A Complete Overview of Airbnb’s Business and Revenue Model
With all quirks and choices on offer, the Vacation rental booking isn’t what it was a few years ago. It won’t be unfair to say that this marketplace has gone more than mainstream by providing first-class hospitality service. What’s even more encouraging is, travelers can avail service at substantially lower prices compared to high-rise hotels. Now, you may see several vacation rental platforms in existence. But seven, eight years ago you probably never had the comfort to choose from a boatload of platforms.
Airbnb, one of the most successful vacation rental platform, did exceedingly well in familiarizing this form of business. The disruptive innovation they were able to bring in, catered customer’s need in the past and thus far. Several peer-to-peer accommodation networks have risen now, still, Airbnb stands as the first choice vacation rental platform to assimilate. So, here, we walk through the platform’s business and revenue model to help entrepreneurs build a platform with essential attributes.
The actual business model of Airbnb: As simple as you could get
Generally, Airbnb acts as a platform where bookings are routed, with business model encompassing hosts and travelers.
A host can list a property, room/apartment basically, at once, after paying the initial listing fee. For a user to book through, he has to pay the upfront fees combined with booking charges.When user’s requested travel dates are accepted by a host, based on property availability, user checks in. When the user checks out, the host gets his share inclusive of site fee deduction.
The flow is as given below,
How does Airbnb generate profit through revenue lines?
Primarily, travelers act as the main source here. For them, Airbnb charges 6-12% of the total booking. More the size of booking, lesser the cost, and higher the savings for a traveler. The commission charge usually obtained is for keeping the room check in ready.
Undoubtedly, the foremost reason for Airbnb success is the cheaper means they offer for hosts. Only a mere 3% of booking fee is collected from hosts, once the customer checks out.
Majorly, Airbnb generates revenue using the above-mentioned methods.
Also, they employ and follow other strategies like corporate travel and account arbitrage.
If you wonder how they make money through that, this is how:
Corporate travel agents play middleman role between Airbnb and the traveler. In fact, those agents/agencies enjoy the maximum of profit here and Airbnb isn’t the major beneficiary.
Airbnb model necessitates travelers to book a property before 3-4 month’s period, so the money received from them underlies with Airbnb and the host gets paid only after the traveler’s check in. This enables them to maximize capital through various forms of investment.
As an entrepreneur, if you’re looking forward to developing a hotel rental or vacation rental platform similar to Airbnb, these tried and tested revenue methods can be mighty useful. Yes, you can personalize it completely to suit your preferences and business environment. But the script be should pre-built closely resembling Airbnb’s structure.
Agriya has in place a cost-effective and ready-made script of Airbnb, in the name of Burrow. It’s developed largely to help business aspirants unlock the trapped values of vacation rental marketplace both by saving time and cost.