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2 The evolution of Airbnb’s business model

Stephan Reinhold , School of Business and Economics, Linnaeus University, Sweden

Sara Dolnicar , Department of Tourism, UQ Business School, The University of Queensland, Australia

Please cite as: Reinhold, S. and Dolnicar, S. (2021) The evolution of Airbnb’s business model, in S. Dolnicar (Ed.) Airbnb before, during and after COVID-19 , University of Queensland DOI: https://doi.org/10.6084/m9.figshare.14195957

The academic fascination with Airbnb, but not with its business model

By reinventing home stays and tourism experiences, Airbnb has introduced to the tourism and hospitality sectors one of the most fascinating innovations of the past decade. By facilitating an online peer-to-peer trading platform, Airbnb has extended short-term accommodation capacity in unprecedented ways (Dolnicar, 2019), and provoked strong responses from both the established commercial tourism accommodation sector (Zach et al., 2020) and local regulators (von Briel & Dolnicar, 2020).

Airbnb has adapted the platform business model to the long tail of hospitality in ways that had not been attractive to established distribution networks (Reinhold et al., 2020). In so doing, Airbnb demonstrated that a Silicon Valley-style start-up company (Gallagher, 2017) can scale in tourism and hospitality, and create a broad ecosystem that facilitates new entrepreneurial activity serving at a number of levels: hosts, and providers assisting hosts with service provision (e.g., Sibbritt et al., 2019; Sigala & Dolnicar, 2018). While these additional entrepreneurial opportunities were welcomed, the success of Airbnb also presented host communities and other stakeholders with new sets of problems (e.g., Xie et al., 2020). For both its merit and associated conflict, Airbnb has become an iconic, category-defining case study in industry and scholarly discourse (Dolnicar, 2019; Kuhzady et al., 2020).

As of July 2020, Elsevier’s Scopus database lists 602 scholarly articles on Airbnb published between 2011 and 2020 in English in peer-reviewed journals. About two thirds of them appeared in the fields of business (34%) and social science (29%). The first article mentioning Airbnb in Scopus was published by Robin Chase (2011) in the Journal of Urban Regeneration & Renewal . Of the 602 articles, 46% appeared in tourism and hospitality journals, with the International Journal of Hospitality Management (45 articles), Annals of Tourism Research (26 articles), and Tourism Management (23 articles) the main outlets. The focus of most studies is on guest and host behaviour, the interaction among different stakeholders, and regulation. Only 53 articles address the business model of Airbnb, with the first one published by Daniel Guttentag (2015). Most of these articles do not analyse Airbnb’s business model as an integrated logic of value creation and capture. They thus fall short of meeting the standards of the broader research program on business models as a theoretical concept (e.g., Foss & Saebi, 2018; Massa et al., 2017).

Figure 2.1 shows the number of Scopus-registered articles published by year for the search terms Airbnb and Airbnb + “business model”. The first publications for each set are marked with a colour-corresponding dot. The sharp increase in 2019 is partially explained by Annals in Tourism Research launching its virtual curated collection on peer-to-peer accommodation leading to a surge in new submissions. The slight decline between 2019 and 2020 is likely explained by the cut-off of the search in July 2020. At the time of writing, there was another half year for new articles to be registered on Scopus.

Area chart showing an increase in the number of scholarly publications mentioning Airbnb” between 2011 and 2020 (with a slight decrease between 2019 and 2020 due to the mid-year collection of the data in 2020). The number of scholarly publications mentioning Airbnb and “business model” has also increased

This review of scholarly work on Airbnb shows that only few studies focus specifically on Airbnb’s business model. This is an important omission. Understanding Airbnb’s business model shows how the design choices as a dynamic equilibrium (Demil & Lecocq, 2010) have shaped and are being shaped by the evolution of Airbnb and its interactions with guests, hosts, and other contextual contingencies. Those interactions determine the success of the platform, the viability of its facilitator, the dependability of services for guests and hosts, and externalities experienced by other stakeholders. The business model perspective provides insights into how Airbnb’s context and business model shape one another.

In this chapter we explore in detail the evolution of Airbnb’s business model across three distinct development periods. We draw on existing academic publications on peer-to-peer accommodation, industry and media reports, and public archival sources to reconstruct Airbnb’s business model at various points in time, and transformations over time. This approach enables us to reconstruct a detailed account of how Airbnb creates, captures, and disseminates (non-)monetary value, and outline avenues for further research.

Business model versus strategy

Interest in the business model was triggered in the mid-1990s during the dotcom boom (DaSilva & Trkman, 2014). Today, it is an interdisciplinary research stream in its own right (e.g., Bigelow & Barney, 2020; Lecocq et al., 2010), which has been used across a number of industries including tourism (e.g. Reinhold et al., 2019; Reinhold et al., 2020) and what is generally referred to as the sharing economy (e.g. Kumar et al., 2018; Ritter & Schanz, 2019).

At its core, the management concept of the business model is a description of how value is created, captured and disseminated by an entity, typically an organisation (Bieger & Reinhold, 2011). Analysing an organisation’s business model is a powerful approach (Reinhold et al., 2017) to understanding how it works (e.g., Zott & Amit, 2010) by investigating observable attributes. Examples of observable attributes of interest include how an organisation prices its services and how it designs segment-specific services. The business model also observes staff perceptions of how an organisation operates – their mental models (e.g., Martins et al., 2015). These perceptions determine to a significant extent decision-making in organisations because they allow decision makers to anticipate the results of alternative decisions. The intimate understanding of an organisation derived from the analysis of its business model can serve as the basis for redesigning the organisation or creating an entirely new organisation (e.g., Osterwalder & Pigneur, 2009; Sinfield et al., 2012).

The business model connects an organisation’s strategy with its operations (Bieger & Reinhold, 2011). Strategy outlines the direction in which an organisation is moving. Operations are specific tasks which an organisation needs to perform in order to move into the direction set out in its strategy. While an organisation’s business model captures the bigger picture, like business strategy does, the two concepts are distinctly different from one another (Bigelow & Barney, 2020). Strategy is forward-looking and sets out the organisation’s scope, its unique selling proposition among the competitive field in the market, and how the organisation generates value for shareholders (Massa et al., 2017). The business model in itself is not forward-looking. Rather, it is a description of the present moment. The business model specifies how the organisation, presently, creates value for its customers, captures value, and how it disseminates it further to its suppliers and business associates. The business model is not aspirational, it is “ a reflection of a […] reali z ed strategy ” (Casadesus-Masanell & Ricart, 2010: 205). As such it is particularly valuable to organisations who do not have a clear strategy (Casadesus-Masanell & Ricart, 2010). A strategy cannot be fully recreated by observing how an organisation operates. Its business model can be.

For the present analysis, we focus on the integrative story (Bigelow & Barney, 2020; Doganova & Eyquem-Renault, 2009) that provides insights into the evolution of Airbnb’s business model over time. We base our analysis on the value-based business model framework (see Table 2.1, which “ (1) determines what an organization offers that is of value to the customer (i.e., the value proposition), (2) how it creates value within a value network, (3) how it communicates and transfers this value to customers, (4) how it captures the created value in form of revenues and profit, (5) how the value is disseminated within the organization and among stakeholders, and finally, (6) how the value is developed to ensure sustainable value creation in the future ” (Bieger & Reinhold, 2011: 32).

The evolution of Airbnb’s business model

The business model configuration used by Airbnb is called a multi-sided platform model (Rumble & Mangematin, 2015; Reinhold & Dolnicar, 2018a; 2018b); a term coined in the field of economics (Rochet & Tirole, 2003). As the name implies, a platform stands at the centre. The business runs the platform; it serves as the platform facilitator. The platform connects two sides, in the case of Airbnb: guests who need short-term accommodation and hosts who have available space and are interested in renting it out for short periods of time. Additional stakeholders can also be involved in multi-sided platform businesses. Professional photographers, for example, assist Airbnb and hosts to present available spaces in the most attractive possible manner.

A deep theoretical understanding of multi-sided platform businesses was not the starting point of Airbnb being founded. Rather, it was the result of a long and ongoing learning and development process as the subsequent quote from Jeroen Merchiers (Airbnb Managing Director of Europe, the Middle East and Africa) illustrates:

“ When the founders started Airbnb 10 years ago with a few air mattresses in their apartment, they had no idea what the company would become. They simply found a creative accommodation solution at a time where there was no availability at nearby hotels. But they soon realized, as they hosted their first guests, that Airbnb can offer far more than just an air mattress on the floor. It could offer a much more personal and unique experience for guests provided by locals who know the area. ” (Ting, 2018a)

The subsequent sections portray and discuss the evolution of Airbnb’s business model from its origins in 2008 to the alternate pandemic travel reality created by the COVID-19 pandemic in mid-2020. We detail the initial business model configuration (2008 – 2016), track experiments and different growth paths on the way to initial public offering (2017 – 2019), and finally assess Airbnb’s COVID-19 response up to and including the organisation’s initial public offering on the stock market. Figure 2.2 provides an overview of critical milestones across these three periods. The milestones at the top mark changes in the elements of Airbnb’s business model and achievements. The milestones at the bottom provide information on funding for the company. We close this section with observations on the overall development. Our arguments and analysis are grounded in in public archival sources and industry publications detailing observable changes in the key attributes of Airbnb’s business model. It should be noted that although the chapter is divided into defined time periods (e.g., 2008 – 2016), some events extend across multiple periods.

Timeline showing Airbnb milestones and funding from 2007 until present (2020). Airbnb milestone timeline: Fall 2007: Airbedandbreakfast.com August 2008: Formal website launch; Democratic Convention (US) March 2009: Name change to Airbnb Feb 2010: 1 million bookings, 89 countries Summer 2011: First foreign office May 2012: $1m host guarantee June 2012: 12 million bookings Summer 2014: More than 100,000 guests during Rio world cup October 2014: Airbnb law in San Francisco November 2016: Friendly buildings program November 2016: Airbnb Experiences February 2017: Acquisition of Luxury Retreats December 2017: Niido home sharing apartments February 2018: Airbnb Plus & Concerts March 2019: HotelTonight and 0.5b arrivals November 2019: 9 year sponsorship with Olympics March 2020: $260m host relief package May 2020: 25% workforce cut December 2020: Initial Public Offering Airbnb funding timeline: 2008: [Financial crisis October 2008] Selling cereal boxes ($30,000) 2009 – 2011: Seed funding ($20,000) Y combinatory, Seed funding ($615,000) Sequioa, Series A funding ($7.2m) 2011 – 2013: Series B funding ($114.9m) 2013 – 2015: Series C funding ($200m), Series D funding ($520m) 2015 – 2017: Series E funding ($1.7b), Series F funding ($1b) 2017 – 2021: [COVID-19 pandemic March 2020] Private Equity ($1b), Market launch valuation for ABNB ($100b)

Developing the initial business model configuration (2008 ‒ 2016)

Developing a new business model in an undeveloped market (“ alternative tourist accommodation offered in people’s homes ”) is a complex endeavour. Hence, designing what is still at the core of Airbnb’s value creation logic to this day, was the result of years of trial-and-error. It shaped the different mechanisms Airbnb uses to create and capture value from connecting guests, hosts, and third parties.

Value proposition

Table 2.2 summarises Airbnb’s value propositions to hosts who list space on its platform A irbnb.com , to guests who use the platform to book short-term accommodation and to all other service providers who support any of the core providers within the network. These aspects remain essentially unchanged, apart from the additions between 2017 and 2020 outlined in later sections.

Value proposition for…

Proposition to hosts

The primary reason for hosts to list space on Airbnb’s online platform is to find trading partners – people who are willing to pay for access to these spaces. Hosts may be motived by a range of different benefits that are important to them (Karlsson & Dolnicar, 2016), including maximising return on a property investment, earning an income, supplementing their income, covering the expenses associated with having a holiday home, meeting new people, or putting space that otherwise sits idle to good use.

Airbnb’s online platform attracts hosts with very different patterns of motivation, which have been classified by different authors in different ways. At the most fundamental level, hosts can be grouped into professionals and non – professionals (Farmaki et al., 2019; Li et al., 2016). Splitting up the non-professionals leads to three segments of hosts: c apitalist s , b efrienders and e thicists (Hardy & Dolnicar, 2018a). Even finer groupings differentiate between e conomic hosts , e co-socio hosts , socio-eco hosts and s ocial hosts (Sweeney & Lynch, 2009) and p ragmatists , p etty tycoons , c onflictual owners , e xtrinsic owners , and lexi-owners (Darke & Gurney, 2000).

Irrespective of the reasons for wanting to host, it is extremely difficult to do so unless potential buyers are aware of the offer. Developing a webpage to showcase one’s space is one solution, but it does not offer the same value as listing space on Airbnb.com. Airbnb’s value proposition to hosts developed between 2008 and 2016 is multi-faceted: Airbnb’s online platform: exposes the listing to a very large number of potential buyers, limits the host’s risk associated with letting strangers stay at their property, manages payments, handles additional administrative matters (such as providing information about access, internet passwords etc.), and provides hosts with access to thousands of other people who are part of the network to connect with, share experiences with and learn from.

Airbnb.com helps hosts to identify suitable guests by showcasing the property in a lot of detail, and in a standardized way familiar to guests, to 150 million Airbnb members living around the world. This is a very strong value proposition because of the size of the network. The more members – potential buyers – that are part of the network, the more exposure the listing gets and the likelihood of being booked increases. The search interface on Airbnb.com facilitates the identification of good matches between buyers and sellers of space – guests and hosts. Guests are offered an extensive list of accommodation characteristics which they can choose from to ensure that search results are suitable for their needs and attractive to them. Examples include: whether the property has a pool, a secure undercover parking space, a spa, and Wi-Fi. In addition to these searchable criteria which are coded in binary format on the trading platform, each Airbnb listing also offers a substantial amount of detail, including a detailed description and a large number of – often professional – photos. These sections of the listing enable hosts to ensure that the uniqueness of their property is communicated and illustrated well to potential guests. Underlying the Airbnb.com webpage visible to Airbnb members is a sophisticated algorithm that presents listings in an order that maximises bookings.

Risk is the main concern hosts have when they make space available to strangers (Karlsson et al., 2017). Airbnb’s value proposition of risk mitigation , therefore, is hugely important. Airbnb has in place a range of mechanisms to reduce the risks associated with short-term space trading. The identities of all Airbnb members are verified. Hosts have the possibility to read reviews of guests sending booking enquiries. These reviews are provided by other hosts, who have previously made space available to these guests. Over time, guests develop what has been referred as a peer-to-peer accommodation network curriculum vitae (P2P-CV, Dolnicar, 2018): a long list of reviews from other hosts. A large number of positive reviews gives a host confidence that it is safe to make their property available to these guests. Airbnb also has a very generous host guarantee, which “ provides up to $1,000,000 USD in property damage protection in the rare event a host’s place or belongings are damaged by a guest or their invitee during an Airbnb stay ” (Airbnb, 2020a). This host guarantee is critically important given the amount of negative press generated every time an incident occurs at an Airbnb property.

Most hosts are not professional e-commerce retailers. The fact that Airbnb handles all payment s , therefore, is of significant benefit to them. Guests can pay using the most commonly used online payment options in their national currency. Airbnb handles the rent payment, including any surcharges and cleaning fees that may apply, as well as managing transactions associated with cancellations, and collecting and holding a deposit from the guest in case the host notices damage and requests within 24 hours of check-out for the damage to be paid for by the guest. Electronic handling of payment well before check-in is safer and avoids any socially unpleasant situations between guests and hosts at the time of the stay.

Closely related to managing payment is also the pricing strategy of a listing. Airbnb offers a value proposition for hosts in this area also, by helping them maximi s e revenue . This is not only achieved by the algorithm that matches guests with the most suitable listings, but also by making pricing recommendations to hosts for every calendar day based on the features and location of their property, and historic data of booking prices for similar properties. Hosts can choose to use these pricing recommendations, or, alternatively, to set their own price, overriding Airbnb’s recommendations.

Another key Airbnb value proposition is assistance with the administration of a listing. When a host decides to list a property, they need to take action with respect to a range of areas: they need to provide certain information about the property (such as location, Wi-Fi password), ensure that the property has the safety features required under local laws and regulations (such as fire alarms, exit signs on doors and an emergency evacuation plan), and be able to signal to guests interested in booking their property whether or not it is available on specific dates. The highly structured and standardised setup of a listing on Airbnb guides hosts through all these steps. The Airbnb platform also forces hosts to take action when regulations or circumstances change in critical ways. As a result of the COVID-19 pandemic, for example, as discussed later in this chapter, hosts had to agree to stricter cleaning procedures. While Airbnb cannot police compliance with these procedures, the process of committing to them alerts hosts to how they need to modify their procedures, effectively offering a checklist

The value proposition of connecting like-minded hosts is one that is appreciated by some hosts more than by others. Many Airbnb hosts use Airbnb.com as a distribution platform and have no interest in engaging with other Airbnb members. Others are very active on the platform and its discussion groups via the Airbnb C ommunity Center , which invites hosts to “ s hare knowledge, get inspired and meet other hosts who are creating a world where anyone can belong” (Airbnb, 2020b). The Airbnb community facilitates online exchanges between hosts, but hosts also have the opportunity to meet in person or use alternative communication platforms once they are connected. A very active and vocal group of Tasmanian Airbnb hosts, for example, uses a Facebook group to talk and coordinate their actions (Hardy & Dolnicar, 2018b; Hardy et al., 2021).

Proposition to guests

Airbnb.com also offers several value propositions for guests, whether they are travelling for business or for pleasure. At the most fundamental level, Airbnb’s online trading platform helps guests find suitable accommodation . The search for accommodation is facilitated on Airbnb.com in many ways: it enables directed searching using a range of search criteria, including geographic location, price, size, and rating by other guests as well as a substantial list of criteria which are used to describe – in binary format – each listing. Criteria developed between 2008 and 2016 include the nature of the listing (shared space or entire property), whether the host is a Superhost, and whether it has: a kitchen, heating, air conditioning, a washing machine, a dryer, Wi-Fi, a TV, an indoor fireplace, hangers, an iron, a hair dryer, a cot, and a highchair. Other default searchable criteria include safety-related aspects such as whether the space is equipped with a smoke alarm and a carbon monoxide alarm, whether there is a dedicated workspace, whether self-check-in is possible and whether breakfast is provided. More search filters are accessible to guests for specific requirements, such as a pool, a spa, free parking, a gym, and whether the property allows pets.

Guests can search by scrolling through listings, looking at one picture and a few key facts about each property or by locating properties on a map. Clicking onto one specific listing provides access to a very detailed property profile, much more detailed than those provided by established tourism accommodation providers. Listings include a substantial number of pictures, an overview of the key features of the property, the amenities provided, cancellation terms, reviews by other guests, detailed – sometimes quite lengthy – information about the property, whether pets are allowed, and whether smoking is permitted. The listing also directs people searching for accommodation to the profile of the hosts, and provides information about the neighbourhood, including tips provided by hosts themselves. The large number of daily searches conducted on Airbnb.com is harvested by Airbnb to identify search patterns and deploy search optimisation algorithms to present people with the listings that are likely to be most attractive to them.

The Airbnb online trading platform also facilitates a different kind of search: entirely undirected searching guided by browsing the webpage and deriving inspiration from the content. Such undirected searching has become even more attractive since Airbnb introduced Experiences in 2016 across a wide range of areas, including sport, food and entertainment (Gardiner & Dolnicar, 2018; 2021). Experiences refocus the search to activities. Once an interesting Experience is identified, the location follows, and accommodation can also be booked on Airbnb.com.

A value proposition in its own right is also the convenience of booking using an online booking platform. When suitable accommodation is identified, the booking process is very easy. It only takes a few clicks and the credit card details. The level of convenience has further increased in recent years as a consequence of Airbnb introducing the Instantbook feature. When a host activates Instantbook , guests can book the accommodation without having to send a request to the host. Sending a request to the host and potentially being denied permission to book the selected accommodation was a key feature of Airbnb as it was originally designed, as it gave hosts control, and with it, confidence in giving access to their house to strangers (Dolnicar, 2018a). Booking convenience on network platforms is known to represent a key factor in perceived service quality (Priporas et al., 2017; Varma et al., 2016). On Airbnb.com the booking process is standardised. Airbnb manages all payments, which means that no money transfers – and certainly no cash payments – are required directly between guests and hosts. Payments can be made using most available standard payment options supported by banks.

Booking a private space via an online booking platform helps guests to mitigate risk . Many things can potentially go wrong when booking space from a non-licensed provider, especially when the space is shared with the host or other guests. For a relatively small service fee charged by Airbnb to guests, guests benefit from a range of risk-mitigation measures put in place by Airbnb:

  • The identity of all network members is verified. At the very least, this identification process involves their telephone number and email address. Network members can also choose to list links to their social media profiles, their location of residence and provide official identification documents.
  • Before a booking is confirmed, Airbnb does not share the guest or host’s private data, and does not transfer money to the host until 24 hours after the guest has checked in, making it easier to handle refunds if the guest finds the accommodation to either not exist at all or be unacceptable and not as presented on the online listing.
  • Guests and hosts are encouraged to write reviews about one another. Guest reviews include a star rating for cleanliness, communication, check-in, accuracy, location and value. Guests can also provide a more detailed evaluation in an open text field. The sum of all reviews forms the host’s peer-to-peer accommodation network curriculum vitae (P2P-CV, Dolnicar, 2019), just as it does for guests. The availability of these host P2P-CVs gives guests the opportunity to inspect them before deciding to book accommodation. Airbnb further adds value by allowing hosts to respond to what they believe to be inaccurate accusations.
  • Although Airbnb does not mandate safety devices, it encourages hosts to take several measures to reduce risks to guests through a separate safety section on the listing profile. Here, hosts declare if there is a pool or spa without a gate or lock, if the accommodation is near a lake, river, or other body of water, if there is a climbing or play structure, if there are any elevated areas without rails, or any potentially dangerous animals. If any of these things apply, the host is asked to provide additional information. Hosts also indicate if the space has security cameras or audio recording devices, a carbon monoxide alarm, and smoke alarms.
  • Airbnb has a guest guarantee, giving people confidence that alternative accommodation will be arranged if the booked Airbnb property does not exist or is unsafe.

