace.
There were more than 52 million downloads of Airbnb applications on the app stores. On the same page, it is also revealed that the global market capitalization of the company was valued at more than US $73 billion.
In this guide, we will drive you through the Airbnb business modelso that you can have a detailed insight into how to build an Airbnb-like app and implement its business model to leverage the benefit of proven strategies. By learning the business model of Airbnb, you can plan for the breakeven point by comparing the cost to develop an Airbnb-like app and the revenue stream you generate through the product.
Table of Contents
Unlike traditional rental companies that own properties all over the world, the Airbnb rental business model is way smart. The company operates as a marketplace without owning a single property or dwelling. It connects travelers (guests) and hosts who have space to rent. Airbnb’s model of business focuses on the primary revenue stream which is service charges to both parties. Here are the major Airbnb revenue models –
The business model for Airbnb is built on the service feeds. The company charges guests a service fee of nearly 14% of the total booking amount. This subtotal is the nightly rates plus charges or fees for cleaning. However, Airbnb fees and taxes are excluded from this. The fees are utilized to maintain the robust online platform that offers online secure payments and provides unparalleled customer support for both guests and hosts throughout the booking lifecycle.
Hosts of the properties benefit from the best platform that has millions of users worldwide. In return, the Airbnb app business model asks for fees from hosts. They incur a service fee of around 3% on each booking completed on the app. The company uses this fee to manage costs associated with offering hosts the best features and functionalities on the app including secure booking, secure payment, complete tenant profiles, and so on.
Airbnb today is just more than vacation rentals and accommodations – the app offers bookable experiences such as local tours, unique activities by certain hosts, workshops, and many more. This segment reveals a new Airbnb revenue model. They charge around 20% commission fees on bookings for these unique experiences. This Airbnb business model has created a marketplace with a win-win situation for unique travel adventures along with traditional rentals.
Expanding their services for vacation rentals, the Airbnb revenue model also includes Airbnb for work. In fact, it is one of the travel app types offering myriad features and functionalities to provide better expansion in the future for any travel booking company. Airbnb has a similar fee structure as regular rentals but it focuses on professionals because the company recognizes the growing business travel sector. The business model for Airbnb is specifically designed for professionals and offers them verified listings with business-friendly stays and amenities such as a conference hall, WIFI-designated areas, and workspaces in the rooms. The service fees levied on both hosts – around 3% and guests – around 14% for business travel bookings.
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The travel app trends have been the talk of the town among entrepreneurs who want to venture into the mobile app business where they can think of offering myriad services. Airbnb sets a perfect example for additional services. The company capitalizes on all possible types of services possible for renting solutions.
The business model for Airbnb is just beyond the general models we observe in other companies. Besides core rentals, Airbnb offers additional services to generate more profits and enhance the user experience for both guests and owners.
It is for earning the commission on bookings. Here, the Airbnb rental business allows hosts to offer optional add-on services beyond traditional and basic bookings. This could include professional cleaning services after guests’ stays or pre-stocked groceries for a cozy arrival. Some hosts also offer hassle-free airport transfers at additional costs. When guests book these extra services through Airbnb, the platform charges some commission creating an additional Airbnb revenue model stream.
It is for commission on plans. Airbnb understands that there are several risks associated with short-term and long-term rentals. Hence, to provide better peace of mind, the platform comes up with several options for insurance for stay and money protection. These plans cover accidental property damages, and liability protection for guests in case of accidents, or cancellations due to unusual reasons.
As mentioned earlier, the business model for Airbnb also includes the Airbnb Experience as a service. The platform offers just beyond accommodation – local hosts can offer sightseeing tours, workshops, seminars/conferences, and even symposiums. Guests book these experiences and Airbnb charges around 20% as a commission. Airbnb, thus, serves as a one-stop shop for travel experience and planning.
This is a potential future revenue stream for the Airbnb model of business. The platform does not have anything core at present, but the company is exploring property management services in the future. This may involve property listing management, guest communication, and even maintenance or cleaning at the premises on behalf of the hosts. Airbnb model may include charges put on hosts for premium services. This could be a good option for busy hosts who don’t want to take any burden of managing the properties.
The Airbnb business model canvas briefly depicts where the company spends and where it gets a good stream of revenues.
The entire Airbnb business model relies on the value proposition that it offers to both hosts as well as guests. It provides a win-win situation for both and finds its unique way to a steady income. While Airbnb provides ease of booking and listing properties, it also focuses on providing secure payment and verification of properties for trust. The best UX comes from UI and there are regular updates for the app to provide the best features.
