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People generally look for convenience, easy access to accommodation and saving cost in addition to the site, food, and hospitality whenever they travel. Airbnb has been working for 21+ years to ease such issues in Hospitality services | Peer-to-peer Rental Property | Vacation Reviews services. Their services have helped people to repeat their trip, to stay a little longer, convince people to open up their home for the guests to stay and ensure that hosts are happy to rent out their places. Let’s have a look at some points that impact the revenue and business model of Airbnb:
How Airbnb is Good for Their Guests?
- Guests get to have a virtual tour of the property or accommodation online.
- They get the choice and variety of selection.
- Airbnb accounts for a much reasonable option than comparable hotel rooms
- Hosts get to acquaint the guests with the locality, which accounts for a wholesome experience.
- Airbnb is of value to users
- Bookings can be done easily
- Searching for properties is easy
- Multiple and secure payment options are available
- Self-check-in options are available.
How Airbnb Is Good For Hosts?
- Airbnb can become a good source of income generation for the hosts
- The joining process is easy with help, tutorials, and documentation
- There are minimal chances of risk to the hosts or the guests as Airbnb offers solutions/mitigators to any type of concerns or risks.
- Airbnb offers a mini management tool for a reservation system with various features like listing details, photos, amenities, price setting, availability calendar and more.
- It is simple and secure to publish
- It gives full control of availability of dates, pricing and rules of the property
- It provides $1 M home insurance to cover any damage or accidents.
- It becomes easy to communicate with guests
- Guests and self-check-in with easy “how to enter” instruction in the Airbnb app
- 24 * 7 customer support via phone, email and live chat
- A 24*7 customer care support is available.
Who Are Airbnb’s Key Partners?
- Hosts (supply side)
- Guests (demand side)
- Tourism Partners and communities
- Rental Hosts/Superhosts
- Tourism partners
- Communities
- Biz travel managers
- Commercial partners
- Insurance Agents
- Investors
- Big Landlords
- Software partners
- Technology partners in the travel industry
- Corporate travel partners, associates, investors, venture capitalists
- Commercial partners
What Are Airbnb’s Key Activities?
Airbnb swears by three types of key activities: operational excellence/consistency, continued expansion of the host vs. guest base, improving value propositions. Practicing these approaches helps reduce search, transaction, post-transaction costs, Deliver consistency (guest experience), remove frictions (guest/host), grow network effects, new offerings, and enhances a positive network effect. This also helps in retaining consistency, to ensure that the trade-off between the service offerings is legitimate according to the price they are charging.
What Are Airbnb’s Key Resources?
- The network that connects hosts with the guests
- Active hosts
- Active guests
- Brand
- Data assets (user data)
- Algorithms
- Tech platform
- Skilled staff
- Playbooks
- The brand that Airbnb stands for
- Acquisitions
What Pricing And Revenue Does Airbnb Follow?
- Revenues are based on the commissions on transaction value (inclusive of service fees)
- Pricing affects – Rental guests, Rental hosts, Event hosts, Event guests, Hotels and Host cost base important.
- Pricing is segmented for guests – by demographics, behavioural, based on rent, based on accommodation or trip type, based on motivation, based on interest. Segmentation will also be based on geo-demographics, rental, location type, motivation to host, by type of experience provided in food, craft, nature, activity etc.
- Customer Segments are categorized as – Hosts or Guests (By Type, By Location, By Price, By Space, By Amenities, By experience)
- Airbnb charges 3-5% of the hosting fee for listing their property or event. A 20% service fee is charged on hosts that offer experience.
- Airtel charges 0-20% of the fees from travellers who later have to pay on the platform. This includes: Reservation fees (per room charges), Cleaning fees, Service Fees, Occupancy, Extra guest fees, Currency exchange fees, VAT / Local Taxes and more
Conclusive: Which Factors Determine the Revenue Resource/Cost Of Airbnb?
Airbnb is a source (online platform) that connects people who want to rent their homes with travellers at a reasonable price. This system covers thousands of cities across 191+ countries. Real estate investors purchase properties and get them listed on Airbnb. This helps investors to gain income from multiple properties that they own. Cost determining factors include:
- Platform development and maintenance cost
- Infrastructure Cost
- Marketing and Sales cost
- The cost of customer acquisition
- The salaries for employees
- Cost of capital
- Development and maintenance
- Credit card processing fees
- Regulatory and Insurance cost
- Administrative and legal cost
Airbnb realized that the key to the success of their business is to get the hosts to list their properties on its platform. They’ve evolved, continuously improved, added new features to their website and app, created new products, expanded across new markets, re-created the user interface and applied many other tactics to grow their business. Airbnb has expanded it’s business and revenue model multi-fold, since its inception, and it opens an infinite series of options for travellers to get the crummiest accommodation at a convenient location. Follow us if you wish to have an app like Airbnb!