While the core focus of Airbnb is on the trading of accommodation, guests can derive additional value from a wide range of E xperiences (Gardiner & Dolnicar, 2018; 2021) that can also be booked on the platform. In addition, Airbnb encourages hosts to provide local recommendations which are not related solely to the accommodation, but also encompass dining experiences and attractions, among other things. This authentic, local, personal insider knowledge augments the experience compared to booking accommodation using established commercial accommodation providers.

Proposition for third parties

To third parties – businesses involved peripherally with peer-to-peer accommodation trading – Airbnb also offers a value proposition: revenue generation by providing services that are not provided by either Airbnb or the host. Such additional services (for examples from the first period see Table 2.3) are embedded on the trading platform, but not operated by Airbnb. One example is the professional photography service for listings.

Another example is the possibility for professional co-hosts to assist hosts with their Airbnb operations. Airbnb has set up an interface where co-hosts are formally involved in the process, rather than having to illegitimately operate through the hosts’ login credentials. Co-hosting offers significant entrepreneurship opportunities to third parties (Sigala & Dolnicar, 2018; Fairley et al., 2021a). Ultimately the value proposition is the ability for businesses and entrepreneurs to attract new clients. An entire ecosystem (Adner, 2017) of third-party providers depends on the trading occurring on Airbnb.com.

Value creation

Airbnb creates value for hosts, guests, and third parties through activities and resources, and input from business partners. Table 2.4 offers a summary of the five key activities and five key resources Airbnb leverages to generate value. The term key activities refers to standard operating procedures – routine behaviours (Feldman & Pentland, 2003) – that make it possible for Airbnb to make the value propositions discussed above. Key resources are the building blocks Airbnb relies on to perform the key activities. Optimally, key resources are under full control of Airbnb and, as such, cannot be imitated by competing facilitators of peer-to-peer accommodation trading.

Key activities

A handful of key activities drive Airbnb’s success. The first one is to attract and retain a large number of Airbnb hosts and guests ( growing and nurturing guest and host networks ). By definition, the attractiveness of any market of trading platform depends on how many potential trading partners are available in the market or on the trading platform. As the number of potential trading partners increases, so does the attractiveness of the market or trading platform. The technical term relating to this attractiveness is network effect (e.g., Hagiu & Wright, 2015). A network effect occurs when the value of a service – in this case the functionality of Airbnb.com – increases with the number of network members.

As soon as a market or trading platform reaches a critical mass of buyers and sellers, a self-reinforcing cycle is activated: markets and trading platforms with many members attract more members and continue to grow to a point where they can dominate entire markets. This is exactly what happened in the case of Airbnb. Airbnb put substantial efforts into the initial growth of its membership between 2008 and 2016, including employing growth managers whose sole purpose is to attract more network members. Airbnb has taken a wide range of different approaches over the years to grow its membership. When Airbnb launched originally, the founders of the company personally door-knocked to increase the number of listings on Airbnb.com, and organised events dedicated solely to the recruitment of hosts (Gallagher, 2017).

Airbnb also tapped into the pool of people already listing rooms and apartments on online platforms – such as the US classifieds webpage Craigslist –and offered them co-listing opportunities (Brown, 2017; Gallagher, 2017).

Using Facebook, Airbnb launched an early advertising campaign in San Francisco and New York. The aim of the campaign was to communicate how much money people could earn by selling access to their homes while they were on vacation. The key argument was that people could in fact fund their vacation by renting out their homes while enjoying their holiday (The Economist, 2015). To minimise the cost associated with making space available on its online trading platform, Airbnb did not charge a listing fee – much in contrast to other peer-to-peer trading platforms (The Economist, 2012). This pricing strategy signalled to potential host that listing on Airbnb.com was risk free: it may lead to revenue, but it will not cause any cost (except the time hosts invest in setting up the listing).

In an attempt to expand their network globally, Airbnb acquired businesses in the UK and Germany that imitated the Airbnb.com platform in the first period. This approach was highly effective in growing the number of local Airbnb hosts quickly, platform by platform, rather than host by host (Brown, 2017). Where this was not possible, or where it proved too expensive to acquire competitors, Airbnb reverted to its original growth strategy of personal door-knocking by teams of staff to proactively recruit local hosts in international markets (Yip, 2017).

Although Airbnb is now well-established globally, its recruitment efforts are ongoing. Its referral program, for example, allows hosts to invite their friends to list space on Airbnb. If they do, Airbnb gives them credit to use when they make their first booking on Airbnb as a guest. As soon as the new host has welcomed their first Airbnb guest, the host who referred them is also given credit that they can use for their next stay at an Airbnb-listed property (Brown, 2017). Word of mouth also played a key role in recruiting new hosts. Airbnb fuelled word of mouth by its storytelling initiative, which facilitates the sharing of travel experiences among Airbnb members (Yip, 2017). Airbnb also ran advertising campaigns using a range of communication channels (Wegert, 2014) emphasising the advantages of booking Airbnb-listed accommodation (Davis, 2016), and targeted advertisements using Google, amplifying its own search engine optimisation algorithms.

Events that lead to a temporary, but substantial increase in demand for tourist accommodation (Brown, 2017), often characterised by accommodation shortages (Fairley & Dolnicar, 2018; Fairley et al., 2021) are another key recruitment opportunity for Airbnb. Such events include major sports events, conventions, conferences and festivals. In such situations, Airbnb can unlock vacant unused space temporarily to help overcome accommodation shortages, while enabling locals to earn additional income. Locals who would otherwise not have considered hosting may take the opportunity to try it out. Furthermore, guests who would usually prefer to stay in established, licensed tourist accommodation may choose an Airbnb-listed property because of the high prices of hotels and similar accommodation options at times when demand is high.

The second key activity Airbnb engages in to create value is to facilitate the matching process on the online trading platform ( search optimisation to match guests and hosts ). People searching for accommodation are not interested in the largest set of options. Rather, they want to be presented with a reasonably sized, relevant set of accommodation options that matches their requirements and preferences. This is where Airbnb’s secret search algorithms come into play. Optimal matching of listed properties with guest needs – micro segmentation (Dolnicar, 2018) – gives an online trading platform a substantial competitive advantage in the marketplace. Although Airbnb does not disclose the exact optimisation algorithm (which was supervised by some 400 engineers and data scientists as of 2016), existing reports point to two key features of the algorithm that make it so effective (Gallagher, 2017): the design of its search platform Airbnb.com, and the use of search engines such as Google that facilitate targeted displays of search results. For example, Airbnb targeted advertising by optimising Google AdWords (Gallagher, 2017; Google, 2014) and Display Ads (Wheeler, 2014).

The algorithm Airbnb uses on its own trading platform takes more than 50 aspects of guest-host matching into consideration, including: the property’s location and type of space; its star rating across reviews; the number of reviews available for a listing; how quickly a host responds to guest enquiries; if a property can be booked without having to wait for the confirmation from the host; if the required travel dates are available; and how expensive it is. By understanding how Airbnb processes listings, hosts can optimise the visibility of their property in guest searches by ensuring they perform well on the key criteria, including responding to enquiries, responding quickly, not cancelling bookings, providing many forms of identity verification as well as pricing the property competitively and including many pictures. Importantly, no two identical searches by two Airbnb guests will lead to the same properties being displayed. This is because Airbnb personalises the presentation of available listings to the preferences of network members learned through their previous searches and bookings (Ifrach, 2015). In Table 2.4 this activity is listed as understanding and tracking guest and host behaviour .

In addition to digital platform optimisation, Airbnb also engages personally with hosts to understand their needs, what they like about listing their properties on Airbnb, and what they think could be improved. When Airbnb started its operations, the founders of the company themselves interacted directly with hosts to gain market insight. While such individual conversations became unviable as the number of listings climbed into the millions, Airbnb moved to organising large events to facilitate the personal exchange between Airbnb staff, hosts and host service providers. Airbnb’s flagship event is the Airbnb Open, which Airbnb refers to as “ the festival of hosting ” (Airbnb, 2017). Airbnb Open events have been held in San Francisco, Paris and Los Angeles.

Overall, however, personal meeting and conversation opportunities have – over the years – given way to machine learning and behavioural modelling, which allow Airbnb to gain insights into people’s preferences by mining large transaction data sets (Sng & Hachey, 2016). This development has not been welcomed by Airbnb hosts, especially those Airbnb hosts who have been the pioneers of peer-to-peer accommodation provision (Hardy & Dolnicar, 2018b) and have become used to interacting with humans at Airbnb. Yet, the data generated on a continuous basis by Airbnb.com opens up new business opportunities for Airbnb. Its transaction data has the potential to provide key insights informing decision-making by tourism industry professionals, urban planners, the real estate sector, and tax authorities – as events discussed later in this chapter will demonstrate. Airbnb could mine data and sell insights or even sell de-identified data, creating an entirely new revenue stream.

Risk mitigation is another key activity Airbnb engages in. Before Airbnb became a successful peer-to-peer accommodation trading platform, potential investors raised significant concerns about the proposed business model, suggesting that “ the idea of renting out space to strangers [is] totally weird and unbelievably risky” (Gallagher, 2017: 16-17) and that “ t he very idea of letting strangers sleep in their homes was asinine [and] simply asking for trouble ” (Gallagher, 2017: 49-50). While these concerns did not prevent Airbnb from becoming successful, it is true that giving all network members confidence in the platform and the transactions made on the platform (Dolnicar, 2018) was critically important to Airbnb’s business model. Not surprisingly, much of Airbnb’s effort was directed toward the building of trust. A dedicated Airbnb Trust and Safety Division manages a portfolio of strategies put in place to reduce host and guest risk and risk perception, and to increase trust and confidence in the platform.

Airbnb has put in place several measures targeted at hosts, including the host guarantee providing protection against damage to a host’s property or belongings (Airbnb, 2020a), the ability to access guests’ P2P-CVs containing the numerical and verbal reviews written by people who have previously hosted these guests, and identity verification. Airbnb provides information on their webpage for hosts about the local regulatory requirements in relation to short-term rentals. At popular tourist destinations, these regulations typically include requirements to register, to pay a tourist tax, and to comply with specific criteria relating to guest safety (Hajibaba & Dolnicar, 2018; Von Briel & Dolnicar, 2020; 2021a). In some destinations, policy makers allow Airbnb to collect and pay taxes on behalf of hosts.

Risk mitigation is also a core Airbnb activity with respect to guests. Airbnb protects guests in a number of ways. Paying hosts with a slight delay is one of these approaches. The 24-hour payment delay ensures that hosts listing non-existent properties or properties that are substantially different in reality to how they were presented online are not paid. In such instances, guests are able to contact Airbnb and have alternative accommodation organised. Another way for guests to reduce risk is to study the P2P-CVs of hosts. These P2P-CVs consist of all reviews guests have ever written about the host and the property. A large number of positive reviews gives guests confidence that they will not be disappointed. Airbnb also verifies the identity of hosts and set up the property listing in a way that ensures that hosts include detailed safety-related information, including which safety devices are at the property, evacuation plans and emergency contact details. The Airbnb Community Defence Team spot-checks listings, and data scientists monitor trading transactions on Airbnb.com for any potentially fraudulent activity, and Twitter and Facebook posts for Airbnb-related distress calls (Gallagher, 2017). Airbnb also has crisis management, victim advocacy, insurance, and law-enforcement relations teams; all working under the supervision of Airbnb’s Trust Advisory Board (Gallagher, 2017).

The final key activity is the management of cost . Airbnb’s revenue model works on the assumption that a large number of trades occur on Airbnb.com, each only contributing a small profit margin. This explains why Airbnb charges hosts only a relatively low fee for its services compared to other tourism accommodation distribution channels. The low fee, in turn, attracts more hosts because they perceive Airbnb as a cost-effective distribution channel. As a likely consequence of the small profit margin Airbnb makes for each transaction, Airbnb has strict cost control measures in place (The Economist, 2017).

Key resources

Airbnb’s key resources include a tailored marketplace, trust-base relationships, an extensive database of reviews tied to network member profiles, knowledge resources, and service recovery staff. These resources enable Airbnb to engage in the key activities discussed above and, in so doing, create value for all its stakeholders. Key business resources are particularly beneficial to a business if they cannot easily be copied, offering a substantial competitive advantage in the marketplace (Barney, 1991). The extent to which Airbnb’s key resources can be imitated by competitors varies from resource to resource.

The tailored marketplace , Airbnb.com, is one of the keys to Airbnb’s success. When Airbnb started operating, its online trading platform was custom designed to facilitate all the key functions necessary to present listings in the most attractive way possible, facilitate high numbers of trades simultaneously without crashing, build a community, protect all network members, create trust through a reciprocal review system that allows for responding and resolution (Dolnicar, 2019), and manage international financial transactions without requiring a bank licence (Gallagher, 2017). Airbnb’s tailored marketplace was not easy for competitors to imitate in the early days of Airbnb. Since the end of the first period, a number of off-the-shelf open-access and paid online marketplace solutions have been available to use by new market entrants to copy this aspect of Airbnb’s online presence (von Briel & Dolnicar, 2021b)

Airbnb’s second key resource is the trust-based relationships it has built with millions of hosts and guests globally over the years. This was extremely challenging for Airbnb because tourists were used to relying on licensed tourism accommodation providers. The licensing signalled to tourists that they could trust these accommodation providers. The providers themselves did not need to work to earn the trust of tourists, they could only lose this trust by providing inadequate services. Airbnb was in an entirely different position. It was trying to convince people to rent out their private spaces to strangers, and to book someone’s private space for their holiday. Trusting the trading platform is an essential requirement to be able to achieve this (Morgan & Hunt, 1994). Developing trust as a resource takes a long time (Dierickx & Cool, 1989). In terms of competitors’ ability to imitate this resource, Airbnb’s efforts of trust-building have paid off. Airbnb is arguably the most trusted peer-to-peer accommodation trading platform globally, a resource that is very difficult to imitate. At the same time, Airbnb’s success in getting tourists to trust peer-to-peer accommodation in general also makes it easier for competitors to build trust into their platforms, as the base level of trust for peer-to-peer accommodation has increased substantially since Airbnb first launched.

Related closely to trust is another of Airbnb’s key resources: an extensive database of reviews associated with network member profiles. Every review benefits the entire network, allowing hosts to assess the suitability of a guest before confirming their booking and guests to assess the trustworthiness and professionalism of a host before sending a booking enquiry. The large collection of reviews and P2P-CVs that has accumulated on Airbnb.com is not easy to imitate for competitors because it is a function of the substantial number of trades that have taken place on Airbnb.com over the last decade. Hosts and guests who do not have a single review are at a significant disadvantage, representing a high risk for their potential trading partners (Dolnicar, 2018b). Reviews benefit Airbnb in another way: they highlight problems with listings which Airbnb may need to address, thus doubling up as a quality assurance instrument.

Knowledge resources are relevant to Airbnb in two ways. First, gaining market insights from millions of guest-host transactions requires knowledge on how to extract insights from data, while at the same time creating expertise in data mining for consumer insight at Airbnb, a resource that is available generally, but not easy to imitate by competitors with lower transaction numbers in the peer-to-peer accommodation space. The second dimension of knowledge resources relates to information libraries created by Airbnb to assist hosts. These include guidance such as setting up optimal listings, responding promptly and professionally to guest enquiries, dealing with complaints, complying with local regulations relating to peer-to-peer accommodation (Gallagher, 2017), and – more recently – cleaning properties in way that ensures no COVID-19 transmission between guests. Not all of this information is shared with the general public, with many knowledge resources embedded in Airbnb structures and procedures, including the Airbnb call centre (Sng & Hachey, 2016). While some of these knowledge resources for hosts can be easily imitated by competitors, others cannot.

The last of Airbnb’s key resources is a pool of call centre staff specialising in service recovery. Call centres can either be run by a business itself or can be outsourced. Outsourcing is typically the more cost-effective approach, but implies a lower level of control. Because building trust is of such fundamental importance in peer-to-peer accommodation trading, Airbnb has chosen to never outsource their call centre. Call centre service staff are critically important to building and maintaining positive relationships with hosts and guests, while also having to resolve critical situations involving safety risks. This key resource is not easy to imitate by competitors.

Only little information is available about how Airbnb’s partners and suppliers create value in this first period (Table 2.5).

The role of some of Airbnb partners is quite fundamental, as is the case with Amazon Web Services, for example. Amazon hosts Airbnb’s web services. As a consequence of the decision to use Amazon’s services, Airbnb does not need to manage hardware infrastructure, and is able to increase or reduce processing capacity quickly (Amazon, 2017; Gallagher, 2017). A different kind of partnership is that with business travel companies (Montevago, 2016). Here, Airbnb integrates its services with corporate travel programs.

Value communication and transfer

Airbnb.com is not only a point of sale for Airbnb. It is also the primary platform used by Airbnb to communicate with all of its active network members and people who are considering joining. Most communication is not individualised, yet offers support to hosts and guests and ensures the homogeneity of listings. Helpful, automatised communication includes, for example, a reminder email to hosts shortly before guests check in. This email ensures that hosts do not forget the arrival of guest. This may sound like an unlikely scenario, but with many hosts not being professional accommodation providers and hosting only as an additional source of income, such reminders are very useful indeed. Automatic emails are also sent to remind both guests and hosts to review each other on the day of check-out. This communication ensures that guest and host P2P-CVs grow continuously, increasing the value of Airbnb.com to all trading partners.

Most of Airbnb’s communication is not personal, rather it involves its web platform, its app, email, and advertising. In the early beginnings of Airbnb, personal contact was a key success factor in attracting new hosts. Over the years these personal contact opportunities became more organised and concentrated, for example, through hosting large events called Airbnb Opens where Airbnb staff, hosts, guests and host service providers had the opportunity to interact personally. Increasingly, these opportunities have become rare and interaction has been shifted online where Airbnb communities are encouraged to discuss any Airbnb-related matters.

Advertising and public relations play a key part in growing membership and retaining hosts and guests. In public, Airbnb focused strongly on communicating the concept of belonging in the first period (Marion, 2014). Marketing messages tended to be variations on this theme (e.g., ‘ belong ’, ‘ belong anywhere ’ ‘ don’t go there. live there ’, ‘ until we all belong ’), and fed into the curation of listing content, presentation of guidebooks and tips about local neighbourhoods (Davis, 2016; Wheeler, 2014). In addition to the highly emotional message of belonging, Airbnb also issued its own magazine (originally titled Pineapple and later renamed Airbnb Magazine), produced its own blog, created short films (including Birdbnb), and shifted content onto the full range of social media sites, including Facebook, YouTube, Instagram and Twitter (Wegert, 2014).

Airbnb.com’s messaging system – which serves as the platform for all communication – saves all messages sent and received, helping hosts with the filing of documents and serving as the basis for the resolution of any legal disputes or complaints by other network members (Gallagher, 2017).

Value capture

Airbnb captures value by charging a relatively small commission on all guest-host transactions. As opposed to other distribution channels, Airbnb split up this commission between hosts and guest with the guest fee between 5% and 15% of the price, and the host fee ranging from 3% to 5%. For comparison, Booking.com charges, as of 2020, an average commission rate of 15%, which is paid entirely by the accommodation provider (Booking.com, 2020). Booking.com claims that its commission rate average is “ among the lowest in the industry ”, suggesting that other tourist accommodation distribution channels charge an even higher commission rate.

Also in contrast to other distribution channels, Airbnb charges guests the entire amount of the accommodation at the time of booking. Airbnb deducts its commission and only releases the remainder to the host 24 hours after the guest checks in. This approach benefits Airbnb in two ways. First, it ensures – in the absence of complaints – that the listing actually exists and reflects the description on the listing, and second, it gives Airbnb access to the money for potentially extended periods of time. Peak season bookings are commonly made 12 months in advance; Airbnb having this money available to use for 12 months effectively represents an interest-free loan (Reinhold & Dolnicar, 2018d). This cash flow management model is also being used by Amazon; customers order and pay, then wait for days until the items they have purchased are delivered. During this period, Amazon can work with the money.

Figure 2.3 illustrates the money flows for Airbnb and Homeaway (now VRBO) as per the first period, highlighting the benefits Airbnb derive from its model.

Flow chart showing the difference in Homeaway and Airbnb’s payment flows after host and guest agree on a booking. Airbnb collects 100% of the payment, it then has interest free working capital to grow and develop the platform. 24 hours after the guest checks in and is satisfied, the host received the payment (minus the guest fee of 5 – 15% and the host fee of 3 – 5%). In contrast, Homeaway immediately pay a deposit to the host (minimum 20%) to secure the booking, minus a small service fee. About 1 month before the guest arrives, the guest pays the outstanding balance. In this month period, Homeaway have interest free capital to grow and develop the platform. 3 days after the guest checks in and is satisfied, the host receives the remainder of the payment.

For guests, Homeaway’s model is preferable – its payment plan includes a number of smaller payments leading up to the time of the booking. At the time of booking, Homeaway only charges a deposit of a minimum of 20%. Hosts can choose a higher deposit amount. In contrast to Airbnb, Homeaway immediately transfers the payment to the host, after having deducted its commission. The final payment is due one month before the booking. The host receives this amount three days after the guests have checked in. The security deposit is not due until one week before the booking. This money is refunded to the guest unless the host makes a damage claim after the guest has checked out.

