What's an Airbnb? How Airbnb Works?

What is Airbnb?

Airbnb (or “Air Mattress Bed and Breakfast”) started as a marketplace for room sharing where hosts could offer their beds, rooms, or entire house to guests who needed a place to stay. 

The idea came to the Airbnb owners as they did not have enough money to pay their rent, so they started offering mattress beds in the living room to travelers, plus preparing a homemade breakfast for them in the morning. After they saw the attraction, they grew their business to what we call Airbnb today, a platform to connect Hosts and Guests.

Airbnb has evolved a lot over the years, and hosts have come up with many creative ways to offer interesting Airbnb accommodations and make money. Needless to say that this attraction has come with a price for the guests. Airbnb started to be a cheaper alternative to hotels but has become more and more expensive in the past couple of years.

As the idea grew and more people joined the community, other platforms, such as Vrbo, appeared, offering the same services. Today hosts can list their places on almost all the major OTAs (Online Travel Agency), but there are some clear alternatives to Airbnb.

What Industry is Airbnb in?

In the beginning, Airbnb was part of a shared economy where hosts could list their properties and guests could book them without too many regulations and limits. Nowadays, Airbnb is one of the biggest platforms in the world, and many travelers choose Airbnb over hotels all the time. However, there are more regulations, taxes, and even bans for Airbnb rentals nowadays due to their danger to the economy and housing prices.

How Airbnb Makes Money

The primary source of Airbnb’s revenue comes from service fees from bookings charged to both guests and hosts. Depending on the size of the reservation, guests are required to pay a non-refundable service fee based on the type of listing—usually under 14.2%.

Airbnb also charges the hosts around 3% of the total booking sum. The percentage varies depending on the type of accommodation the hosts offer, such as Airbnb Plus or Luxe.

According to Airbnb: 

Revenue for Q1 2023 grew 20.5% to $1.8 billion. Revenue growth is attributable to "a 19% increase in Nights and Experiences Booked of 19 million driving a 19% increase in Gross Booking Value of $3.2 billion. The growth in revenue demonstrated the continued strong travel demand."

How Airbnb Stays Legit?

Airbnb has changed a lot since it was established. It used to be a budget-friendly platform that offers travelers an alternative to hotels, but nowadays, it is not cheaper compared to hotels (There are still ways and tips you could use to get discounts on Airbnb, or avoid paying Airbnb service fees.). It also has negative effects on housing prices, as in many cities, the prices have risen because of Airbnb. On top of that, there are many horror Airbnb stories and Airbnb dangers to Guests.

So how Airbnb stays legit and trusted by people? 

One reason is the rating system of Airbnb and the introduction of Airbnb Super Hosts. This allows the guests to make sure they are booking a place from a trustworthy host. On the other hand, hosts can also write reviews for their guests after their stay. This can help other hosts to decide whether they want to let guests book their property or not. 

Airbnb Host Requirments

If you are thinking of becoming a host, make sure to read Airbnb host's requirements first and familiarize yourself with them. 

There are also some basic Airbnb host requirements:

• Provide guests with a least the essentials, if not more. You must include toilet paper, soap, sheets, and at least one towel and pillow per guest. It is up to you to provide anything else; we suggest adding a little something extra to get a good host rating!
• You must be responsive. Reply to inquiries and reservation requests within 24 hours of receiving them.
• Accept all reservation requests promptly. The sooner, the better!
• Do not cancel. Airbnb takes host cancellations very seriously. They understand that travel plans depend on accommodations, so cancellations are highly frowned upon.
• Keep a consistent, high level of quality to achieve a high rating.

Also, read our Health and Safety Guide for the Airbnb Hosts.

Airbnb Advantages and Disadvantages

Airbnb Advantages

• Airbnb has provided locals the opportunity to make some money renting their property.
• Airbnb facilitates cultural exchange where hosts can meet interesting people from all over the world, and guests get to experience living in a house/flat for a while in their desired destination and not a hotel.
• Flexible and easier check-in and check-out compared to hotels
• Various accommodations to choose from

Airbnb Disadvantages

• Negative effect on the housing market and prices
• Safety issues
• Limited service compared to hotels
• Low-quality control of the properties
• Various cancellation policies

Read Airbnb Pros and Cons in more detail.

Airbnb’s Effect on The Hotel Industry

For sure, Airbnb has affected the hotel industry and the travel industry as a whole, however, it is not a direct competition for hotels. Hotels can list their rooms on Airbnb to be rented out, so they can use this platform to their advantage rather than fighting it. 

Also, many people prefer hotels over Airbnb, and it does not seem that their numbers are decreasing after the popularity of Airbnb, on the contrary, as the prices for Airbnb surge, many people prefer to stay in hotels instead of Airbnb. 

If you would like to know more about Airbnb and other aspects of it, read more articles about gusts, hosts, and trending features, head to Ratepunk Blog Page, and search for Airbnb on the search bar!