There are two key partners for the Airbnb business model. For the business, it relies on platform developers and customer service executives whereas on the ground it partners with professional photographers and insurance companies to list properties neatly and transparently.
The company adopts the best revenue models wherein it imposes several types of fees to hosts, and guests, and also involves some commissions for Airbnb experience services that are unique to the platform.
Airbnb business model heavily relies on unparalleled customer services offered by their business representatives, call centers, and in-house customer executives. People from all over the world can contact Airbnb through various channels such as text messages, WhatsApp, email, and even simple telephone calls.
Airbnb’s model for business works on both of the channels – the Airbnb mobile application and the Airbnb web portal. Travelers can easily log in to any of the platforms and start availing themselves of the best services for rentals.
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Airbnb is much more than a marketplace today. It is a renowned tech-driven platform at the forefront of the traveling and tourism industry. The smart pricing algorithms deployed by Airbnb can accurately analyze the market trends and traveler’sbehavior to offer the best listing prices for hosts in order to maximize bookings and therefore revenues. User reviews are the cornerstone of the platform responsible for building trust through transparency.
The two-way communication enables users to make better decisions and incentivizes hosts to keep their properties with the highest possible standards and quality. The user-friendly Airbnb mobile application helps users or customers streamline the whole travel and stay cycle smoother and more convenient without stepping out of the house.
Searching properties, booking stays, securing payment, add-on services such as to-and-fro airport drop, and communication channels with each other make the Airbnb app the best one.
Just like other businesses, Airbnb also faces key challenges. Here are some of the known ones along with the solutions possible. You can learn from these challenges and solutions to identify the loopholes and build your Airbnb-like application with fewer or no issues.
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The future of Airbnb, looking at its track record and constant efforts to improve the platform, is brighter and more promising. While disrupting the travel industry with its uniqueness, Airbnb’s future promises even more it seems. Airbnb could venture into the future to become a super application offering start-to-end traveling solutions worldwide. The rise of Artificial Intelligence in the travel industry to facilitate the astounding features and functionalities meeting the future market and consumer demands is a trend, and Airbnb could use those contemporary technologies to provide a one-stop solution for all travel needs – professional or leisure.
Here are some of the key areas of its future growth –
With the grand success of Airbnb Experiences, the platform could expand to cover a wider range of activities in the future. This may include cooking classes, workshops with local artists and skilled executives, and even volunteering opportunities with NGOs for noble causes.
Airbnb is known for short-term stays. The business model of Airbnb could bring the ‘live anywhere’ concept for longer stays. It’ll then blur the line between traditional rental and hospitality services for longer vacations.
The Airbnb model of business may include newer partnerships and collaboration with airlines and travel agencies. Furthermore, it can also think of collaborating with local businesses to create a seamless travel and touring option for its users.
In the future, Airbnb may come with integration for secure payment solutions beyond traditional methods. Payment with cryptocurrencies and other methods will give benefits to users.
Giant companies worldwide are now keeping sustainability and eco-friendly goals in their vision and allocating significant amounts in their budget. Highlighting eco-friendly features and focusing more on listing energy-efficient properties could be the next goal.
Partnering with local NGOs or businesses for noble causes will help promote a responsible tourism experience that will benefit everyone. The community will help improve the overall tourism worldwide.
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Now that you know how Airbnb business model can mint money, you can think of building a customized application that can serve as a one-stop traveling solution to a local, national, or international sight. You can discuss the ideation with a top travel app development company to build an Airbnb-like app or can simply craft your own from scratch. You can discuss your business objectives and business models to make your product sellable.
Airbnb connects guests i.e., travelers with hosts (property owners) who have space to rent. They make money through fees or commissions charged to both parties. The Airbnb business plan includes fees applied at various stages during booking or renting.
As stated earlier, the Airbnb business model includes charges or fees to both guests and hosts for about 14% and 3% respectively. Plus, it also makes money through its exclusive Airbnb Experience services as well as add-on services such as cleaning, insurance, and commissions.
Airbnb charges commissions of around 20% on bookings made for local sightseeing, workshops, and various fun and cultural activities offered by property owners/hosts through the Airbnb Experience platform.
As the tech-savvy Project Manager at Prismetric, his admiration for app technology is boundless though!He writes widely researched articles about the AI development, app development methodologies, codes, technical project management skills, app trends, and technical events. Inventive mobile applications and Android app trends that inspire the maximum app users magnetize him deeply to offer his readers some remarkable articles.
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