The money-flow comparison shows the competitive advantage Airbnb derives from the way it manages payments. Airbnb can use the money guests have paid for accommodation well in advance of their booking to cover its expenses and expand its business.

Until December 2020, Airbnb was not a publicly traded company and was therefore not obliged to reveal details about its revenue and profit. However, the company is said to have first been profitable in 2016 with revenues projected to hit USD $2.8 billion in 2017 with its earnings before interest, taxes, depreciation and amortisation (EBITDA) at USD $450 million (Gallagher, 2017). Airbnb attracted – through ten investment rounds – some USD $3.34 billion of funding from 41 investors during the first period (Crunchbase, 2017), as shown in Table 2.6.

Value dissemination

Airbnb cannot create value for its members and third parties without a large number of stakeholders. These stakeholders gain benefits from their association with Airbnb but also potentially incur risk or other negative effects resulting from peer-to-peer accommodation sharing – even without actively partaking in the economic activities surrounding Airbnb’s platform. It is in Airbnb’s interest to ensure that all key stakeholders continue to gain benefits to ensure that they will continue to assist Airbnb in creating value for hosts, guests and third parties. Using as a framework Post, Preston, and Sachs’ (2002) dimensions of strategic settings (which differentiates resource base, industry structure and socio-political context), Figure 2.4 paints a picture of Airbnb’s stakeholder relationships. We discuss the main relationships below in detail.

Airbnb’s key stakeholder relationships. Airbnb’s resource base is its guests, hosts, employees, and investors. This is surrounded by an industry structure of direct suppliers, indirect suppliers, public policy makers, landlords, and partners. This is surrounded by the socio-political area comprised of NGOs, governments, local communities, and advocacy groups.

Dissemination to hosts

Hosts and guests are Airbnb’s core stakeholders. Hosts enable Airbnb to operate by making spaces available for rent. Without the hosts’ spaces, Airbnb has nothing to sell. The number, quality, and variety of listings on Airbnb.com determine how attractive Airbnb’s online trading platform is to guests (Dolnicar, 2018a). In addition to the core service of accommodation provision, hosts may also offer additional services to guests, including local insider tips about which attractions to visit and where to dine. The reviews hosts write about guests who stayed at their properties are invaluable to other hosts when they are assessing whether to grant permission to future guests to book (Karlsson et al., 2017). Many hosts further contribute to Airbnb.com through their involvement in host communities and in training new hosts and guests (e.g., Dolnicar 2018b).

The contribution from hosts comes at a risk. The most fundamental risk is that guests will not treat their property with respect and cause damage to it. Additional risks include tensions and disputes with neighbours or the body corporate (homeowners association) of an apartment complex. Hosts may also risk disputes, fines and lawsuits with government regulators if they are not in compliance with rules relating to short-term letting. Rules are not always unambiguous, creating a risky grey legal space within which hosts may need to operate (von Briel & Dolnicar, 2021a).

Because Airbnb relies on hosts, it is in its interest to minimise the risk for them of being active on the network. Airbnb achieves this in several ways: it enables people who otherwise would not be able to make space available for short-term rental to do so; it helps hosts to create an attractive listing; it assists with price setting; and it pays out a higher fraction of the price the guest pays than other online trading platforms or traditional tourism accommodation distribution channels. Airbnb also punishes guests who violate guest rules, including the possibility of legal proceedings and exclusion from the network. Despite substantial media interest in instances where Airbnb guests have caused severe damage to host properties in the first period, such instances are exceptionally rare: “ of forty million guests staying on Airbnb in 2015, instances that resulted in more than $1,000 of damage occurred just 0.002% of the time ” (Gallagher, 2017: 92).

Dissemination to guests

The second stakeholder group that is essential to Airbnb’s operations is its guests. Guests contribute to Airbnb by purchasing short-term access to space (making the trading platform more attractive to hosts), and by writing reviews about the properties they stayed at and their hosts. Reviews assist other guests in the decision-making process when they are looking for suitable accommodation. Reviews also serve as an inbuilt quality control mechanism, similar to the established market research practise of mystery shopping (Dolnicar, 2019). Guests can express their discontent or make constructive recommendations for improvement publicly, or in a private message to the hosts. For hosts who are motivated to improve the service they are offering, this process provides specific guidance on how they can achieve this.

Actively engaging with an online peer-to-peer accommodation trading platform is not risk-free. Guests could find themselves desperately searching for a property they booked that does not actually exist, or they could be disappointed in the space because it is much inferior to its appearance on the online listing. If the listing is a shared space, guests face several additional risks: the hosts could be disrespectful to their privacy, steal from them or physically harm them.

It is in Airbnb’s interest to minimise these risks to ensure that guests continue booking on Airbnb.com and write positive reviews which attract new guests to the network. Airbnb, therefore, put in place several risk mitigation measures benefitting guests, including a guarantee which entitles guests to alternative accommodation if the booked space does not exist or differs significantly from what was advertised. At the more fundamental level, Airbnb reduces risk by structuring the way peer-to-peer accommodation listings on Airbnb.com are presented. By structuring listings, hosts are nudged to comply with key safety requirements. Airbnb also manages financial transactions, giving guests confidence that delinquent hosts cannot take their money without providing access to space as agreed.

Dissemination to landlords and real estate developers

Hosts and guests as the key stakeholders of Airbnb have been discussed extensively in the literature (for a review see Dolnicar, 2019). Other stakeholders and their roles in Airbnb’s business model have received substantially less attention. These stakeholders include landlords and real estate developers.

Many landlords and real estate developers find themselves in the situation of being involved in the short-term rental business because their tenants list spaces owned by them on Airbnb. Their involvement with Airbnb is not intended and, in some instances, they may not even be aware of it. Despite this indirect and involuntary association with Airbnb, landlords and real estate agents can benefit from Airbnb and bear risk because of their association with Airbnb, giving them some bargaining power.

The risks landlords and real estate developers face are similar to those of hosts: the short-term nature of the rentals is likely to cause more damage and more wear than is the case with long-term rentals, the body corporate or owner’s association may object to short-term rental activity, neighbours may complain about reduced safety given that new sets of strangers are given access to the apartment complex on a regular basis, and the likelihood of neighbourhood complaints is higher. Accepting these risks allows real estate developers and landlords to benefit in several ways from their indirect association with Airbnb.

Airbnb is actively engaged in making apartment blocks more friendly to peer-to-peer accommodation trading. In collaboration with rental conglomerates, Airbnb has developed models under which tenants are given the right to sublet properties on Airbnb within the parameters set by the owners (Gallagher, 2017). One such initiative named Niido is discussed later in this chapter. As demand for Airbnb properties increases and apartment complexes become more peer-to-peer friendly, property value – in terms of both the sale and rental value – also increases, putting owners in the position of being able to charge higher rents because of the short-term rental return potential of a property: “ landlords have already begun pricing the expectation of an Airbnb revenue stream into the rents they charge ” (Gallagher, 2017: 204).

For property owners who are not happy for their long-term tenants to sublet their properties, Airbnb does not offer any solutions (McNamara, 2015) – owners are forced to find a solution within the framework of local tenancy laws. In the long term, the simplest option in such cases is to clarify in the rental agreement that subletting is not permissible.

Dissemination to local communities

Another of Airbnb’s key indirect stakeholders is the local community . Most of the public discourse in relation to Airbnb’s impact on the local community focuses on the negative externalities experienced by locals (for a review, see Dolnicar, 2019), including: competition for public resources upon which residents rely in their everyday lives, such as parking, guests’ lack of a sense of responsibility to care for the area and of accountability for their misbehaviour, and the nuisance of being stopped by tourists in residential areas and asked for directions or help (Edelman & Geradin, 2015).

In addition to these direct inconveniences to the lives of local residents, a large numbers of Airbnb listings at popular tourist destinations can also lead to an increase in real estate sale and rent prices. Airbnb put in place some measures to reduce the potential of disruption to the lives of locals, such as the neighbourhood support webpage (Airbnb, 2020c) where locals can complete a form stating the nature of the disruption. The complainant, after submitting the form, receives a confirmation, and Airbnb contacts the host (assuming the address provided by the complainant is an active listing hosting guests at that point in time). Airbnb reports back to the complainant at the end of this process.

Airbnb also put in place initiatives aimed at giving back to the communities that are potentially burdened by its operations. One such initiative in the first period was the co-design of 10% of its Airbnb Experience offererings with local non-profit organisations (Gallagher, 2017), donating all revenues to the participating non-profits.

While such initiatives are welcome, Airbnb does not take more radical action, such as limiting the number of listings to address social sustainability concerns (Ciulli & Kolk, 2019). This is largely the responsibility of local policy makers (von Briel & Dolnicar, 2020; 2021a). Overall, the bargaining power of locals is relatively low.

Dissemination to public policy makers

Public policy makers, including tax authorities, represent another key Airbnb stakeholder. They have substantial bargaining power because Airbnb is operating within their legislation. Airbnb is therefore highly motivated to lobby them and work with them to ensure it can run its operations as smoothly as possible. Regulations relating to short-term rentals vary substantially from location to location (Hajibaba & Dolnicar, 2018; von Briel & Dolnicar, 2021a), and have dramatically evolved over time within locations (von Briel & Dolnicar, 2020; 2021a). This is not surprising because the characteristics of a location affect the potential impact Airbnb has on it. Regional and remote areas in desperate need of revenue sources are likely to benefit more than popular city destinations struggling with overtourism. At city destinations popular with tourists, the negative externalities of Airbnb are most pronounced. This explains why the most restrictive government regulations have been implemented in such places, including New York, San Francisco, Paris and Barcelona. Airbnb has dedicated staff who lobby local government and aims to establish collaborative agreements with policy makers where possible. At some locations, Airbnb collects tourist taxes on behalf of hosts and forwards them directly to tax authorities – a matter that has become more salient in periods two and three.

Value development

Over the years, Airbnb has grown by continuously adding hosts and guests to its member base, which has substantially increased its valuation (The Economist, 2015, 2017). Acutely aware of its multi-sided platform business model and the importance of a large pool of hosts and guests to increase the attractiveness of the trading platform, Airbnb put in place several initiatives to ensure continued growth. At the host level, Airbnb established a referral program through which hosts can earn travel credits if they successfully recruit another host (Airbnb, 2020d). Airbnb also engages in acquisitions, especially in view of capturing new markets quickly and developing its offerings for specific segments. In 2016, Airbnb started cooperating with CWT Carlson Wagonlit Travel and American Express Global Business Travel in an attempt to expand from the leisure tourism market to the business market. While this growth occurred within Airbnb’s original business model, it represented a significant expansion geographically and with respect to the market segments Airbnb catered to.

In addition to strategic initiatives aimed at growth, Airbnb also benefits from cross-pollination: “ when a traveler from France uses Airbnb in New York, he or she is more likely to go back to France and consider hosting, or to talk up the company to his or her friends, sparking awareness and ultimately leading to more listing activities in that market ” (Gallagher, 2017: 40).

Experimenting with new growth paths (2017 ‒ 2019)

By 2016, Airbnb had laid the foundational core of its business model and established key relationships between the different sides of its accommodation sharing platform, propelling its growth. With these foundations established, the period between 2017 and 2019 was characterised by experimentation with different growth paths – some evolutionary, some revolutionary. Still, survey-based estimates in 2017 suggested that more than half of the travellers in Airbnb’s home market had never used Airbnb (Carty, 2017). The senior management team aspired to develop Airbnb into a “ true ‘ecosystem’ or a ‘one-stop shop for travel ’” (Ting, 2018b). These aspirations seem to have guided Airbnb’s expansionary course and built on the core of its business model. The following sections highlight critical changes to the elements of Airbnb’s business model.

Changes to the value proposition

Between 2017 and 2019, Airbnb enhanced its value proposition for two specific kinds of hosts (Superhosts and hotels) as well as for the broader population of hosts. It addressed risks inherent to hosting guests by making the way monetary transactions are handled more convenient and competitive, and by increasing the value offered from its short-term property management solutions.

Identify suitable guests: Airbnb labels some of its host community as Superhosts (approximately 600,000 as of December 2018). Superhosts benefit from higher visibility and exposure in guest search queries on the platform and thus have a higher likelihood of receiving bookings (Ting, 2018c, 2018d). A second group of hosts that has received more attention in this second period are hotels listing rooms on the platform (Ting, 2018e). Airbnb enables hotels to find guests for their rooms on the platform via easy integration into their existing inventory management systems and without the need for a long-term contract. An example of developments in this area include new boutique aparthotel offerings providing long-term stay options for project-based travellers (Ting, 2018f).

Mitigat ing risk: Airbnb announced stricter moderation of its review systems to prevent guests from using negative reviews or ratings to petition hosts for discounts or other benefits (Schaal, 2019a). Airbnb support agents are granted the right to remove reviews that are irrelevant (e.g., based on features that have nothing to do with the host’s listing or that are beyond their control) or biased (e.g., based on host characteristics such as race or political orientation). They preclude guests from using the platform for repeated misconduct. These measures were accompanied by updates to Airbnb’s guest standards. The updates aim to protect hosts and host communities from issues such as littering in and outside of rental properties, parking violations, and open-invite parties or unauthorised guests (Whyte, 2019a).

By the end of September 2020, Airbnb had a network of more than 6,600 third-party partners in 25 locations to handle community support, alongside 24/7 assistance in Mandarin and English, and helplines and live chat in 8 to 11 languages during business hours. To prevent guest misconduct, Airbnb has also updated its reservation screening procedures – complementing computer screening with human judgement – to identify bookings from unauthorised parties and other potential misconduct (Sheivachman, 2019a). Airbnb still refrains from requiring government issued identification, in order to not discriminate access to its services on that basis. In January 2020, more than two thirds of accommodation transactions involved verified parties from the Airbnb guest and host community (Schaal, 2020a). Finally, Experience hosts must underwrite additional third-party insurance and prove possession of the required licences and permits to host government-sanctioned activities, for example, tours in national parks, or tours that involve high risk activities such as white water rafting (Schaal, 2019b).

Manag ing short-term rental s : Airbnb has started providing more support for professional hosting. Professional hosts are those that manage multiple properties that do not qualify as private, permanent residences. At the end of 2019, Airbnb reported that 10% of its hosts were non-individual hosts, and 28% of its overnight stays were booked with professional hosts (Schaal, 2020b). Small property managers with between two and twenty properties on Airbnb.com account for most of Airbnb’s listings. Professional hosts with more than 100 listings have seen the biggest growth overall (Schaal, 2020b). Functional value upgrades include IT integration with professional property management systems, calendars and booking management, pricing rules, additional messaging features (Ting, 2017a), and human support (Ting, 2018g). This is a valuable addition for hotels listing rooms on the platform (Ting, 2018a).

The relationship between property management companies acting as professional hosts and Airbnb remained challenging throughout this second period – particularly in holiday destination markets outside of urban centres. These companies disapprove of Airbnb’s short-term guest cancellation policy, which limits insurance policy sales. Professional hosts also present Airbnb with challenges in terms of collecting the taxes and other fees mandated by local regulations (e.g., overnight taxes and resort fees) and complying with local hosting caps (O’Neill, 2019a).

Handl ing monetary transactions: Alongside the payment options and support for monetary transactions introduced prior to 2017, Airbnb has started to open to local payment service providers such as WeChat Pay and Alipay in China (Schaal, 2019c). The way Airbnb handles monetary transactions and shares revenues has also been a sales argument in convincing hotels to list their rooms on Airbnb. Online travel agents charge hotels a commission rate of between 15% and 25% and do not offer additional services such as payment solutions or the collection and remission of taxes on behalf of the accommodation provider (Ting, 2018a). Airbnb charges much lower commission, allowing hotels to retain as much as 97% of the listed price. This is possible if Airbnb collects a part of its service fee from guests (Ting, 2018g) but does not seem attainable if hosts opt for the host-only charges model (Schaal, 2019d) – as we discuss under changes to value capture in period two.

Between 2017 and 2019, Airbnb improved its services to help guests find suitable accommodation more effectively, make bookings more easily, and deal with the risks involved in renting shared accommodation. It also implemented several ways to augment guest stays, for example, offering Experiences in addition to accommodation (Gardiner & Dolnicar, 2018; 2021). In 2019, Airbnb reported 54 million active bookers, accounting for 327 million overnight stays and Experiences as well as 825 million guest arrivals (Airbnb, 2020e).

Finding accommodation: Airbnb has considerably extended its types of listings beyond traditional home sharing. Between 2017 and 2019, Airbnb’s inventory included everything from rooms in boutique hotels, inns, and bed and breakfasts, to traditional vacation rentals, holiday homes, luxury villas, and entire apartment complexes (Ting, 2018g). For example – under the label Beyond by Airbnb – the platform featured luxury vacation rentals purchased from Luxury Retreats (Ting, 2018h, 2018c). Under the label Airbnb Plus , Airbnb featured a curated collection of inspected listings meeting specific quality standards from a 100-item checklist. Airbnb listings in this collection are characterised by their design rather than luxury, while still commanding higher than average nightly rates (about USD $250 instead of USD $100) (Ting, 2018i, 2018c). Airbnb also improved the way its platform helps guests discover those options and reach a decision. A new layout on the app and website assisted people in finding different kinds of accommodation for specific purposes using new markers (e.g., business travel, accommodates families, balcony) and curated collections (e.g., honeymoons, dinner parties). Listings in collections have a rating of 4.8 or higher (Ting, 2018c). Regulatory intervention (von Briel & Dolnicar, 2020; 2021a) has led to more transparency in European markets, where Airbnb now displays the total price including room rate, cleaning fee, and local occupancy tax (Schaal, 2019e).

Booking process : Localised payment options such as WeChat Pay and Alipay – along with the integration of logins and apps on popular social media platforms and new options for splitting the payments of travel groups – lower guest barriers to engaging with Airbnb’s services (Schaal, 2019c; Ting, 2017b). Airbnb highlights that – compared to online travel agents – after having machine learning match guest preferences with listings, processing is supervised by its service and support staff who can be contacted in case of problems (Ting, 2018g).

Mitigat ing Risk: Airbnb has taken several measures to improve the way it mitigates the risks involved in sharing activities on its platforms. First, it started monitoring reviews more closely, screening specifically for content that causes safety concerns, including sexual harassment and other forms of discrimination (Ting, 2018j). Second, it has strengthened its efforts to identify and prevent deceitful offers, for example, hosts listing an establishment at multiple price points, and misrepresentations of offered properties and amenities in text and images. It also vets host profiles for prior bans from the platform (Ting, 2017c). At the end of 2019, Airbnb announced its intention to verify most of what it offered on the platform, including Experiences . Third, Airbnb mandates additional insurance for hosts offering Experiences that require governmental permits, licences, or that involve high-risk sports activities (Schaal, 2019b).

Augment experiences: Airbnb has tremendously grown its Experiences offering, which was first launched in November 2016 (Gardiner & Dolnicar, 2018; 2021). The platform’s inventory increased from 3,100 activities across 40 cities in November 2017 to around 40,000 activities in 1,000 cities around the globe by the end of 2019 (Schaal, 2020c; Ting, 2017d). In 2018, Airbnb reported that it had approximately 1.5 million bookings for Airbnb Experiences annually, most with a five star rating. Top Experience hosts earned USD $300,000 (Ting, 2018b, 2019a). Categories for Experiences enjoyed by both locals and tourists include food and drink, sports, lifestyle, music, entertainment, and new categories such as animals. Experiences have centred on more conventional tourist activities like sightseeing compared to early high profile offers (Ganaishlal, 2019; Ting, 2017d).

Alongside these activities, usually lasting from one to a few hours, the platform operator launched Airbnb Adventures for multiday experiences in 2019. Unlike Experiences , Adventures include board and lodging with ticket prices ranging up to USD $5,000. With 200-plus exclusive itineraries run locally by selected tour operators, Adventures are akin to traditional holiday packages without transportation. Adventures on offer on Airbnb.com include, for example, slow-food safaris, mountaineering and trekking in traditional holiday destinations such as the Galapagos Islands. In mid-2019, neither Experiences nor Adventures were separate profit centres at Airbnb despite these offerings positioning Airbnb.com in direct competition with companies such as GetYourGuide, TripAdvisor, and Intrepid Travel (Schaal, 2019f, 2019g). As a smaller in-destination convenience feature, Airbnb has started offering dining reservations on its platform via a Resy integration (Ting, 2017e).

Proposition to third parties

Between 2017 and 2019, Airbnb extended its value proposition for host- and guest-focused third-party service providers by helping them to engage with new clients, with process optimisation and access to new inventory for booking and events professionals.

Process optimi s ation and new inventory: The period between 2017 and 2019 is characterised by Airbnb extending its range of tools for booking professionals via integration with corporate travel management solutions (Ting, 2018k). These tools facilitate the processes of corporate travel managers and allow them to access Airbnb inventory under the label Airbnb for W ork (formerly Airbnb for B usiness ). Airbnb also partnered with WeWork to facilitate access to workspaces and meeting rooms (Sheivachman, 2017, 2018a). For event professionals (Fairley & Dolnicar, 2018; Fairley et al., 2021b), Airbnb introduced the option to create dedicated landing pages that identify available accommodation for delegates near the event location, and assist with the organisation of group trips (Sheivachman, 2018b).

Find and engage with new clients: Alongside photography and facility management services – both available early on in its development– Airbnb launched a preferred software partner program in the 2017 to 2019 period that identifies backend solutions for professional host property management (Ting, 2018h).

