Airbnb is a great aggregator business model that allows individuals or families to rent out their residences as lodgings for travelers.
It has gained massive popularity amongst tourists as it allows them to experience a homely environment that no hotel can provide.
While it offers a great lodging option for travelers, it also allows the owners to offer their properties for rent to get an extra source of income.
This great business model was devised by Brian Chesky and Joe Gebbia.
They started a venture in 2008 along with another associate, Nathan Blecharczyk, wherein they created a website through which short-term rentals could be arranged.
After a few years, Airbnb created a user-friendly and secure mobile app. Moreover, the team integrated some of the best monetization methods into their app.
By doing this, their small venture later grew into a behemoth with a market value of $ 35 billion in 2019.
The company reached out to this level because it relied on multiple sources of revenue.
If you are interested in knowing how Airbnb earns this much money, then you should read this article.
The Revenue Stream of Airbnb
In this article, we shall share with you the different revenue models Airbnb uses to earn a healthy profit.
Commission Earned from Owners
Airbnb pursues two varied fee structures in case of the host of the properties.
It could be either host-only fees or split fees. In the case of host-only fees, the entire commission is paid by the owner of the property.
Airbnb uses this type of fee structure mainly for hotel booking, wherein the owner of the property has to pay a service fee that can range between 14% to 16%.
On the other hand, in case of a split fees system, both the guest as well as the host split the commission that has to be paid to Airbnb.
In this system, the owner of the property has to pay a commission that can range from 3% to 5% for the rent they are receiving.
The remaining portion of the commission which can be around 10% to 14% is paid by the guests which are in addition to their booking price.
Transaction Fees from the Travellers
Airbnb charges a service fee that can range from 6% to 12% of the booking amount for every confirmed booking from the travelers, this amount is non-refundable.
In addition to the service fee, Airbnb also charges a value-added tax, which is calculated on the final value of the service or goods provided by Airbnb (this rate varies from country to country).
Furthermore, if a guest pays the host in a different currency, then they have to pay based on the exchange rate that is fixed by Airbnb.
The main focus of Airbnb is to provide travelers with a great experience whenever they visit a new place.
To fulfill this objective, they have added Airbnbmag as a part of their business model. This is a comprehensively written magazine that is a collaborative effort between Airbnb and Hearst.
This $ 15 well-written magazine filled with beautiful photos of the place where you want to visit gives you much more information than you can get from a normal guidebook.
This magazine lists both the popular as well as the hidden gems of a place that does not form a part of the normal traveling circuit.
It offers you a great experience as you can uncover the beauty of the little-known places.
Airbnb also has a business model, wherein a company can hire business-ready homes for higher fees that fulfill their requirements that include specific amenities, host commitment, responsiveness, home type, and others.
This type of model is specially designed for those executives who want better transparency in the traveling charges and allows more accurate reporting to their company.
In addition to the commission it charges both from the travelers and the host, Airbnb also has listed their IPO in the market to get more resources for expanding their services to new locations.
Airbnb IPO was listed on NASDAQ on December 10, 2020, wherein it mopped up $ 3.5 billion to strengthen its portfolio even further.
In the year 2020, Airbnb saw its revenue taking a big hit as a global lockdown came into force.
However, as the lockdown was progressively removed, Airbnb saw its revenue shoot up as people changed their traveling habits and looked for vacation rentals that were near them.
This type of highly innovative aggregator model is witnessing a huge expansion, which is making traveling to new places a unique and highly fulfilling experience.
Airbnb is at the right place at the right time using the latest technological advances in connecting travelers with those who want to rent out their property on a short-term basis.
It is a great way of bringing people together on a single platform so that they can do business transactions with each other.