Changes to value creation

The period from 2017 to 2019 saw a noteworthy addition to Airbnb’s key resources and activities: the automation of processes and interfaces. Airbnb tries to keep transactions and exchanges efficient, as operations scale and the complexity and volume of interactions between guests and hosts – as well as with other stakeholders – increase. For instance, regulators in different national and local contexts started requiring hosts to file dedicated tax reports and reports on other fees and financial activities (von Briel & Dolnicar, 2020; 2021a). To this end, Airbnb started offering automated tax reporting for hosts in certain locations, such as Estonia (Sheivachman, 2018c). In terms of strategic resources, Airbnb started building its inventory ownership across strategic locations and markets by means of investments in lodging and property management companies. It does not seem that these investments are purely financially motivated as the companies Airbnb invested in have brought listings of their own to Airbnb.com (e.g., HotelTonight and Luxury Retreats; Hamdi, 2019a; Ting, 2018h, 2018c).

Airbnb added new partnerships and investments to tie partner resources and capabilities to its business model. Airbnb partnered with property planners and real estate investors to launch Niido , an Airbnb-branded hotel-like concept (Ting, 2018l). Units in the apartment complex are designed with sharing rooms or rented out as entire units for up to 180 days a year. They include common areas, keyless entry systems, and booking systems provided by the landlords. Under this concept, tenants would retain approximately 75% of the profits resulting from guest stays (Ting, 2017f). However, the resident tenants of the apartment complex designated to be converted to the Niido concept met the Airbnb partnership with some resistance as they had first signed leases under a different concept (Ting, 2018m, 2018n).

To lower entry barriers for traditional bed and breakfasts and increase the inventory of bed and breakfast rooms on its platforms, Airbnb started partnering with ThinkReservations, potentially giving it access to 17,000 establishments in the USA alone (Ting, 2017g). Likewise, a new partnership with SiteMinder, a cloud-based hotel distribution platform, provided potential global access to the rooms of more than 28,000 hotels (Ting, 2018g). Alongside these distribution integrations, Airbnb partnered with a range of new software providers to extend its value proposition for professional hosts and property managers (Ting, 2018h). At 75 Rockefeller Plaza in New York, Airbnb partnered with a real estate company to offer apartment-style hotel suites to business travellers (Carey, 2019).

Between 2017 and 2019, Airbnb also made investments worth around USD $800 million (Schaal, 2020d) that, by adding services and travel content, contribute to the ways in which Airbnb creates and captures value (Ting, 2018b). Table 2.7 provides a summary of investments during the 2017 to 2019 period.

Airbnb invested in Resy, a restaurant software partner it uses to enable guests to make dinner reservations directly through its platform (Ting, 2017e). Accomable represented a limited run investment in accessible travel for travellers with special needs (Randle & Dolnicar, 2018; MacInnes et al., 2021; Ting, 2017h; Whyte, 2018a). Airbnb’s acquisition of the French concierge and property management company Luckey Homes is the first investment in parts of the extended partner eco-system surrounding the peer-to-peer accommodation platform (Schaal, 2018a; Ting, 2018o). In Denmark, Airbnb invested in Gaest, a small booking site for events and meetings offering a low-cost alternative compared to other business-focused alternatives (O’Neill, 2019b; Sheivachman, 2019b).

Airbnb added two hospitality investments to its portfolio in 2019; OYO and HotelTonight. Through its USD $400 million investment in HotelTonight, Airbnb added around 25,000 boutique and lifestyle offerings from independent hotels to its platform while keeping HotelTonight as a separate, mobile-first business (Ting, 2019b). HotelTonight complements Airbnb by not only providing additional capacity, but by offering rooms tailored to last-minute travellers alongside Airbnb’s more long-term orientated booking offerings (Hamdi, 2019a). The USD $200 million investment in OYO, in contrast, helped to establish additional inventory in rapidly growing Asian markets (Hamdi, 2019b; Schaal, 2019c).

Multi-family apartments (Hajibaba & Dolnicar, 2018; Zare & Dolnicar, 2021) were the focus of Airbnb’s USD $160 million investment in US-based Lyric, a rental management company (Schaal, 2020e; Ting, 2019c). Airbnb also acquired Urbandoor, a company specialising in furnished business apartments, relocations, and extended stays (Schaal, 2019h). Finally, with Tiqets, Airbnb invested USD $60 million in ticketing solutions for tourist experiences (Schaal, 2019i).

Changes to value communication and transfer

Airbnb’s value communication and transfer activities between 2017 and 2019 represent evolutionary changes to the communication and distribution established within Airbnb’s first ten years of operation. The activities below highlight selected additions and extensions.

While Airbnb had scaled back on affiliate marketing before 2017, it gave third-party websites such as GoEurope and Hipmunk commission to promote its brand on their channels (O’Neill, 2017). Airbnb engaged in direct communication with potential new hosts when it wrote an open letter to bed and breakfast and hotel owners to encourage them to join the platform in coordination with a larger advertising campaign centred on hotel listings on Airbnb.com (Schaal et al., 2018). These efforts preceded Airbnb’s investments in OYO and HotelTonight, which would eventually add hotel room inventory to the platform in 2019. The investment in and partnership with HotelTonight led Airbnb to cross-promote hotel room offerings across the mobile-first service and its own platform (Schaal, 2019j). Airbnb started making its inventory available through Google searches alongside Expedia in 2019 (Schaal, 2019k, 2019l). In selected markets, Airbnb also partnered with tourism boards – such as Visit Sweden – for marketing purposes (Peltier, 2017).

Airbnb’s marketing strategy seems to have remained content centred. In Airbnb Travel Stories , the platform allowed users to share personal travel stories that inspire and convey the community’s purpose (Ting, 2017d). Superhosts were allowed temporary editorship of the Airbnb Instagram channel one day at a time to share their stories with 3.5 million followers in December 2018 (Ting, 2018d). Airbnb also started early development work on new original entertainment content in the form of travel shows and films (Ting, 2019d). The Japanese market saw a concerted USD $30 million investment with an image marketing campaign centred on home-sharing, as new regulation for the sector came into force in 2019 (von Briel & Dolnicar 2020; 2021a). The introduction of Airbnb Adventures was marketed with an “ around the world ” promotional offer, enabling guests to travel to 18 countries on six continents within 80 days (Schaal, 2019m).

Airbnb’s focus on marketing and sales activities meant that it spent less effort on value communication and transfer than rival online travel agencies, such as Booking.com, Ctrip or Expedia (Schaal, 2019n). Consequently, Airbnb attracted substantially more direct traffic to its webpage – about 60%, compared to 23% paid traffic in 2019 (Borko, 2020). A higher share of direct traffic compared to its competitors and the focus on word-of-mouth activities signal the relational and community-centric focus of Airbnb’s marketing activities (Schaal, 2018b). This is reflected in a favourable ratio of marketing expenditure to gross booking income. In terms of gross booking revenue per USD of marketing expenses, Airbnb reported USD $33, Expedia group USD $21 and Booking Holdings USD $19 (Borko, 2020). Airbnb has also reported that – based on credit card data – it manages to retain customers better than other online travel agents in the US with repeat guests accounting for 69% of Airbnb’s 2019 booking revenue (O’Neill, 2020).

Changes to value capture

How Airbnb creates value from interactions with guests and hosts by means of monetising interactions based on its value proposition has remained mostly unchanged. In 2019, 69% of revenues from overnight stays and E xperiences resulted from return guests (Airbnb, 2020e).

The main change to the way Airbnb captures value from its activities is the option given to professional hosts and hotels to eliminate the guest fee. Starting in 2019, instead of splitting the service fee between guests and hosts, hosts could now opt for a 14% host-only charge (Schaal, 2019d). This seems to fit with the addition of more hotel inventory to the platform and Airbnb’s requirement to keep control of their own pricing and yield management. Hotel guests are not used to paying guest fees and the 14% host charge is substantially lower than the commission typically charged by online travel agents. A minor change also occurred in the way group payments were being handled to increase convenience: up to 16 guests can share the payment for a listing for up to 72 hours after booking (Ting, 2017b).

Between 2017 and 2019, Airbnb remained a private company, limiting the availability of reliable financial information. Discussions of the valuation of Airbnb by industry media and analysts was connected to a potential initial public offering (IPO) on the stock market. The first financial information communicated by Airbnb itself was released in a public memo in the third quarter of 2018. In this quarter, Airbnb had realised revenues of more than USD $1 billion for the first time and reported 400 million total guest arrivals since its launch in 2008 (Ting, 2018p). For 2018 as a whole, Airbnb reported that it had earned money for the second year in a row without mention of details (Whyte, 2019b). Bloomberg and The Wall Street Journal suggest that Airbnb accumulated a net loss in 2019 as it had increased spending on a range of investments and marketing activities in preparation for a rumored IPO in 2020 (Schaal, 2020f, 2020g). In September 2019, Airbnb confirmed its intentions to go public in 2020 after much speculation of if and how (direct listing vs IPO) the sharing platform operator would eventually go public (Schaal, 2019o; Whyte, 2018b). Airbnb’s CEO later clarified that the company was cashflow positive in 2019, despite not being profitable in earnings after taxes, depreciation, and amortisation (Schaal, 2020h). With the information revealed in light of Airbnb’s IPO, considerably more is now known about the financial side of Airbnb’s business model (see Table 2.8).

Gross bookings increased from:

Table 2.8: Airbnb financial data (source: Craft.co based on Airbnb, 2020e)

Airbnb’s earnings before interest and taxes (EBIT) margin has never been above 5%, which is acceptable for asset-heavy business models, but far behind the operating margins of the asset-light business models of platforms such as Booking Holdings with about 35% (Schaal, 2020b). Airbnb describes its own business model as capital efficient (Airbnb, 2020e). The moderate EBIT margin may also be a sign of Airbnb’s commitment to its host community and their earning potential from engaging with the platform.

Figures 2.5 and 2.6 show how gross booking value per night and the average number of nights per booking vary by region, using 2019 data as an example. As can be seen in Figure 2.7, the Europe, Middle East and African Region (EMEA) generated most of Airbnb’s revenue and bookings in 2019 (Ali, 2020a). In total, 63% of the platform operator’s revenues originate from non-US listings, while Expedia Group receives 43% of its revenues from non-US sources (O’Neill, 2020).

Bar chart showing gross bookings per night across geographic regions. North America $164.86 per night, EMEA $104.97, Asia Pacific $84.83, Latin America $78.12, total $116.14.

Changes to value dissemination

The interactions between Airbnb and its stakeholders in matters of value dissemination were modified in several ways between 2017 and 2019. We cover a number of key developments for selected stakeholder groups below and highlight, where appropriate, contributions, rewards, risks, and bargaining power implications.

There was no major change in value dissemination in interactions with guests . Modified in favour of guests between 2017 and 2019 was the increased availability of alternative accommodation options on different platforms other than Airbnb, such as aparthotel rooms and vacation rental homes, being listed in volume via the booking platforms of online travel agencies (Montali, 2017).

From a host perspective, a 2018 Skift research report based on AirDNA data estimated that Airbnb hosts had an economic impact of about USD $12 billion in the ten largest urban markets, with hosts earning an average of approximately USD $3,900 per year from hosting activities (Stone, 2018). Developments in top markets like London suggest that the platform featured a smaller share of single apartment or single room hosts, and more professional hosts instead (Schaal, 2019h). This development shifted bargaining power in favour of professional hosts. Some evidence for this is provided by the newly introduced option for hosts to pay the entire Airbnb service fee, thus not requiring guests to pay their fraction (Schaal, 2019d).

Airbnb emphasises that it is aware of its responsibilities toward its hosts when engaging with local markets, which is why, for example, Airbnb did not disengage with the New York City market despite litigations against it (Ting, 2018b). While hosts are Airbnb’s customers, suppliers, and provide a valuable, necessary resource to the platform to be able to operate, Airbnb does not tolerate inappropriate host behaviour. Airbnb has introduced penalties for hosts who violate its community guidelines such as fraud, privacy violations, or abuse, be it on its own or other social platforms (Schaal, 2019p).

To the extent that real estate developers and landlords have not become professional hosts themselves (as in the case of Niido), they have often been sceptical of Airbnb’s business, stating reasons such as violations of zoning restrictions, facilitation of illegal hotel operations, distortion of real estate prices, and negative external effects on local resident communities (Schaal, 2017). Airbnb faced a legal challenge by Amico, one of its largest landlords, which accused Airbnb of helping tenants unlawfully violate their lease agreements. Airbnb won the lawsuit in late 2017 (Ting, 2018q). In another landlord lawsuit in 2018, Airbnb reached a settlement (Schaal, 2018c; Ting, 2018r). Airbnb’s key arguments are shown in Table 2.9. Airbnb tried to address the concerns of real estate developers and landlords by introducing their Friendly Building Program back in 2016 (Ting, 2016).

Key arguments

  • This is going to hurt people just trying to make ends meet
  • Existing laws just do not work
  • We are only a platform
  • Let us help you (help us)
  • What about the other actors?

Table 2.9: Summary of Airbnb’s key arguments in lawsuits by landlord and real estate developers (source: based on Ting, 2018s)

Airbnb emphasises its global responsibility toward local communities (Ting, 2018b). According to a 2019 Airbnb-run survey with 84,000 Airbnb guests, 43% of guest spending occurs in local communities (Airbnb, 2020e). Throughout the 2017 to 2019 period, Airbnb took action to address negative externalities and share value with locals affected by guests visiting their neighbourhoods. It established a Tourism Advisory Board consisting of industry and policy representatives to develop its long-term vision of travel and address its contribution to overtourism (Peltier, 2018a). Airbnb also launched an Office for Healthy Tourism dedicated to the development of tourist activities in rural areas that could benefit from tourism income (Peltier, 2018a), and started to interact more closely with local governments, providing them with policy tools to manage the presence of peer-to-peer accommodation in their local communities (Ting, 2018a). In markets with hosting restrictions such as Amsterdam and London, Airbnb introduced automated caps on host listing availability (von Briel & Dolnicar, 2020; 2021a; Ting, 2018a). Furthermore, Airbnb banned specific nuisance behaviour such as open-invite parties (Whyte, 2019a) and planned to provide local communities with USD $100 million in grants over the course of the 2020s (Schaal, 2020a).

In terms of public policy makers , the 2017 ­to 2019 period saw the introduction of many new regulations and restrictions in popular tourist destinations and urban centres around the world (e.g., Paris, France; Vancouver, Canada; Kyoto, Japan; New York City, US; see von Briel & Dolnicar 2020; 2021a for a summary). Regulations can comprise limits on the number of days hosts are allowed to rent out their property, specify tax filing and tax collection obligations, require hosts to share information and/or sign up to a registration system, mandate inventory cleaning based on specific criteria, and encourage engagement in efforts to deal with overtourism pressure. The aforementioned Tourism Advisory Board and Office for Healthy Tourism as well as the Community Compact and Policy Tool Chest address the concerns of regulators in Airbnb host contexts (Peltier, 2018a; Ting, 2018a). Airbnb has also entered agreement negotiations in Mexico and agreements on tax collection in Denmark (Peltier, 2018b). As of September 2020, Airbnb collected lodging taxes in more than 29,500 different jurisdictions (Airbnb, 2020e). It started sharing host data with authorities in local San Francisco and Chicago markets (Whyte, 2018c), as well as Europe’s statistical agency, Eurostat (Whyte, 2020). It adjusted the way it communicates prices and surcharges in the European Union to meet consumer protection standards (Ting, 2018t). According to a Bloomberg report and Opensecrets.org, in the second period Airbnb spent about USD $500,000 to $600,000 per year on government lobbying activities in the US (Schaal, 2018d).

Airbnb has also cooperated with several different touris m boards throughout the 2017 – 2019 period (such as Visit Sweden), shared access to its big data, helped them attract new kinds of tourists, and collected overnight fees and other tourist taxes (Peltier, 2017).

Airbnb did not raise any attributed investor funding between 2017 and 2019 (unattributed funds of USD $227.5 million in 2019; Series F funding completed in 2016). In 2018, investors expressed that they would like the sharing platform operator to look for ways to compensate for the limitations that new regulations and restrictions had put on the company’s profits (Whyte, 2018c).

The ecosystem of start-ups around Airbnb that provide services that the platform operator cannot or will not address has grown throughout the second period. Table 2.10 contains several examples.

Changes to value development

Airbnb grew considerably between 2017 and 2019 due to its geographic expansion in China and the Asia-Pacific region. In 2019, before the emergence of COVID-19, China was projected to develop into Airbnb’s biggest origin market (Schaal, 2019c) with its local division called Aibiying (Xiang & Dolnicar, 2018; Xiang et al., 2021; Ting, 2018u). In mid-2019, Airbnb reached a milestone with 1 million listings in the Asia-Pacific region (Hamdi, 2019c) and investments in OYO added more diversity and new inventory to its offerings in those markets.

The company’s experiments with different growth paths between 2017 and 2019 saw it evolve some elements of its business model while working toward a more revolutionary overhaul of its overall business model architecture.

One of the evolutionary developments was Airbnb’s diversification of product and service offerings, some including changes to value proposition, value creation and value capture for a broader appeal to new and existing hosts and guests on its platform (e.g. Ting, 2018v). As discussed in detail in the previous section, this diversification was implemented largely by adding diversity to the Airbnb inventory (luxury homes, rooms in inns, bed and breakfasts, hotels, etc.), increasing the options for guests with special needs, and expanding into complementary services (some from partners, some by means of investments) for professional hosts, real estate managers, and professional booking staff in business travel. Many of these evolutionary changes were triggered by host and guest communities, as illustrated by the following quote from Greg Greeley, Airbnb President of Homes at the 2018 Skift Global Forum (Sampson, 2018a):

“The way that Airbnb is thinking about its evolution and the way that we think about it internally, about the different kind of extensions we’re doing, it’s very much by listening to the community, both the host and the guest and tying that back to, are we really driving great, differentiated innovative travel that’s people-powered and centered around just a true great local experienc e. ”

While the contingent strategic plans for the long-term development of Airbnb’s business model architecture are mostly opaque to outside observers and analysts, the changes occurring between 2017 and 2019 point to Airbnb’s ambitions of more revolutionary development : Airbnb’s CEO, Brian Chesky, mentioned in mid-2018 that he wants Airbnb to become a one-stop shop for travel or a true ecosystem (Gardiner & Dolnicar, 2018; 2021; Ting, 2018b), which extends way beyond the company’s initial role as market maker for the trading of space among ordinary people. Similarly, Nathan Blecharczyk, Airbnb co-founder and chief strategy officer, highlighted that travel is the main focus of Airbnb, supporting the notion that Airbnb aspired to developing into a platform that can cater to all travel-related tourists needs (Sampson, 2018b). At the end of 2019, Airbnb’s business model resembled that of online travel agencies (Ting, 2017i). Airbnb.com was used to trade spaces, Experiences (vacation activities) and Adventures (packaged tours), and allowed network members to make dining reservations. Travel entertainment content and transportation products were in the process of being developed (Ting, 2019e, 2019d).

Navigating COVID-19 (2020 ‒)

COVID-19 has disrupted the global tourism industry in an unprecedented manner, with far-reaching consequences for both the guest and host communities as people face health threats, travel restrictions, and the financial consequences of layoffs, furloughs, and declining demand in many lines of business. For the leadership of an organisation facilitating guest-host interactions, this has been an experience nobody could have predicted. As Brian Chesky (Airbnb CEO) stated:

“We were preparing to go public. We had a plan, and I felt great about the plan. And all of a sudden, it felt like I was captain of the ship and a torpedo hit the side of the ship. The world changed irreversibly and everything was breaking at once. […] I’ve been through crises before. We started Airbnb in late 2008, right in the middle of the recession – but I’ve never ever experienced everything like this. You see, usually you have a crisis because something is wrong, and in this crisis – all of a sudden in a matter of a week or two – it felt like everything was wrong. Everything broke at once, and there was this feeling of panic.” (Hoffman, 2020)

On Valentine’s Day 2020, Airbnb realised the extent of the challenge it was facing, with activity in China – the original epicentre of the pandemic – declining by 80%. The bad news kept coming. When Europe and the US markets were hit by what at that point was declared to be a pandemic by the World Health Organization (WHO), Airbnb faced more than USD $1 billion in guest cancellation requests (Cox & Chon, 2020). The business model developments outlined below detail how Airbnb dealt with the unfolding crisis. We also portray the company’s business model upon its public debut on 9 December 2020.

It should be noted that – at the time of writing– key developments are still in progress; the COVID-19 crisis is far from over and the short- to mid-term implications of the initial public offering unknown.

Changes to value proposition

Airbnb implemented several changes in its value proposition toward hosts, guests, and third parties as a consequence of COVID-19 and the restrictions put in place by nations around the world to protect their residents from the pandemic.

At the end of September 2020, Airbnb reported having more than four million hosts offering 5.6 million active accommodation, Experienc es and Adventures listings in some 100,000 cities across 220 countries (Airbnb, 2020e). As illustrated in Figure 2.8, some of the accommodation offerings listed on Airbnb were non-traditional, distinguishing Airbnb from traditional accommodation providers and online travel agents.

Bar chart showing the quantity of different non-traditional accommodation types on Airbnb. Cabins have the most listings, followed by farms and tiny homes. Lighthouses and igloos have the least number of listings. Cabins 90,000, Farms 40,000, Boats 5,600, Castles 3,500, Yurts 2,800, Tree houses 2,600, Private islands 1,600, Lighthouses 300, Igloos 140

Host s experienced several changes to the value proposition Airbnb offered them during COVID-19. Most critically – in response to national COVID-19 restrictions – Airbnb reduced the ability of hosts to identify suitable guests by disabling trading on Airbnb.com during times when and in places where it was illegal given local regulations. At one stage, Airbnb disabled all listings in the UK – with the exception of bookings made by essential health and other key workers – following instances of hosts promoting isolation retreats (Spinks, 2020a). Airbnb also addressed illegal offers and false claims made by hosts, such as “ COVID-19-free ” accommodation.

Hosts benefitted from Airbnb’s action to help them mitigate risk . In May 2020, Airbnb launched an advanced cleaning initiative with sanitation protocols and support for hosts in inspiring confidence in their guests (Schaal, 2020i). Hosts were unable to accept bookings unless they agreed to the stricter cleaning protocols, which required a minimum of 24 hours between stays, or a more rigorous 72-hour window between departing and arriving guests, to increase confidence in the care given to deep cleaning and inspire an emphasis on cleanliness in guest reviews (Schaal, 2020i; 2020j). Furthermore, Airbnb has updated its host knowledge resources with information about the COVID-19 pandemic and how to deal with guest health issues (Airbnb, 2020f, 2020g).

Airbnb introduced a mandatory refund policy for bookings from early March 2020 onward to prevent guests from feeling obliged to travel, which proved a point of contention with hosts who lost revenue during the early 2020 period (Schaal, 2020k). Airbnb also started mandating more professional hosts, particularly those using third-party software, to move to its new 15% host flat fee (instead of splitting the Airbnb service fee between hosts and guests), as Airbnb’s experience allegedly showed that this would generate more bookings (Schaal, 2020l).

Airbnb’s value proposition for guests also changed during COVID-19. During lockdowns in different national markets, Airbnb allowed hosts to provide free accommodation – or accommodation at reduced rates – for employer-registered health and first-line response workers (Spinks, 2020a). Remote work and long-term stays (30 days or longer) also became more of a priority on the platform; the proportion of long-term stays increased from around 15% of bookings on Airbnb.com to nearly 50% during the pandemic (Schaal, 2020m). Meanwhile, efforts to establish Airbnb Plus as a certified collection of homes of the highest quality with great reviews and exceptional hosts were abandoned as Airbnb focused on consolidating existing listings and offerings (Schaal, 2020n).

Safety concerns with an emphasis on health issues became a priority in how Airbnb mitigated risk during the pandemic. In its communication, Airbnb emphasised the benefits in control over where and how guests get to stay and the limited number of other people sharing the same space compared to traditional hotels (Schaal, 2020o). Airbnb enforced stricter cleaning procedures involving five steps (prepare, clean, sanitise, check and reset) and 16 specific tasks, such as washing hands and wearing a mask and gloves during the cleaning process, wiping down all hard surfaces, using the highest setting when washing dishes and laundry, and spraying surfaces that are touched frequently, such as door handles, with an approved disinfectant (Airbnb, 2020h). Hosts were unable to list their spaces unless they agreed to comply with the more rigorous cleaning regime.

It is, however, unclear whether hotel rigor in cleaning and safety standards outweighs control over who guests interact with and the lower density of guests in shared accommodation units. A selective analysis of 12 regional and 15 urban destinations based on STR and AirDNA data for January to June 2020 comparing whole-unit listings and hotel rooms suggest that hotel rooms, on average, saw much more of a drop in revenue per available room than the short-term rentals listed on Airbnb and VRBO (Sperance, 2020). This analysis does not account for the differences in occupancy between hotels. It also does not include the summer holiday peak season.

To address the unpredictable travel environment, guests have changed their booking patterns. Since COVID-19, bookings occur much closer to the travel date, about 7 days prior to arrival. People also look for accommodation much closer to home than usual – within a 50-mile or 80-kilometre radius (Schaal, 2020i). This radius extended to about 200 to 300 miles (320 to 480 kilometres) in July and August (Cox & Chon, 2020). Destination preferences shifted to the countryside and small towns as guests preferred to not travel abroad and to avoid plane travel and large crowds (Cox & Chon, 2020; Ravenscroft, 2020). In the US, for example, the shift in guest preferences led to an increase in bookings from mid-May to the start of June 2020 compared to the previous year (Schaal, 2020k). Globally, domestic E xperiences and overnight stays accounted for 77% of bookings in 2020, compared to around 51% of Airbnb’s business in 2019 (Ali, 2020b).

Finally, Airbnb has pledged to monitor transactions for discrimination against (potential) guests in ongoing efforts to become a more equitable platform (Schaal, 2020h). Alongside the COVID-19-focused changes, Airbnb continued to suspend hosts who acted in violation of its community standards (e.g., Domio case; Schaal, 2020p, 2020q) and worked to prevent nuisance behavior (e.g., house parties and event bookings in Los Angeles) as some destinations imposed a ban on one-night stays (Schaal, 2020r, 2020s). Guests trying to make single night reservations were directed to hotel reservations on the platform instead, with a note that the initially requested reservation of one night might be considered unsafe (Schaal, 2020t).

In an attempt to augment experiences during COVID-19, Airbnb launched Online Experiences as people stayed home to self-isolate and most events and personal service industries shut down. In May 2020, Airbnb offered approximately 300 different Online Experiences which enabled people to virtually connect and Experience hosts to earn an income. Successful Experiences such as Sangria and Secrets with Drag Queens earned USD $150,000 in just one month (Begley Bloom, 2020).

The altered business environment in which Airbnb has found itself since the start of the COVID-19 pandemic required it to reconsider the key activities and key resources that underpin the value creation of its business model.

Airbnb put a renewed focus on cost management (Schaal, 2020u) and recentered on the aspects of its business that make it unique, specifically the human connection between guests and hosts as the foundation of the platform and the basis of Airbnb’s unique supply (Cox & Chon, 2020; Schaal, 2020u). According to Brian Chesky, Airbnb’s CEO, the intention was to preserve value for all stakeholders, including cash, reputation, and shareholder value (Cox & Chon, 2020). Chesky mentioned the increasing cost that came with growing from a start-up to a more corporate entity, and how total operating expenses had grown faster than revenue from 2017 to 2019.

Airbnb’s re-focus on core business and cost management did not imply, however, that every new investment and initiative was abandoned or sold, though its development priorities changed (Schaal, 2020h). Airbnb stopped or scaled back work on transportation offers, travel content ( Airbnb Studios ; Airbnb, 2020e), Airbnb Plus and Airbnb Luxury , as well as hotels (Cox & Chon, 2020). Airbnb also ended its partnership for the Niido apartments in March 2020 – allegedly over disputes about their development – but did not rule out working with other real estate developers in future (O’Neill, 2020).

These changes came with the layoff of 1,900 people, around 25% of Airbnb’s global workforce, to ensure the long-term survival of the organisation should the pandemic travel reality endure for a number of years (Airbnb, 2020e). Departing employees were granted the right to remain stockholders even if they had worked for Airbnb for less than one year, they could keep their computers, received severance pay and one year of health insurance post-employment, and Airbnb used company resources to establish an alumni directory to help former staff market themselves to recruiters as they started looking for new jobs (Cox & Chon, 2020). In total, this resulted in more than USD $130 million in restructuring costs (Airbnb, 2020e) and left the company with only around 5,400 employees in 24 cities worldwide (Airbnb, 2020e). The remaining employees had their bonuses adjusted and the executive committee reduced their salaries for six months (Airbnb, 2020e).

Finally, Chesky identified that an ability to learn was crucial to deal with the crisis as there were no prior reference points as to how a global internet company ought to deal with a pandemic crisis (Cox & Chon, 2020).

Marketing expenses were cut drastically early on in the COVID-19 pandemic (Airbnb, 2020e; Schaal, 2020v) and the use of channels, partners, and content promoting local, non-urban destinations (Schaal, 2020k) reflected Airbnb’s new priorities alongside the safety and cleaning messaging reinforced by the new host protocols (Airbnb, 2020h). Brian Chesky regularly communicated with his employees and the host community in semi-public video meetings answering questions, detailing developments, and explaining the executive management team’s decisions. Finally, Airbnb disassociated its listings with Google vacation rentals – which it had joined in the 2017 – 2019 period – presumably because investors in an IPO value its unique traffic and inventory (Schaal, 2020w, 2020x).

In its IPO filing, Airbnb reported that its community of guests and hosts had written more than 430 million reviews on the platform as of the end of September 2020 (Airbnb, 2020e).

In March 2020, Airbnb’s business faltered in Asia (-90%), Europe (-75%) and the signs in the US market were not promising either (-50%; Schaal, 2020y). The platform facilitator faced refunds of USD $1 billion at the start of the pandemic because its revenue model has guests pay their stay in full to Airbnb at the time of booking (Schaal, 2020u).

Understandably, many hosts were unhappy about the universal refunds Airbnb granted as they relied on that booking revenue for mortgage payments and their operations (Schaal, 2020z). Airbnb did eventually pay hosts USD $250 million from its own reserves to partly cover pandemic cancellations (Schaal, 2020aa). Airbnb itself had to take on USD $1 billion in new debt at 10% interest, due in April 2025, to protect its liquidity (Airbnb, 2020e; Schaal, 2020ab) and by mid-2020 this number had increased to a total of USD $2 billion (Schaal, 2020ac). Airbnb was expected to produce a positive EBITDA for 2020 (Spinks, 2020b), but with these new financial developments, the valuation of Airbnb dropped to USD $18 billion (Schaal, 2020v).

Work on the initial public offering planned for 31 March 2020 was paused (Cox & Chon, 2020; Schaal, 2020h). As of mid-2020, Airbnb was approached by different investors proposing it forego an IPO in favour of a special purpose acquisition company or consider direct listing (Schaal, 2020w, 2020ad, 2020ae). Airbnb confidentially filed for IPO on NASDAQ with the US Securities and Exchange Commission (SEC) in mid-August 2020. It split its privately held shares in October 2020 (Schaal, 2020af).

Financially, the pandemic did not affect Airbnb as badly as expected. The company saw a growth in domestic overnight stays and Experience bookings with a focus on short-distance travel outside of major cities, with an average growth rate of 35% for those offerings compared to the previous year (Ali, 2020b). While gross booking value decreased by 39% in the first nine months of 2020, the platform facilitator reported an operating profit of USD $418 million as of September 2020, likely due to cost cuts and layoffs (Ali, 2020b). In the year leading up to September 2020, North America surpassed the Europe, Middle East and Africa Region (EMEA) in bookings and gross value per booking compared to 2019, as shown in figure 2.5 (Ali, 2020a). Individual figures for bookings and E xperiences are not available as Airbnb reports them as one category in their S-1 registration statement.

Airbnb’s IPO in early December 2020 was the biggest in travel to date with a valuation of USD $47 billion and USD $68 per share in asking price (Schaal, 2020ag). At the end of the first NASDAQ trading day, ABNB shares listed at around USD $145 and the organisational market capitalisation (MCAP) at USD $100 billion, thus surpassing Booking Holdings (USD $86 billion), Expedia (USD $18.5 billion) and the combined value of Hilton and Marriott (USD $71.8 billion) (Schaal, 2020ag).

The IPO filing mentions that although most guest nights are paid in full upon booking, there is also a Pay Less Upfront program that allows guests to pay in two installments (Airbnb, 2020e). Airbnb might earn interest on the funds held on behalf of hosts and guests, which would positively affect the platform facilitator’s cashflow (Airbnb, 2020e).

COVID-19 led to several changes in value dissemination because of the radically altered travel reality. We highlight those that pertain to guests, hosts, local communities, tax authorities and other public policy makers, and investors.

The looming threat of coronavirus infection meant that guests faced an unprecedented health threat when travelling and staying at accommodation away from home. Airbnb decided early in the pandemic to grant full refunds for a limited period of time, although this decision meant reversing more than USD $1 billion in bookings as of March 2020.

From a host perspective, Airbnb had previously been synonymous with relatively stable business and growth prospects. When COVID-19 disrupted global travel, many hosts faced defaults on their mortgages or rent payments (Schaal, 2020z). Reports from the United Kingdom suggest that former Airbnb listings have been flooding the property market with an increase in available listings between 45% (in London) and 78% (in Bath) as landlords and property managers try to cover their costs and cut their losses (Schaal, 2020z). Some former Airbnb hosts resorted to launching their own direct booking sites or pooled efforts to establish their own, independent platforms (e.g., Zeevou.direct, LetsConvention.com; Rodriguez, 2020). Lowering rates to draw in more reservations was not an option for most, as this has the potential to attract guests that disrespect the community standards and could ruin price anchors (Suttell, 2020).

Airbnb acknowledges that the decision to unilaterally refund guests may have raised doubts as to whether it still values hosts as partners (Neate, 2020; Schaal, 2020z). To signal its commitment to the host community, Airbnb paid hosts USD $260 million (USD $250 million from Airbnb, USD $9 million from the founders, and USD $1 million in donations from Airbnb employees; Schaal, 2020aa). Hosts were refunded up to 25% of what the cancellation policy would have granted them. A special fund equipped with USD $15 million (USD $10 million from Airbnb, USD $5 million from two Airbnb investors) was established for Superhosts to cover up to USD $5,000 in rent and mortgage payments (Schaal, 2020aa, 2020ab).

In comparison, Expedia offered its partners marketing credit, a reduction in commission, and access to free training videos (Schaal, 2020ah). VRBO left hosts to decide how to handle refunds but strongly recommended returns of up to 50% in cash or in the form of vouchers for future stays (Schaal, 2020aa). As of the end of September 2020, Airbnb had reported payments to customers of USD $204 million under its scheme (Airbnb, 2020e). Airbnb also established host knowledge resources pointing hosts to national and local stimulus and aid packages, and lobbied for the inclusion of hosts in such relief packages (Spinks, 2020b). In October 2020, Airbnb announced an endowment fund of approximately USD $9 million to allow the 4 million members of the host community share in the platform operator’s success. The fund will provide educational and financial host support once it reaches USD 1 billion (Schaal, 2020ai). Despite these commitments to the host community, Airbnb faced a host lawsuit seeking class action status and punitive damages (Schaal, 2020aj).

In light of the COVID-19 crisis, Airbnb has reiterated that it wants to connect guests to real local communities and disperse and redistribute the flows of guests between and at destinations (Cox & Chon, 2020).

Tax authorities and other public policy makers are hoping that a fair share of former Airbnb apartments will be reintroduced to the long-term rental market, alleviating the pressure the introduction of Airbnb had caused in local housing markets (Schaal, 2020ak). In Europe, the European Court of Justice ruled in two cases (C-724/18; C-727/18) that national or local requirements to register short-term letting are not in violation of European law (Parsons, 2020). Furthermore, regulators in local markets like Chicago have started to ban single-night stays in shared accommodation as such stays can signal potentially undesirable house parties (Schaal, 2020s). During an IPO roadshow presentation, the CEO of Airbnb mentioned that 70% of cities have some sort of short-term rental regulation (Schaal, 2020al).

Some investors made contributions to the relief funds Airbnb initiated for its (Super)hosts (Schaal, 2020aa; 2020ab). Airbnb also publicly communicated that its long-term relationships with host and local communities are a prerequisite of its business and will ultimately benefit investors as well (Cox & Chon, 2020). Airbnb notifies shareholders in the risk section of the S1-Filing that they have in the past and might “ in the future make decisions, that [they] believe are in the long-term best interests of [the] company and [its] shareholders, even if such decisions may negatively impact the short- or medium-term performance of [the] business ” (Airbnb, 2020e).

Change to value development

With the prior period characterised by growth, experiments and extensions, period three was quite the opposite. Airbnb recentered its efforts on the core of its business model – facilitating transactions between hosts and guests. This recentering and the senior management’s decisive action to preserve cash alongside the principles that value their employees, their communities and other stakeholders alike seem to have been rewarded with a USD $100 billion valuation upon initial public offering. While predictions about whether Airbnb will further its plans to become a one-stop shop for travel at the time of writing are pure speculation, this is not unthinkable. Then again, how tourism and travel are going to look after the pandemic is still very much subject to lively debate.

Airbnb and its ongoing evolution remain, to our minds, one of the most fascinating research subjects in tourism and hospitality. The three periods we outline demonstrate the initial business model configurations (2008 – 2016), different experiments and extensions (2017 – 2019), and the renewed focus on the core of the business model from the start of the pandemic to the initial public offering (2020). With this chapter and the details we provided on Airbnb’s business model, we contribute to the understanding of how facilitators of multi-sided platforms evolve, how such facilitators create, capture, and disseminate value in light of external change (e.g., the COVID-19 pandemic, regulatory responses) and internal initiatives (e.g., the search for alternative paths to growth on the basis of acquired capabilities and resources).

We encourage future work that keeps track of the unfolding changes in Airbnb’s business model as the pandemic and tourism recovery continue. For instance, it will be interesting to see which pandemic-induced changes have lasting implications for Airbnb’s value proposition, value creation, and stakeholder relationships. Furthermore, we also encourage longitudinal work into the co-evolution of business models and contextual change in the tourism and hospitality context.

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Ting, D. (2016) Airbnb launches trips, its big tours and activities gamble, retrieved on February 18, 2021 from https://skift.com/2016/11/17/airbnb-launches-trips-its-big-tours-and-activities-gamble

Ting, D. (2017a) Airbnb debuts new tools for a bigger cut of the $138 billion vacation rental industry, retrieved on February 18, 2021 from https://skift.com/2017/10/16/airbnb-debuts-new-tools-for-a-bigger-cut-of-the-138-billion-vacation-rental-industry

Ting, D. (2017b) Airbnb makes good on startup acquisition with launch of split payments for group travel, retrieved on February 18, 2021 from from https://skift.com/2017/11/28/airbnb-makes-good-on-startup-acquisition-with-launch-of-split-payments-for-group-travel

Ting, D. (2017c) Airbnb needs growth – and to grow up – before its IPO, retrieved on February 18, 2021 from https://skift.com/2017/12/12/airbnb-needs-growth-and-to-grow-up-before-its-ipo

Ting, D. (2017d) Airbnb touts growth of trips for foodies, millennials and solo travelers, retrieved on February 18, 2021 from https://skift.com/2017/11/21/airbnb-touts-growth-of-trips-for-foodies-millennials-and-solo-travelers

Ting, D. (2017e) Airbnb adds restaurant reservations thanks to partner Resy, retrieved on February 18, 2021 from https://skift.com/2017/09/20/airbnb-adds-restaurant-reservations-thanks-to-partner-resy

Ting, D. (2017f) Airbnb is getting a $200 million boost to build its hotel-like apartment business, retrieved on February 18, 2021 from https://skift.com/2017/12/18/Airbnb-is-getting-a-$200-million-boost-to-build-its-hotel-like-apartment-business

Ting, D. (2017g) Airbnb’s bed-and-breakfast deal highlights its bigger ambitions in accommodations, retrieved on February 18, 2021 from https://skift.com/2017/12/14/airbnbs-bed-breakfast-deal-highlights-its-bigger-ambitions-in-accommodations

Ting, D. (2017h) Airbnb buys accessible travel business accomable in its latest move, retrieved on February 18, 2021 from https://skift.com/2017/11/16/airbnb-buys-accessible-travel-business-accomable-in-its-latest-acquihire

Ting, D. (2017i) Airbnb growth story has a plot twist – a saturation point, retrieved on February 18, 2021 from https://skift.com/2017/11/15/airbnb-growth-story-has-a-plot-twist-a-saturation-point

Ting, D. (2018a) Skift forum Europe preview: Airbnb’s Jeroen Merchiers on the battle with Booking, retrieved on February 18, 2021 from https://skift.com/2018/04/23/skift-forum-europe-preview-airbnbs-jeroen-merchiers-on-the-battle-with-booking

Ting, D. (2018b) Airbnb CEO says company will ready for IPO in 2019, retrieved on February 18, 2021 from https://skift.com/2018/05/30/airbnb-ceo-says-company-will-ready-for-ipo-in-2019

Ting, D. (2018c) Airbnb Plus and everything CEO Brian Chesky just announced, retrieved on February 18, 2021 from https://skift.com/2018/02/22/airbnb-plus-and-everything-ceo-brian-chesky-just-announced

Ting, D. (2018d) Airbnb touts one of its most valuable assets as it prepares for IPO, retrieved on February 18, 2021 from https://skift.com/2018/12/03/airbnb-touts-one-of-its-most-valuable-assets-as-it-prepares-for-ipo

Ting, D. (2018e) This is how Airbnb plans to win over hotels, retrieved on February 18, 2021 from https://skift.com/2018/02/27/this-is-how-airbnb-plans-to-win-over-hotels

Ting, D. (2018f) Apart-hotels vie for higher profile in Airbnb era, retrieved on February 18, 2021 from https://skift.com/2018/07/26/apart-hotels-vie-for-higher-profile-in-airbnb-era

Ting, D. (2018g) Airbnb strikes deal to make a bigger hotel push, retrieved on February 18, 2021 from https://skift.com/2018/02/07/airbnb-strikes-deal-to-make-a-bigger-hotel-push

Ting, D. (2018h) Airbnb offers new tech support to entice more professional hosts, retrieved on February 18, 2021 from https://skift.com/2018/10/26/airbnb-offers-new-tech-support-to-entice-more-professional-hosts

Ting, D. (2018i) Airbnb is set to launch a new tier of select properties, retrieved on February 18, 2021 from https://skift.com/2018/02/13/airbnb-is-set-to-launch-a-new-tier-of-select-properties

Ting, D. (2018j) Sexist reviews on Airbnb in China prompt safety concerns, retrieved on February 18, 2021 from https://skift.com/2018/06/02/sexist-reviews-on-airbnb-in-china-prompt-safety-concerns

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Ting, D. (2018q) Landlord lawsuit against Airbnb dismissed by federal judge, retrieved on February 18, 2021 from https://skift.com/2018/01/02/landlord-lawsuit-against-airbnb-dismissed-by-federal-judge

Ting, D. (2018r) Airbnb faces landlord lawsuit showdown in Miami, retrieved on February 18, 2021 from https://skift.com/2018/07/11/airbnb-faces-landlord-lawsuit-showdown-in-miami

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Ting, D. (2018t) EU issues ultimatum to Airbnb over pricing transparency, retrieved on February 18, 2021 from https://skift.com/2018/07/16/eu-issues-ultimatum-to-airbnb-over-pricing-transparency

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Ting, D. (2019a) Airbnb hires aviation industry veteran to lead new transportation division, retrieved on February 18, 2021 from https://skift.com/2019/02/07/airbnb-hires-aviation-industry-veteran-to-lead-new-transportation-division

Ting, D. (2019b) Airbnb is buying HotelTonight: Here’s what that means, retrieved on February 18, 2021 from https://skift.com/2019/03/07/airbnb-is-buying-hoteltonight-heres-what-that-means

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Airbnb Before, During and After COVID-19 Copyright © 2021 by The University of Queensland is licensed under a Creative Commons Attribution 4.0 International License , except where otherwise noted.

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Airbnb, Inc

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The case is set in 2022, and the protagonist is Brian Chesky, co-founder and CEO of Airbnb, Inc. - an online rental platform. As the Covid-19 pandemic took hold in the U.S. in 2020, Airbnb faced an…

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The case is set in 2022, and the protagonist is Brian Chesky, co-founder and CEO of Airbnb, Inc. - an online rental platform. As the Covid-19 pandemic took hold in the U.S. in 2020, Airbnb faced an existential crisis. The travel company lost 80% of its bookings and 72% of its revenue in just eight weeks. Airbnb's market cap dropped to $57 billion, down 56% from its high of $130 billion just 18 months earlier. Before the pandemic, 80% of Airbnb's business was cross-border and short-term rentals. This case presents the strategic initiatives Airbnb implemented when executing an emergency pivot. It concludes with the challenges CEO Chesky faces post-pandemic, including a macro environment of high inflation and recession, lack of consistent profitability, and uncertainty as to whether pandemic travel trends and work arrangements are the new normal.

Learning Objectives

Strategic Leadership; Mission, Vision, Values; Diversity, Equity & Inclusion (DEI); Entrepreneurial Ventures and Growth; Founder-led Ventures; Stakeholder Strategy and Corporate Social Responsibility (CSR); Internal Analysis and External Analyses; Platform Strategy; Business Model and Business Model Innovation; Strategic Pivot; Organizational Culture and Structure; Implementation and Strategy Execution

Feb 4, 2023

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United States

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Peer-to-peer services, Software development industry, Travel and tourism industry

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Sharing Economy: An Analysis of Airbnb Business Model and the Factors that Influence Consumer Adoption

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The evolution of Airbnb's business model

Link to open access book chapter:

https://uq.pressbooks.pub/airbnb-978-1-74272-321-1/chapter/the-evolution-of-airbnbs-business-model/

Chapter 2: This chapter provides an in-depth discussion of the evolution of Airbnb’s business model until its initial public offering at the end of 2020. We identify three periods of development that mark distinctly different orientations in how the international market leader in peer-to-peer accommodation created and captured value from its activities. While the first two periods were characterised by developing the initial configuration of the business model and experimenting with different growth paths, the third period has been dominated by finding a response to the COVID-19 pandemic and a business model that will work in the context of the new travel reality.

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Airbnb Business Plan

How to Write Up an Airbnb Business Plan: Free PDF Template

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Having a well-crafted Airbnb business plan is the best way to set your business up for success from the get-go. It outlines your business goals, operations plan, and the timeline for accomplishing all of this.

After all, you don’t want to be flying blind when it comes to the vacation rental industry.

Try not to get too overwhelmed: it’s easier to write a business plan than you might think. In this article, we explain why having a business plan for Airbnb hosting is important, offer best practices for writing an effective one, and provide a free Airbnb business plan template to download.

Don’t see the form to download our Airbnb Business Plan? Click here .

First, what is an Airbnb business plan?

An Airbnb business plan is a living document that outlines the direction you want your business to go in and strategies for getting it there. It will include details such as your target market and customers, financial plan, and goals and milestones.

You’ll be referring to your business plan often as you work to open your Airbnb , so be sure to be as detailed as possible.

Airbnb business proposal vs. business plan

We sometimes see people get confused between Airbnb proposals and business plans.

To be clear, a business proposal is a document that explains how a company’s product or service can meet a specific customer’s needs. Its goal is to attract customers.

You might need an Airbnb business proposal if you were, say, trying to get investors for your Airbnb business. However, chances are that what you’re really looking for is a business plan.

Why do you need a business plan for Airbnb hosting?

A well-thought-out business plan for Airbnb is the roadmap you’ll use to steer your business into the future. Here are just a few reasons why you should consider writing a business plan for your short-term rental property.

Helps you meet your goals

It’s easy to get sidetracked while trying to grow your business.

Of course, entertaining new ideas is never a bad thing. But having your original vision in writing

will ensure you don’t deviate too far from what you truly want to achieve. It motivates you to move forward and gives you something to measure progress against, too.

Airbnb Business Plan Goals

Prompts you to make important decisions

You’re going to have to reflect on your operations strategy, competition, future guests, and more when you sit down to write your business plan.

You may find some of the difficult decisions you’ve been putting off coming up in this process. Now is the time to face them head-on.

Don’t sweat this too much. Remember that you can always come back to your business plan and adjust as you go. It’s an ever-evolving document!

Gives you the framework to communicate your business to others

We all like to think we can handle things on our own. However, the time will come when you’ll need help to run your business, be it from a business partner, investor, or assistant.

When that time comes, you need to be able to clearly and confidently communicate what you’re doing and where your business is headed. It wouldn’t make any sense to order an Uber and not tell the driver where to go, right?

Not to mention that an Airbnb business plan saves you the headache of having to explain every nuance of the business to the person you’re bringing on board. Forward the document and let it speak for itself.

How to write a business plan for Airbnb: best practices

Now you know why having a business plan for Airbnb hosting is so important. But how do you go about writing one?

Grab a cup of coffee and pull up a chair. Let’s go over some best practices.

Brainstorm a mission statement

Contrary to popular belief, mission statements are not reserved for major corporations. Before you even start writing the business plan itself, consider writing an Airbnb mission statement for your business.

Airbnb Business Plan Ideas

A mission statement is simply a concise explanation of the business.

Think about how you would explain what you’re doing to a friend at a cocktail party without losing their attention. What vision do you have for the business? Why is this important to you? What value do you provide to your customers?

Take some time to reflect, but keep in mind that mission statements are meant to be quick and to the point.

Airbnb mission statement examples

Here are some examples of Airbnb mission statements for inspiration:

  • “The Cozy Cottage provides budget-friendly accommodations to travelers seeking to enjoy the natural beauty of our neighboring national park.”
  • “The Little Apple is an eco-conscious studio that gives guests unparalleled access to downtown Manhattan at competitive rates.”
  • “The Malibu Oasis offers the ultimate in luxury with a beachfront property, high-end amenities, and services tailored to our guests’ specific needs.”

Recognize your audience

Who will be reading your business plan?

The language you would use with one audience may not be appropriate for another. You might even consider writing different versions of your business plan for different audiences.

For example, a version geared toward investors might use more formal terminology. A version created for a future business partner, on the other hand, might be more casual.

Tap into the power of self-reflection

Starting an Airbnb business is a huge undertaking! Making sure you are ready to take it on is just as important as having a sound business plan.

Take inventory of what skills you already bring to the table and what things you will have to learn along the way. Are there things you should outsource to lighten your load? Do you feel prepared to take the next step with your Airbnb business?

Acknowledge any uncertainties now before you get started. It’s a great way to be honest with yourself and boost your confidence!

Be realistic

Should you push yourself to think big? Absolutely!

Should you set unrealistic and unattainable business goals? Not so much.

It’s all about striking a balance between dreaming big and keeping your feet on the ground. Take into account anything that might go wrong so you aren’t blindsided later on.

What to include in your Airbnb business plan

When it comes to writing a business plan, Airbnb is just like any other business. That’s to say, there are certain things you absolutely must include!

Take a look at our list and stay tuned for our free downloadable business plan template for Airbnb.

Executive summary

An Airbnb executive summary consists of a short description of your Airbnb business. People should be able to read your executive summary and know, at a glance, what your business entails.

Airbnb Business Plan Template

To begin, ask yourself the famous five Ws to ensure you cover all the key information:

  • Who is my Airbnb for (groups of friends, families, couples, etc.)?
  • What is it (family holiday home, beachside condo, bachelor pad, etc.)?
  • When is it best to stay at my Airbnb (summer, winter, weekends, etc.)?
  • Where is my Airbnb located?
  • Why should guests book my property?

Once you have these answers, you can rewrite them into a suitable executive summary.

Operations plan

Your operations plan outlines how you are going to run your Airbnb on a day-to-day basis.

This is one of the most straightforward parts of your business plan. Chances are, you’ve already thought through most of the details.

Here are just a few helpful prompts in case you get stuck:

  • Am I going to hire any staff or run the business myself?
  • How will I manage inventory ?
  • Who is going to clean the rentals between guests?
  • Do I need to hire an accountant to manage my finances?
  • Who will deal with bookings and customer complaints ?

Business goals

You broadly detailed where your business is going with your executive summary. Now, you need to further solidify your vision in your goals section.

Are you satisfied with a couple of bookings a month? Or are you expecting a full reservation calendar by the end of the year? You’ll need to set goals to help pin this down.

It might sound elementary, but setting S.M.A.R.T. goals will help your business make progress. Is your business goal specific, measurable, attainable, relevant, and timely ?

Setting good goals is the basis for any successful Airbnb business plan.

Unique selling points

As with any business, you’ll need to detail the unique selling points (USPs) your Airbnb will bring to the existing market. That is, why are customers going to choose your Airbnb over the competition?

Airbnb Unique Selling Points

Thankfully, finding your USPs is much easier than you might think. Simply analyze your business and consider how your Airbnb provides a better guest experience than other properties in your area. Ask questions such as:

  • Is it better than others because of its location?
  • Is the price of your accommodation better?
  • Are the interiors of your property different or better than the rest?

After all, once you are confident in your strengths, your guests will be, too!

Target customers

Your guests are how you are ultimately going to make your money. So, it’s incredibly important to understand and target them properly.

This starts with creating buyer personas to outline the types of guests you want to attract. As profiles of your ideal customers, buyer personas should be as detailed as possible to help your business grow down the road.

When considering your ideal guests, ask yourself questions such as:

  • What’s their name?
  • What do they do for work?
  • How old are they?
  • Do they have a family?

Understanding and visualizing your ideal guests enables you to prepare for their specific needs and pain points.

For example, if you’re tailoring to young digital nomads , you’ll want to offer fast and reliable Wi-Fi, a designated work area, and suggestions for laptop-friendly cafes in the area. If your ideal guests are families with young children, on the other hand, you’ll want to make sure your property is child-safe .

Competitor analysis

It’s not all about your own business. No business plan is complete without some competitor research as well.

Take a look at the market to find your direct competitors (these are the properties that might win bookings over you). Then, analyze them to see how you can put your own Airbnb on top .

For example, ask:

  • How much are my competitors charging per night?
  • What standard of accommodation do they offer?
  • Do they offer airport transfers/pickup services?
  • Do they offer a wide range of amenities in the house?

Marketing plan

Explain which marketing strategies you will use to target your key markets and achieve bookings. Think about both offline and online marketing , as well as any campaigns or promotions you plan to run externally.

This is when the buyer personas you created earlier will come in handy. If you know the people you’re trying to target, you’ll know what type of marketing will be suitable for them.

Airbnb Marketing Plan

Here are some questions that can help you sketch out your marketing plan:

  • What methods of online marketing should I use?
  • What methods of offline marketing should I use?
  • Do I have a direct booking website ?
  • Do I have business cards ?

Financial plan

How are you going to finance your Airbnb ? You’ve probably given this lots of thought by this point (or even stayed up at night stressing about it).

But now it’s time to get serious. Will you self-finance your Airbnb or take out a loan ? Is financing unnecessary because you’re simply renting out a spare bedroom?

These questions form your financial plan . As we all know, money doesn’t grow on trees—so you need to know where yours will be coming from. To that end, estimate your expenditures and projected income for the first five years.

So, what kind of information makes up a financial plan?

  • Will I need to take out a loan?
  • What will the interest rates be?
  • Do I have savings I’m ready to invest into it?
  • What level of monthly loan payments can I manage?

Milestones and goals

When you start any project—whether it’s going back to school, losing weight, or starting a business—tracking your progress is essential.

So, outline your plans and goals for your business, plus what key milestones will help you achieve these targets. You can refer back to this section later on to ensure you’re on the right track.

Here are some good milestones to use for your Airbnb business:

  • How much do I want to make each month?
  • How many guests do I want in the first quarter?
  • What rate of growth do I want in my bookings year-over-year?
  • How many returning clients do I want each year?

Mistakes to avoid when writing an Airbnb business plan

Like we mentioned above, your business plan is a living document. So, you don’t need to worry about making it perfect on the first try. And you will have to update it over time.

That being said, you’d do well to avoid these common mistakes the first time around.

Don’t be too vague

Avoid making big, vague claims that you can’t quantifiably measure. Claims like this will only make it harder to see where you’ve succeeded and where you can improve.

After all, the point of a business plan is to give your business a sense of direction. Your future self will thank you for being specific about your goals and plans.

Airbnb Business Plan Mistakes

Also, don’t be too specific

We know—we just told you the exact opposite. But hear us out.

If you get too specific in your plan, you don’t leave yourself very much wiggle room. Yes, you want to have a clear direction of where your business is going. But you don’t want to close yourself off to other possibilities.

Be firm about the destination (your business goals) but flexible about the journey (how you will achieve those goals). There’s a sweet spot in there somewhere.

Airbnb business plan example

Sometimes the easiest way to get started is to see examples of others’ work. We’re also providing an Airbnb business plan template you can follow below. But in case it helps, here’s a sample business plan for Airbnb, based on the fictional business of “the Cozy Cottage”:

  • Executive summary: The Cozy Cottage is a cottage located in the small town of Green Meadows. The Cozy Cottage is perfect for couples and small families looking to enjoy the natural beauty of the greater Green Meadows area.
  • Operations plan: I will be able to manage guest communications and turnover myself, as I am semi-retired and live on the property adjacent to the Cozy Cottage. I’ve contracted a local accountant to handle my finances.
  • Business goals: We intend to have every weekend booked by the end of the year, and a full reservation calendar within six months of opening.
  • Unique selling points: The Cozy Cottage’s location (equidistant between the historic downtown and the nearby national park) is especially attractive to visitors. The property also provides a fully stocked kitchen, making it ideal for longer stays.
  • Target customers: The Cozy Cottage has one bedroom with a queen bed, as well as a sofa bed in the living room. The space’s size and offerings make it perfect for small families or couples.
  • Competitor analysis: Green Meadows has only recently become a popular tourist destination, meaning that competition is still scarce. Most existing Airbnbs in the area have higher price points and cater to larger groups. We plan to differentiate ourselves by catering to smaller groups and offering similar amenities at lower prices.
  • Marketing plan: Our initial marketing plan consists of tapping into Airbnb’s customer base, posting on Facebook and Instagram , and distributing print materials in local businesses .
  • Financial plan: The property on which the Cozy Cottage sits is already paid off, as it was part of a family estate. The initial investment for furnishing , decorating, and stocking the Airbnb will come out of my personal savings. According to my projections, the Airbnb should be paying for itself within one year of opening.
  • Milestones and goals: We hope to be booked every weekend by the end of the year and self-sustaining within one year of opening.

Your own business plan will likely be longer, much more detailed, and backed by real data. However, this Airbnb business plan sample should give you an idea of what your own document might look like.

Download our free Airbnb business plan template

We’ve created a free Airbnb business plan PDF that you can download and customize to get started. This business plan template for Airbnb was designed with three specific pain points in mind:

  • Why do I need a business plan in the first place?
  • What do I need to do before I can start creating my business plan?
  • What should I include?

Fill in the form below to download our Airbnb business plan template free of charge!

Disclaimer: Lodgify is an Airbnb Preferred Software Partner. This post, including any claims or statements within, is solely from Lodgify and is not endorsed by, directly affiliated with, authorized, or sponsored by Airbnb in any way.

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Airbnb Business Plan + PDF Template

JUN.01, 2023

Airbnb Business Plan

1. What Is an Airbnb Business Plan?

An Airbnb business plan is a vital docume­nt that outlines the strategic approach and obje­ctives of a business aiming to gene­rate revenue­ through the Airbnb platform. The plan encompasse­s a comprehensive strategy, goals, and objectives for successfully utilizing Airbnb arbitrage­.

The Airbnb business plan examples should detail the steps that the business will take to ensure that it is successful on the Airbnb platform. It should include an analysis of the competitive landscape, a marketing plan, a budget, and a timeline for achieving goals.

2. Why do we need a Vacation Rental Business Plan?

A vacation rental business plan outlines the vision and objectives of the business as well as the strategies, tactics, and financial projections needed to succeed. It se­rves a dual purpose. It assesse­s both the potential risks and bene­fits associated with starting a vacation rental business.

A vacation rental business plan should include an executive summary, a description of the business opportunity, an estimate of market size and potential, a description of the competition, and a financial analysis.

3. Executive Summary

Business overview.

Airbnb operate­s as an online platform that connects individuals seeking short-term lodging options. It facilitates pee­r-to-peer transactions, enabling use­rs to rent or lease various accommodation type­s including vacation rentals, apartments, homestays, hoste­ls, and hotel rooms.

Founded in 2008, the­ company has swiftly emerged as one­ of the world’s top travel lodging websites. Airbnb perfe­ctly exemplifies a disruptive­ business model that effortle­ssly revolutionized the sharing e­conomy.

Airbnb, a revolutionary busine­ss model, has inspired entre­preneurs to establish ne­w ventures and seize­ the growing demand for short-term re­ntals. The innovative­ platform effectively e­nables individuals to monetize the­ir spaces.

Airbnb has revolutionize­d the way people discove­r and reserve short-te­rm rental properties by utilizing its platform. This innovative­ business model has opene­d up a world of untapped opportunities for both aspiring entre­preneurs and avid travele­rs.

The global phenomenon that Airbnb has become serves as a shining example of the imme­nse potential held within the­ sharing economy.

Airbnb functions as an online marke­tplace where trave­lers and hosts can connect to lease­ unique accommodations..

Airbnb provides a platform for hosts to conve­niently list their properties, efficiently manage bookings, and e­ffortlessly communicate with guests. Guests can easily search for accommodations that meet their needs, book reservations, and pay for their stays.

Customer Focus

Airbnb serves as a platform where individuals can effortle­ssly rent out their properties or spare rooms to travelers. The­ ultimate objective is to establish an all-inclusive vacation rental service­ that revolves around the needs of our valuable customers. Our unwave­ring commitment lies in delive­ring an exceptional user experience, ensuring our customers receive­ nothing short of the best.

To ensure­ a seamless and enjoyable­ experience­ for customers, we have incorporated various features. These­ include user revie­ws, background checks, and a 24/7 customer support team.

Management Team

Our primary focus is delive­ring exceptional service­ to our esteeme­d clients. Within our team, we have­ skilled entrepre­neurs, marketing expe­rts, developers, and spe­cialists in the realm of hospitality. Togethe­r, we have successfully launched an Airbnb business plan.

Success Factors

The success of our sample Airbnb business plan relies on various key factors. These include­ finding the right location, offering competitive­ pricing, providing quality customer service, implementing effective­ marketing strategies, and consistently delivering an exce­ptional guest experience. Additionally, a successful Resort business plan should incorporate strategies to foster strong relationships with the local community, leve­rage technology for increased efficiency, and optimize the­ overall guest experience.

Financial Highlights

The financial highlights of this Airbnb property management business plan include the following:

  • A potential 5-year return on investment of over 400%
  • A projected annual growth rate of 25%
  • Cash flow is expected to exceed $1.5 million in the first year
  • Within the first five years of operation, the company expects to generate over $10 million in revenue

Airbnb Business Plan - Proforma Financial Projections

4. Company Overview

Who is casa tropical rentals.

Casa Tropical Rentals operates as a prominent vacation-rental business situated in San Diego, California. This establishme­nt was founded in 2020 and has since emerged as a comprehensive­ agency dedicated to providing outstanding hospitality services to both tourists and business travelers exploring the vibrant city of San Diego. Our wide­ selection of vacation rental prope­rties encompasses luxurious villas, sophisticate­d condos, comfortable apartments, charming beachfront home­s, and much more.

Casa Tropical Rentals aims to deliver exceptional customer service that mee­ts the highest standards. Our dedicated team of knowledgeable­ professionals is readily available to ensure guests experience a comfortable and ple­asurable stay. From the moment of re­servation until departure, we­ provide personalized assistance­ tailored to individual needs. Additionally, we­ offer an extensive­ range of amenities including complime­ntary Wi-Fi, daily housekeeping services, free parking, and more­.

Our goal is to ensure­ that every guest e­njoys an exquisite and unforgettable­ experience­ while staying in beautiful San Diego.

The Casa Tropical Rentals History

Casa Tropical Rentals ope­rates as a vacation rental business in sunny San Die­go, California. It was established in 2020 and offers an array of re­ntal properties suitable for short-te­rm stays. We­ take pride in creating unforge­ttable vacation experiences tailored specifically to their individual requirements. Alongside­ this extensive se­lection, our commitment to exce­ptional customer service se­ts us apart.

Our properties in San Diego are situated in highly sought-afte­r locations, encompassing downtown, beachfront spots, and the sce­nic area of La Jolla. We offer a dive­rse range of rental options to cate­r to your preference­s, including elegant villas, comfortable apartme­nts, and modern condominiums.

5. Industry Analysis

The Airbnb rental business plan is built on the sharing economy, an economic model where individuals or businesses can rent, sell, or share assets. Airbnb has become a global phenomenon since its founding in 2008.

https://www.statista.com/statistics/339845/company-value-and-equity-funding-of-airbnb/#:~:text=Airbnb%20has%20become%20a%20global,over%20100%20billion%20U.S.%20dollars.

The co-hosting business of Airbnb has achieved remarkable­ success, experiencing rapid revenue growth since­ its establishment in 2008.

Airbnb stands as a prominent conte­nder in the sharing economy, alongside­ numerous other companies vying for recognition within this domain. Notable competitors include Home­Away, VRBO, and Couchsurfing.

According to expe­rts, the sharing economy is projecte­d to experience­ consistent growth in the coming years. Airbnb, with its extensive user base­ and strong brand recognition, is strategically positioned to take­ advantage of this expansion. The company’s we­ll-established foothold ensure­s sustained progress alongside the­ industry’s upward trajectory.

6. Customer Analysis

Demographic profile of target market.

This Hotel Business Plan outlines the customer analysis of the San Diego, California, target market.

Demographic Profile of Target Market, San Diego:

  • Gender: Primarily male
  • Income Level: Upper-middle to high
  • Education Level: College degree or higher
  • Cultural Background: Primarily Caucasian
  • Marital Status: Single or married
  • Occupation: Professionals and retirees
  • Location: Primarily urban areas

Customer Segmentation

The customer segmentation for how to write up an Airbnb business plan in San Diego can be broken down into the following categories:

  • Young Professionals/Students: This segment is the primary demographic for Airbnb in San Diego.
  • Families/Groups: This segment is the secondary demographic for Airbnb hosting in San Diego.
  • Budget Travelers: This segment is the tertiary demographic for renting a room on Airbnb in San Diego.
  • Luxury Travelers: This segment is the fourth demographic for backyard tiny house Airbnb in San Diego.
  • Business Travelers: This segment is the fifth demographic for conciergerie Airbnb service in San Diego.

7. Competitive Analysis

Direct and indirect competitors.

Direct Competitors

  • HomeAway: HomeAway is a re­nowned vacation rental company that offers an expensive sele­ction of over two million properties in nearly 200 countries worldwide. Guests have­ the convenience­ of easily booking their prefe­rred accommodations either directly through HomeAway’s user-friendly website or via its efficient mobile­ app.
  • VRBO: VRBO, short for Vacation Rentals By Owne­r, operates as a renowne­d vacation rental company with an extensive­ global presence. With more­ than two million listings spread across 190 countries, VRBO offers a wide­ range of rental options to cater to dive­rse needs and pre­ferences.
  • FlipKey : FlipKey is a vacation re­ntal company operating in over 180 countries, offe­ring a wide range of rental prope­rties. With over two million options available, FlipKe­y specializes in last-minute vacation re­ntals and caters to varied prefe­rences including beach house­s and ski chalets.
  • Booking.com: Booking.com is an este­emed online trave­l agency known for its vast selection of hote­l, hostel, and vacation rental listings. With a remarkable­ presence in over 190 countries, the website­ offers more than two million vacation rentals to choose­ from.

Indirect Competitors

  • Hotels: Hotels are a traditional accommodation option offering short-term stay rooms.
  • Hostels: Hostels are a budget accommodation option offering short-term stay dorm-style rooms. Guests can book rooms directly from the website or through a third-party website.

Competitive Advantage

Highly efficient service.

Highly Efficient Service! I am incredibly happy with the outcome; Alex and his team are highly efficient professionals with a diverse bank of knowledge.

Airbnb offers a distinct and adaptable­ platform, allowing travelers to effortle­ssly rent their properties for short or long periods. This versatile platform cate­rs to various needs, including vacations, business trips, and corporate­ retreats. Moreove­r, Airbnb provides an array of traveler-frie­ndly features such as secure­ payment processing, detaile­d search options, and top-notch customer service­.

Airbnb holds the advantage­ of being a widely recognize­d and trusted brand, relied upon by millions worldwide­.

8. Marketing Plan

  • Target Audience : Our target audience is people who are searching for comfortable and stylish short-term rental accommodations.
  • Develop Branding Strategy: Airbnb should focus on developing a strong and recognizable brand identity that conveys the company’s core values of safety, reliability, and affordability.
  • Utilize Digital Marketing: Airbnb should utilize digital marketing tools such as SEO, social media, and email campaigns to reach potential customers and build relationships.
  • Leverage Influencers: Airbnb should partner with travel, real estate, and hospitality influencers to spread the word about the company’s services and offerings.
  • Measure and Analyze Performance: Airbnb should measure and analyze the performance of its marketing campaigns to better understand how its efforts are driving revenue.

Promotions Strategy

Advertising: We will utilize both paid and organic advertising methods to maximize our online presence. Paid advertising methods will include Google Adwords, Facebook Ads, and other online channels. Organic methods will include search engine optimization, content marketing, and social media engagement.

Promotional Events: We will host promotional events and open house days to let potential customers experience our rental space in person.

Airbnb’s pricing strategy will depend on the type of rental property and location. Airbnb’s pricing will also vary depending on the season, with higher prices during peak travel seasons and lower prices during off-peak times.

9. Operations Plan

Operation functions.

  • Maintenance: Maintenance of the Airbnb property is key to ensuring a safe, comfortable, and enjoyable experience for guests.
  • Cleaning: Regular Airbnb cleaning service is essential for providing guests with a pleasant and comfortable stay.
  • Guest Relations: Proper management of guest relations is essential for providing a positive Airbnb experience for guests.
  • Marketing: Proper marketing of the Airbnb property is essential for attracting new guests and increasing bookings.

Develop and implement customer service policies and procedures: June 1, 2023 Develop and execute marketing and advertising strategies: August 1, 2023 Negotiate terms and conditions with vendors: October 1, 2023 Monitor and manage inventory levels: December 1, 2023 Monitor and review all regulations and standards: February 1, 2024 Develop and implement policies and procedures for regulatory compliance: April 1, 2024

Licensing organization in Airbnb: https://www.airbnb.com/help/article/873

10. Management Team

The management team of the Airbnb business plan will be comprised of the following individuals:

  • Chief Executive Officer (CEO): responsible for providing overall leadership and direction for the business.
  • Chief Operating Officer (COO): oversees the day-to-day operations of the business and ensures that all processes are running smoothly.
  • C hief Financial Officer (CFO): manages the financial aspects of the company, including budgeting, forecasting, and accounting.
  • Chief Technology Officer (CTO): responsible for overseeing the technology used to support the business, including the website, mobile applications, and internal systems.
  • Chief Marketing Officer (CMO): responsible for developing and executing the overall marketing strategy, including advertising, promotions, and public relations.
  • Business Development Manager: responsible for identifying new opportunities and markets for the business and managing existing relationships.
  • Product Manager: responsible for managing the product development process, including researching customer needs, defining product features, and overseeing the product launch.
  • Legal & Compliance Officer: responsible for ensuring the business is compliant with all relevant laws and regulations.
  • Human Resources Manager: responsible for managing the recruitment, training, and development of the business’s employees.

11. Financial Plan

Estimated Start-up Costs:

  • Technology & Infrastructure: $20,000
  • Legal Costs: $5,000
  • Advertising & Promotion: $15,000
  • Initial Inventory: $5,000
  • Website Design & Development: $10,000
  • Miscellaneous: $2,000

Total Start-up Costs: $57,000

Key Revenue & Costs

Key Revenue

  • Booking Fees: $75,000
  • Cleaning Fees: $25,000
  • Security Deposits: $10,000
  • Other Fees: $5,000

Total Revenues: $115,000

  • Administrative Costs: $15,000
  • Insurance: $10,000
  • Technology & Infrastructure: $10,000
  • Advertising & Promotion: $10,000
  • Cleaning & Maintenance: $15,000
  • Taxes: $10,000
  • Professional Fees: $5,000

Total Key Costs: $65,000

  • Revenues: $115,000
  • Less: Key Costs: $65,000
  • Net Profit: $50,000

Funding Requirements and Use of Funds

Funding Requirements

  • Start-up Costs: $57,000
  • Working Capital: $15,000

Total Funding Requirements: $72,000

Use of Funds

Total Use of Funds: $72,000

Key Assumptions

High demand for short-term rentals in the market.

Growth in the sharing economy and increasing acceptance of Airbnb as a legitimate housing option.

Adequate supply of properties in the area to meet customer demand.

Ability to attract quality hosts to list their properties.

Ability to secure a competitive rate for insurance coverage.

Ability to secure favorable terms from technology vendors.

Effective use of technology to manage the Real Estate Business Plan and maximize efficiency.

12. Sources of funding for the Airbnb business plan

  • Angel Investors: Angel investors are wealthy individuals or groups who provide capital to startups in exchange for equity or convertible debt.
  • Venture Capitalists: Venture capitalists are firms that invest in early-stage companies in exchange for equity.
  • Crowdfunding: Crowdfunding, an online me­thod of raising money from multiple individuals, serve­s as a valuable funding source for Airbnb business plans. It posse­sses the unique ability to rapidly conne­ct with numerous potential investors.
  • Bank Loans: Bank loans are a great source of funding for Airbnb business plans due to their ability to provide a large amount of capital at a relatively low-interest rate.

13. Business plans for Airbnb: tricks and tips

  • Research: To gain a comprehe­nsive plan, one should thoroughly rese­arch the Airbnb industry, analyze competitors, and ide­ntify target markets.
  • Goals: Set clear and measurable goals that align with your mission statement.
  • Strategies: Develop strategies to differentiate your Airbnb business from competitors and position it for success in the market.
  • Review: Periodically review your plan to ensure that your strategies remain relevant and your goals are being achieved.
  • Marketing: Create a comprehensive marketing plan that will drive traffic to your listing.
  • Execution Plan: Outline your steps to launch and grow your business.
  • Timeline: Set goals and a timeline to ensure that tasks are completed on time.

14. Common mistakes to avoid in the Airbnb business plan

  • Not doing enough market research: Before writing your plan, make sure to understand the size and scope of the Airbnb market, your potential competitors, and the current trends in the industry.
  • Not setting realistic goals: Overly ambitious goals can lead to disappointment and burnout. Make sure to set attainable goals that you can realistically reach.
  • Not addressing legal issues: Make sure to research and list any relevant local regulations that could affect your business.
  • Not considering customer service: Good customer service is a must for Airbnb.
  • Not planning for scalability: Airbnb is a growing industry, so you need to plan for how you will accommodate growth.

15. Unlock Your Airbnb Business Potential with OGS Capital – Accelerate Your Success!

OGS Capital acknowledge­s the significance of crafting a comprehe­nsive and impactful Airbnb business plan. Our team consists of e­xperienced consultants who posse­ss the knowledge and e­xpertise require­d to tailor a business plan specifically for your Airbnb venture­.

Our team of skille­d business plan writers and consultants possesse­s extensive e­xperience in the­ Airbnb industry. Furthe­rmore, we are we­ll-versed in effe­ctive strategies for optimizing your Airbnb busine­ss, including identifying customer nee­ds, analyzing competition, devising unique marke­ting approaches, and developing a solid financial plan.

Our exte­nsive expertise­ lies in developing accurate­ financial projections. Drawing on industry data and historical trends, we can assist you in fore­casting your potential income, expe­nses, and cash flow.

When se­lecting OGS Capital, rest assured that you will collaborate­ with a team of skilled professionals. The­y will develop a comprehe­nsive and effective­ Airbnb business plan tailored specifically to your unique­ needs. Le­t us assist you in creating a plan that not only aids in achieving your objective­s but also enhances your potential for succe­ss.

Q. Is starting an Airbnb business profitable?

Yes, starting an Airbnb business can be a very profitable venture. Since the company operates on a marketplace model, no upfront costs are associated with becoming a host. Airbnb charges a percentage of each re­servation’s fee, giving hosts the­ freedom to set their desired listing price. As long as hosts deliver a high-quality experience­ for guests, there will be­ ample demand for their e­xceptional services.

Q. How much do Airbnb owners make?

The amount Airbnb owners make varies greatly depending on the location, size of the rental, and amenities offered. Some Airbnb owners may make around $500 per month while others may make thousands.

OGSCapital’s team has assisted thousands of entrepreneurs with top-rate business plan development, consultancy and analysis. They’ve helped thousands of SME owners secure more than $1.5 billion in funding, and they can do the same for you.

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Airbnb: Business Model, SWOT Analysis, and Competitors 2023

Inside This Article

In this blog article, we will delve into the business model, SWOT analysis, and competitors of Airbnb, one of the leading players in the global hospitality industry. As we venture into 2023, it becomes crucial to understand how this innovative platform has revolutionized the way people travel and experience accommodation. We will examine the strengths, weaknesses, opportunities, and threats that Airbnb faces, as well as explore the key competitors shaping the landscape of this rapidly evolving market. Stay tuned to gain valuable insights into the future of Airbnb and its position in the industry.

What You Will Learn:

  • Who owns Airbnb and the key stakeholders involved in the company.
  • The mission statement of Airbnb and how it aligns with the company's goals.
  • How Airbnb generates revenue and the various ways it makes money.
  • An in-depth explanation of the Airbnb Business Model Canvas, highlighting its key components and how they contribute to the company's success.
  • The major competitors of Airbnb and the challenges they pose to the company's market share.
  • A comprehensive SWOT analysis of Airbnb, examining its strengths, weaknesses, opportunities, and threats in the industry.

Who owns Airbnb?

The founders and early investors.

Airbnb was founded in 2008 by three individuals: Brian Chesky, Joe Gebbia, and Nathan Blecharczyk. Brian Chesky, the current CEO, met his co-founders at the Rhode Island School of Design. Initially, Airbnb started as a platform for renting out air mattresses in their San Francisco apartment during a design conference, hence the name "Air Bed and Breakfast."

As the company gained traction, the founders sought funding to expand their operations. Many notable investors, including venture capital firms and angel investors, recognized the potential of Airbnb and contributed to its early success. Some of the prominent early investors include Sequoia Capital, Y Ventures, and Greylock Partners.

Major Shareholders

Over the years, as Airbnb grew into a global marketplace for short-term rentals, the ownership structure evolved. While the exact ownership percentages are not publicly disclosed, certain individuals and entities have emerged as major shareholders of the company.

As of its initial public offering (IPO) in December 2020, the largest shareholders of Airbnb included the founders Brian Chesky, Joe Gebbia, and Nathan Blecharczyk. Despite some dilution in their ownership due to subsequent funding rounds, the founders still hold significant stakes in the company, reaffirming their commitment to its success.

Furthermore, venture capital firms and institutional investors such as Sequoia Capital, Founders Fund, and General Atlantic also hold substantial positions in Airbnb. These investors recognized the potential of the platform early on and have continued to support its growth.

Public Shareholders

With Airbnb going public, the ownership of the company extended to public shareholders who purchased its shares on the stock market. This shift in ownership structure allowed individuals and institutional investors to participate in the company's growth and share in its success.

As of the public listing, Airbnb's ownership is now spread among a diverse range of shareholders, including individual retail investors and institutional shareholders. This broader ownership structure aligns with Airbnb's goal of democratizing access to investment opportunities and involving its community in shaping its future.

While the founders, early investors, and institutional shareholders own significant stakes in Airbnb, the company's IPO has expanded ownership to a wider range of public shareholders. This diverse ownership structure reflects the growing popularity and global impact of Airbnb, as well as its commitment to inclusive growth and community involvement.

What is the mission statement of Airbnb?

Airbnb's mission statement.

Airbnb's mission statement is to create a world where anyone can belong anywhere. This mission reflects the company's core values of inclusivity, diversity, and community. By providing a platform that connects travelers with unique accommodations and experiences around the world, Airbnb aims to foster a sense of belonging and break down barriers between people from different backgrounds.

The company believes that by enabling individuals to share their homes and spaces, they can create meaningful connections and promote understanding among people from various cultures and countries. Airbnb values the idea that everyone should have the opportunity to explore and immerse themselves in different communities, ultimately creating a more interconnected and empathetic society.

Airbnb's mission statement also encompasses their commitment to providing economic opportunities to hosts and communities. By empowering individuals to become hosts and earn income from their properties, Airbnb aims to support local economies and drive sustainable tourism. This aligns with their belief that travel should benefit both the visitors and the communities they visit.

In summary, Airbnb's mission statement is to make it possible for people to experience a true sense of belonging while traveling, fostering connections between hosts and guests, and promoting economic opportunities for individuals and communities worldwide.

How does Airbnb make money?

Host service fees.

One of the primary ways Airbnb generates revenue is through host service fees. When hosts list their properties on the platform and successfully book guests, Airbnb charges a percentage fee on each reservation. This fee typically ranges from 3% to 5% of the booking subtotal, depending on various factors such as the host's location, the type of accommodation, and the length of stay.

By implementing host service fees, Airbnb can monetize the platform while providing a convenient and user-friendly experience for hosts. This revenue stream allows Airbnb to maintain and improve its services, invest in marketing initiatives, and expand its global presence.

Guest service fees

In addition to host service fees, Airbnb also generates revenue through guest service fees. When guests make a booking, they are charged a separate fee that is typically around 6-12% of the booking subtotal. This fee covers Airbnb's operational costs for providing a secure and reliable platform, including customer support, payment processing, and various safety measures.

Guest service fees are a crucial aspect of Airbnb's business model as they ensure the platform remains sustainable and can continue to offer a seamless experience for guests. By charging a reasonable fee, Airbnb can fund ongoing enhancements to its technology, maintain trust and safety measures, and develop new features to meet the evolving needs of travelers.

Experiences and Airbnb Plus

Apart from the traditional accommodation bookings, Airbnb has expanded its offerings to include Experiences and Airbnb Plus. Experiences are curated activities and tours hosted by locals, providing travelers with unique and authentic experiences in their destinations. Airbnb charges a fee to experience hosts for each booking made through the platform.

On the other hand, Airbnb Plus is a premium tier of accommodations that have been verified for quality and comfort. Hosts who meet specific criteria can opt to list their properties as Airbnb Plus, and in return, they pay a higher host service fee while benefiting from additional exposure and potential bookings.

By diversifying its revenue streams with Experiences and Airbnb Plus, Airbnb taps into different segments of the travel market and attracts a broader range of hosts and guests. This strategic expansion allows Airbnb to generate additional income while offering users a more comprehensive travel experience.

Additional revenue sources

Apart from the main revenue streams mentioned above, Airbnb also explores other avenues to generate income. These include partnerships with local businesses, cross-promotions, and advertising opportunities. For instance, Airbnb may collaborate with local attractions, restaurants, or transportation services, allowing them to reach Airbnb users and generate revenue through referral programs or exclusive offers.

Furthermore, Airbnb has introduced a feature called "Airbnb for Work," catering to business travelers. This segment provides additional revenue through corporate partnerships and commissions. By offering tailored solutions for corporate travel needs, Airbnb leverages its platform to tap into the lucrative business travel market.

In summary, Airbnb's primary revenue comes from host and guest service fees, which allow the platform to sustain its operations and invest in growth. Additionally, the introduction of Experiences, Airbnb Plus, and other partnerships provide Airbnb with additional revenue streams and opportunities for expansion.

Airbnb Business Model Canvas Explained

Introduction to the business model canvas.

The Business Model Canvas is a strategic management and lean startup tool that provides a visual overview of a company's business model. It consists of nine key building blocks that capture the essential elements needed to create, deliver, and capture value. By using this framework, businesses can analyze and understand their business model, identify areas for improvement, and innovate more effectively.

Key Building Blocks of Airbnb's Business Model Canvas

Customer Segments: Airbnb caters to two primary customer segments: hosts and guests. Hosts are individuals or property owners who are willing to rent out their properties, while guests are travelers or individuals seeking accommodations.

Value Proposition: Airbnb offers an alternative and cost-effective accommodation solution for travelers, providing a unique and personalized experience. It allows hosts to monetize their properties and generate income.

Channels: Airbnb operates primarily as an online platform, connecting hosts and guests through its website and mobile application. It provides a user-friendly interface for hosts to list their properties and for guests to browse and book accommodations.

Customer Relationships: Airbnb fosters a two-sided marketplace by providing a platform that facilitates communication and transactions between hosts and guests. It encourages reviews and ratings to build trust and establish long-term relationships.

Revenue Streams: Airbnb generates revenue through various sources. It charges hosts a percentage fee for each booking, typically around 3% for hosts in the United States. Additionally, it charges guests a service fee ranging from 0% to 20% of the booking subtotal.

Key Activities: The key activities of Airbnb include maintaining and improving its online platform, marketing and advertising to attract new hosts and guests, and ensuring a smooth booking experience for both parties. It also invests in customer support and trust and safety measures.

Key Resources: Airbnb's key resources include its online platform, the technology infrastructure to support its operations, a large user base of hosts and guests, and brand reputation. It also relies on partnerships with payment processors and insurance providers to enhance the user experience.

Key Partnerships: Airbnb has formed partnerships with various stakeholders, including property management companies, tourist boards, and travel agencies, to expand its reach and enhance its offerings. It collaborates with payment processors to facilitate secure transactions and insurance providers to offer coverage for hosts and guests.

Cost Structure: Airbnb incurs costs related to platform maintenance, marketing and advertising, customer support, legal and regulatory compliance, and technological infrastructure. It invests in trust and safety measures to ensure the protection of hosts and guests.

The Airbnb Business Model Canvas provides a comprehensive overview of how the company creates, delivers, and captures value. By understanding each building block, Airbnb can continually innovate and adapt its business model to meet the evolving needs of hosts and guests. This framework also serves as a valuable tool for aspiring entrepreneurs to analyze and develop their own business models in the sharing economy.

Which companies are the competitors of Airbnb?

Traditional hospitality industry.

One of the biggest competitors of Airbnb is the traditional hospitality industry, which includes hotels, resorts, and bed and breakfasts. These establishments have been offering accommodation services for decades and have built a strong reputation and customer base. With their professional management, standardized services, and luxurious amenities, hotels can be an attractive option for travelers who prefer a more traditional and reliable experience.

Booking Holdings

Booking Holdings, formerly known as Priceline Group, is a global online travel agency that operates multiple brands, including Booking.com, Agoda, and Kayak. While Airbnb primarily focuses on providing accommodation options, Booking Holdings offers a comprehensive platform for booking flights, hotels, car rentals, and vacation packages. With a vast inventory of properties worldwide, Booking.com is a significant competitor for Airbnb, particularly for travelers who prefer a one-stop-shop for all their travel needs.

Expedia Group

Expedia Group is another prominent online travel agency that competes with Airbnb. Through its brands such as Expedia, Hotels.com, Orbitz, and HomeAway, the company offers a wide range of accommodation options, from hotels to vacation rentals. Expedia Group's extensive network and partnerships with various hospitality providers make it a formidable competitor for Airbnb, especially for travelers seeking a diverse selection of properties and travel services.

HomeToGo is a meta-search engine that aggregates vacation rental listings from various platforms, including Airbnb, Booking.com, and HomeAway. It allows users to compare prices and availability across different websites, making it easier to find the best deal. As a direct aggregator of Airbnb's listings, HomeToGo competes by offering a more streamlined search experience and helping users discover alternative options beyond Airbnb.

Vrbo, formerly known as HomeAway, is a vacation rental marketplace that primarily focuses on whole-home rentals, including cottages, villas, and apartments. With a significant number of listings globally, Vrbo appeals to travelers looking for a private and immersive experience. While Vrbo may not have the same level of community-driven interactions as Airbnb, it offers an alternative for those who prioritize privacy and exclusivity.

Sonder is a hospitality company that offers a mix of hotel-like services and apartment-style accommodations. They lease and manage entire buildings or floors, providing guests with professionally designed and serviced spaces. Sonder's model bridges the gap between hotels and vacation rentals, offering a consistent experience while maintaining the uniqueness and flexibility of a home rental. Its focus on quality and standardized services makes it a competitor for Airbnb in the mid to high-end travel segment.

As the sharing economy continues to evolve, Airbnb faces competition from various players in the hospitality and travel industry. Traditional hotels, online travel agencies like Booking Holdings and Expedia Group, meta-search engines such as HomeToGo, and vacation rental marketplaces like Vrbo and Sonder all aim to capture a share of the growing alternative accommodation market. Each competitor brings its unique value proposition, catering to different traveler preferences and needs.

Airbnb SWOT Analysis

Global Presence : Airbnb operates in over 220 countries and has more than 7 million listings worldwide. This global presence gives Airbnb a competitive advantage over other similar platforms, as users can find accommodations almost anywhere they travel.

Brand Recognition : Airbnb has become a household name and is widely recognized as a trusted platform for finding unique and affordable accommodations. This brand recognition gives Airbnb an edge over its competitors, as it attracts both hosts and guests.

Diverse Accommodation Options : One of Airbnb's strengths is its ability to offer diverse accommodation options to cater to different needs and preferences. From private rooms to entire homes, treehouses to castles, Airbnb provides a wide range of choices, allowing users to find the perfect fit for their travel experience.

User-friendly Platform : Airbnb's website and mobile app are designed to be user-friendly and intuitive. The platform's interface makes it easy for hosts to list their properties and for guests to search and book accommodations. This user-friendly experience enhances customer satisfaction and encourages repeat usage.

Regulatory Challenges : Airbnb faces regulatory challenges in many cities and countries due to concerns over housing affordability, tax evasion, and the impact on local communities. These regulatory hurdles can limit the growth and expansion of Airbnb's business in certain markets.

Quality Control : As Airbnb relies on individual hosts to provide accommodations, maintaining consistent quality control can be a challenge. While the platform does have measures in place to ensure guest safety and satisfaction, occasional negative experiences can still occur, potentially tarnishing the company's reputation.

Dependence on Hosts : Airbnb's success heavily relies on the willingness of hosts to list their properties and provide a positive experience for guests. If hosts become dissatisfied with the platform or choose to list their properties elsewhere, it could impact the availability and quality of accommodations on Airbnb.

Opportunities

Expansion into New Markets : Although Airbnb has a significant global presence, there are still untapped markets where the platform can expand. By entering new markets and targeting specific demographics, Airbnb can reach a wider audience and increase its user base.

Partnerships with Tourism Boards : Collaborating with tourism boards and local governments can create opportunities for Airbnb to promote sustainable tourism and contribute to local economies. These partnerships can help Airbnb gain support from local authorities and mitigate regulatory challenges.

Experiences and Services : Airbnb has already ventured into offering experiences and services in addition to accommodations. Expanding this aspect of the business can provide new revenue streams and enhance the overall travel experience for guests, further differentiating Airbnb from competitors.

Competition : The online travel industry is highly competitive, with other platforms such as Booking.com and Vrbo vying for market share. These competitors may offer similar services or target specific niches, posing a threat to Airbnb's market position.

Economic Downturn : During economic downturns or global crises, travel and tourism tend to be significantly affected. A decrease in travel demand can impact Airbnb's revenue and profitability, making the company vulnerable to economic fluctuations.

Data Security and Privacy Concerns : As a platform that collects and stores personal data, Airbnb faces the risk of data breaches or unauthorized access. Any security incidents can erode user trust and damage Airbnb's reputation, leading to a decline in bookings and revenue.

Overall, while Airbnb has numerous strengths and opportunities, it also faces challenges and threats that need to be carefully managed to sustain its growth and success in the competitive travel industry.

Key Takeaways

Ownership of Airbnb: Airbnb is a privately held company, meaning it is not publicly traded on the stock market. The largest stakeholders in Airbnb are its co-founders Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, along with various venture capital firms that have invested in the company.

Mission statement of Airbnb: Airbnb's mission is to create a world where anyone can belong anywhere. They aim to connect travelers with unique accommodation options and create a sense of belonging and community wherever their guests go.

Revenue generation: Airbnb primarily makes money by charging hosts a percentage fee on each booking, known as a host service fee. Additionally, they charge guests a service fee for using their platform to book accommodations. These fees contribute to Airbnb's revenue stream.

Airbnb Business Model Canvas: The Business Model Canvas is a strategic management tool that explains how a company creates, delivers, and captures value. Airbnb's business model revolves around connecting hosts and guests, offering a platform for booking accommodations, and earning revenue through service fees.

Competitors of Airbnb: Airbnb faces competition from various companies in the hospitality and travel industry. Some of its main competitors include Booking.com, HomeAway, VRBO, and Expedia's vacation rental platform. These companies offer similar services and strive to attract both hosts and guests to their platforms.

Airbnb SWOT Analysis: A SWOT analysis of Airbnb highlights its strengths, weaknesses, opportunities, and threats. Some key takeaways from this analysis may include Airbnb's strong brand recognition and global reach as strengths, potential regulatory challenges and backlash from the hotel industry as weaknesses, opportunities for expansion into new markets, and threats from competitors and changing consumer preferences.

In conclusion, Airbnb is a global online marketplace that connects travelers with individuals who have accommodations to rent. The company was founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk. Today, Airbnb is owned by its founders, as well as a number of other investors.

The mission statement of Airbnb is to create a world where anyone can belong anywhere. They aim to provide unique and authentic travel experiences by enabling people to rent out their homes or spaces to travelers.

Airbnb generates revenue through service fees charged to both hosts and guests. They charge hosts a percentage of each booking, typically around 3%, while guests are charged a service fee that can range from 6% to 12% of the booking subtotal.

The Airbnb Business Model Canvas provides a comprehensive overview of the company's key activities, resources, and partners. It highlights the importance of their platform, which acts as a marketplace connecting hosts and guests, as well as the role of technology in facilitating bookings and ensuring a seamless experience.

As for competitors, Airbnb faces competition from various companies in the sharing economy and hospitality industry. Some of its main competitors include Booking.com, Expedia, HomeAway, and VRBO. These companies offer similar services and aim to capture a share of the growing market for alternative accommodations and travel experiences.

In a SWOT analysis of Airbnb, we can identify its strengths, such as a strong brand presence and a vast global network of hosts and guests. However, there are also weaknesses, such as regulatory challenges and concerns over safety and security. Opportunities for Airbnb include expanding into new markets and offering additional services, while threats include increased competition and potential backlash from local communities.

Overall, Airbnb has revolutionized the way people travel and experience new destinations. With its unique business model and mission to provide an inclusive and authentic travel experience, Airbnb continues to dominate the home-sharing industry while facing challenges and opportunities in an ever-evolving marketplace.

What are the strengths and weaknesses of Airbnb?

Strengths of Airbnb:

Wide Range of Accommodation Options: Airbnb offers a diverse selection of accommodation options, including apartments, houses, villas, and unique properties like castles or treehouses. This variety caters to different traveler preferences and allows for unique and memorable experiences.

Cost-Effective: Generally, Airbnb accommodations are more affordable than traditional hotels, making it an attractive option for travelers seeking budget-friendly accommodations. It can provide cost savings, especially for families or larger groups who can book entire homes instead of multiple hotel rooms.

Local Experience: Staying in an Airbnb allows travelers to immerse themselves in local communities and neighborhoods, providing a more authentic and culturally enriching experience than a typical hotel. Hosts often provide personalized recommendations, insider tips, and a more personalized level of hospitality.

Flexibility and Amenities: Airbnb accommodations often offer more flexibility compared to hotels, with amenities such as kitchens, laundry facilities, and communal spaces. This can be particularly beneficial for longer stays or travelers who prefer self-catering options.

Weaknesses of Airbnb:

Quality and Consistency: The quality and cleanliness of Airbnb accommodations can vary significantly, as they are managed by individual hosts. Without standardized quality control, there is a risk of encountering subpar or misrepresented properties, leading to potentially disappointing experiences for guests.

Safety and Security: While Airbnb has implemented safety measures, such as verified profiles and reviews, there have been instances of fraudulent listings, scams, or safety concerns. Guests may have concerns about their personal safety and security in unfamiliar environments, especially when staying in shared accommodations.

Legal and Regulatory Challenges: Airbnb faces legal and regulatory challenges in many cities and countries, as it disrupts traditional hospitality industries and can impact local housing availability. Some cities have imposed restrictions or regulations on short-term rentals, limiting the operation of Airbnb listings.

Lack of Human Interaction: While some travelers appreciate the privacy and independence offered by Airbnb, others may miss the services and human interaction provided by hotels, such as round-the-clock front desk assistance, room service, or concierge services.

What are the threats of Airbnb?

There are several threats associated with Airbnb:

Regulatory challenges: Airbnb faces regulatory challenges in many jurisdictions around the world. Some cities and countries have imposed restrictions or bans on short-term rentals due to concerns about housing affordability, neighborhood disruption, and safety regulations.

Legal issues: Airbnb has faced legal challenges related to various issues, including rental regulations, taxation, and liability for accidents or damages that occur on rented properties.

Safety concerns: There have been instances of property damage, theft, and personal safety incidents reported by both hosts and guests. These incidents can damage Airbnb's reputation and erode trust in the platform.

Competition from traditional hospitality industry: Airbnb competes with traditional hotels, bed and breakfasts, and other accommodation providers. These established players have resources, brand recognition, and regulatory compliance that can pose a challenge for Airbnb's growth.

Trust and quality control: Maintaining consistent quality across a diverse range of listings can be a challenge for Airbnb. There have been cases of misleading or inaccurate listings, unclean accommodations, and hosts who do not meet guest expectations, which can affect the overall trust and user experience.

Economic and social impacts: Some argue that Airbnb contributes to rising rental prices and housing shortages in popular tourist destinations as properties are taken off the long-term rental market and converted into short-term rentals. This can lead to negative economic and social impacts on local communities.

Data privacy and security: As a platform that collects and processes personal information, Airbnb needs to address concerns related to data privacy and security. Any data breaches or mishandling of user data can have serious consequences for the company.

Reputation management: Airbnb's reputation can be impacted by incidents such as discrimination, illegal activities taking place in rented properties, or negative guest experiences. These incidents can lead to negative publicity and affect the perception of the platform.

Overall, while Airbnb has revolutionized the accommodation industry, these threats pose challenges that the company needs to navigate to ensure sustainable growth and success.

What is a competitive disadvantage of Airbnb?

One competitive disadvantage of Airbnb is the lack of consistent quality and standardization across listings. Since anyone can list their property on Airbnb, there is a wide range of quality and amenities offered, making it difficult for users to have consistent experiences. Some listings may have inaccurate descriptions, misleading photos, or poor customer service, leading to dissatisfaction among guests. This lack of standardization can result in a negative perception of Airbnb as a whole and favor traditional hotels or other accommodation options that offer more consistent quality and service.

What are the risks of Airbnb business model?

Legal and regulatory risks: The legality of short-term rentals can vary in different jurisdictions. Some cities have strict regulations or outright bans on Airbnb, which can result in fines, legal disputes, or the suspension of listings.

Property damage and theft: There is a risk of guests causing damage to the property or stealing valuable items. While Airbnb provides host protection programs, they may not cover all types of damages or fully compensate hosts.

Safety concerns: Safety incidents can occur in Airbnb properties, such as accidents, injuries, or criminal activities. Hosts need to take precautions and ensure the security of their guests.

Reputation and trust: Negative experiences or incidents can harm the reputation of both hosts and Airbnb as a platform. A few high-profile incidents can erode trust in the service and discourage potential guests.

Unreliable guests: There is a risk of guests making bookings but not showing up or canceling last minute, leading to lost revenue for hosts. Hosts may also face difficulties in dealing with problematic guests, such as guests violating house rules or causing disturbances.

Market saturation and competition: As the popularity of Airbnb grows, there is an increasing number of hosts, resulting in market saturation and intense competition. This can lead to lower occupancy rates, reduced rental prices, and decreased profitability for hosts.

Economic downturns and travel disruptions: During economic downturns or travel disruptions, such as natural disasters or pandemics, the demand for Airbnb accommodations can significantly decrease. Hosts may face financial challenges during such times.

Tax and financial considerations: Hosts need to comply with tax regulations and may need to pay income tax on their rental income. Failure to do so can result in penalties or legal issues. Additionally, hosts may face financial risks if they heavily rely on Airbnb income, as it may be unpredictable or seasonal.

Data security and privacy: Airbnb collects and stores personal and financial data of hosts and guests, making it vulnerable to data breaches and privacy concerns. Any breach in data security can harm the trust and confidence of users.

Changes in Airbnb policies and fees: Airbnb can change its policies and fee structures, which may impact hosts' profitability. Hosts may need to adapt to new regulations or face unexpected costs.

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business model airbnb pdf

Airbnb Business Model in a Nutshell – Exponential in Almost Every Way

business model airbnb pdf

Understanding the Airbnb business model can help you run a more profitable business. When you know how the platform operates, how the company approaches business today, and what it’s doing to secure opportunities for the future, you can plan accordingly and make the most of the opportunity as an Airbnb host or feel better about using the app for booking a vacation rental or other short term lodging.

What should you know about the Airbnb business model?

Airbnb has its sights set on exponential growth in the coming years. This company is known for making changes to how it runs to benefit the business in the future. The model was disruptive when it hit the market and created an ongoing ripple in the travel and hospitality industry.

The company’s efforts have been widely successful. To date, Airbnb operates globally and has more listings than the world’s top five major hotel brands combined.

The thing that is most shocking to people in the industry and all over is how Airbnb has achieved so much success with such a simple business model. They do not own any properties and have minimal overhead; instead, they took advantage of a growing sharing economy by offering a service that was missing. It makes its money via the booking fees charged by Airbnb hosts. This seems like a cut and dry way to build a profitable company but the business model Airbnb uses is exponential and has more built-in profit opportunities than most comparable businesses in the hospitality market.

At the moment, Airbnb has managed to scale hospitality in a way that the world’s most profitable hotels can only dream of accomplishing.

How does Airbnb do it?

For starters, Airbnb is a solution to a problem. The Airbnb business model is designed for a mass market that it connects in a one-of-a-kind way. Airbnb has created a community and within that community, people are working to make the company money. Hosts, travelers, renters, guests, property managers, and experience and adventure providers are all a part of the ever-growing Airbnb community and they have provided them a way to communicate, rate, and tailor experiences to meet their needs.

Airbnb also prizes efficiency and created a completely digital channel. In a hotel, you contact the front desk with problems or when checking in and out at reception. Not with Airbnb. The platform allows users to find and make reservations for short-term lodging while the host or landlord manages their listings all via the Airbnb app or website. It’s still personal but in a far different way than you’d find at a hotel.

Airbnb understands both of its customer segments and provides them with value. It is a multi-sided platform serving both guests and hosts and, as a multi-sided platform, it can only be of value to one group if the other group exists.

Airbnb’s Value Proposition

A value proposition is the bundle of products and/or services that create value for a specific customer segment. Businesses must ask themselves, “How will we create value for our customers and what makes us different?”

The answer to this question is the Value Proposition and it’s why customers turn to a specific business over its competitors.

Value Propositions must link to a benefit – something the customer segments care about. So in the case of Airbnb, benefits include:

  • Booking rooms with locals as opposed to chain hotels
  • Staying at unique places when traveling
  • Customizing searches for accommodations in all different ways that meet distinct needs
  • Monetizing space and/or properties
  • Earning extra money
  • Finding reliable and safe accommodations based on customers ratings

In a nutshell, Airbnb’s Value Proposition is being a trusted community marketplace for people to list, discover, and book unique accommodations globally.

It’s also important to note that Airbnb is a marketplace and its core value proposition is information-based. What does this mean? Airbnb does not own properties or have any interest in real estate. The entire business model is predicated on bringing people together and providing an online marketplace for the exchange of goods which, in this case, is short-term rental space, experiences, and adventures. There are several revenue streams for the company that are all connected to the exchanges occurring in its marketplace.

Airbnb’s Operations

But what about operating? How does the company address operation in the Airbnb business model?

Airbnb included scalability in everything it did, right from the beginning. From working with regulators to the development of its app to its advertising and marketing, Airbnb made sure its processes made for easy and efficient entry into new markets. Traditional brick and mortar establishments like hotels don’t have this option.

The way Airbnb connects all of the opportunities it has created is to use algorithms to match value propositions with the right people. It has created a cycle that benefits its market and the company’s bottom line.

And when it comes to the Airbnb work environment?

Airbnb relies on millions of hosts and guests worldwide to keep it churning but there are also in-house employees. Far fewer than you’d find at a hotel but they do exist and are necessary to keep the company going. Airbnb employees work in open and collaborative environments and are empowered to make decisions when it comes to assisting customers. “Upper brass” gives employees the ability to work together and come up with solutions to problems when it can improve the customer experience.

The company doesn’t operate or have the same overhead expenses as hotels and other similar competitors in the hospitality industry. But this doesn’t mean it isn’t spending money and making investments back into the business.

Airbnb focuses its investments on:

  • Technologies, including payment processing, platform maintenance, and development
  • Human Capital, including employees and freelance support
  • Marketing and sponsorships, in which it invested more than $23 million in the United States in 2015 alone

What does this and everything else about the Airbnb business model tell us and help us predict what could be in the future for the company?

Airbnb has embraced the idea of an exponential business model whole-heartedly. It’s focused on creating value. The company understands how all of the elements within the model work together. Airbnb is always focused on innovation to help it meets its goals of staying connected and growing even more.

business model airbnb pdf

✔ How to avoid the BIG mistakes that most hosts make

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A note from Google and Alphabet CEO Sundar Pichai:

Last week, we rolled out our most capable model, Gemini 1.0 Ultra, and took a significant step forward in making Google products more helpful, starting with Gemini Advanced . Today, developers and Cloud customers can begin building with 1.0 Ultra too — with our Gemini API in AI Studio and in Vertex AI .

Our teams continue pushing the frontiers of our latest models with safety at the core. They are making rapid progress. In fact, we’re ready to introduce the next generation: Gemini 1.5. It shows dramatic improvements across a number of dimensions and 1.5 Pro achieves comparable quality to 1.0 Ultra, while using less compute.

This new generation also delivers a breakthrough in long-context understanding. We’ve been able to significantly increase the amount of information our models can process — running up to 1 million tokens consistently, achieving the longest context window of any large-scale foundation model yet.

Longer context windows show us the promise of what is possible. They will enable entirely new capabilities and help developers build much more useful models and applications. We’re excited to offer a limited preview of this experimental feature to developers and enterprise customers. Demis shares more on capabilities, safety and availability below.

Introducing Gemini 1.5

By Demis Hassabis, CEO of Google DeepMind, on behalf of the Gemini team

This is an exciting time for AI. New advances in the field have the potential to make AI more helpful for billions of people over the coming years. Since introducing Gemini 1.0 , we’ve been testing, refining and enhancing its capabilities.

Today, we’re announcing our next-generation model: Gemini 1.5.

Gemini 1.5 delivers dramatically enhanced performance. It represents a step change in our approach, building upon research and engineering innovations across nearly every part of our foundation model development and infrastructure. This includes making Gemini 1.5 more efficient to train and serve, with a new Mixture-of-Experts (MoE) architecture.

The first Gemini 1.5 model we’re releasing for early testing is Gemini 1.5 Pro. It’s a mid-size multimodal model, optimized for scaling across a wide-range of tasks, and performs at a similar level to 1.0 Ultra , our largest model to date. It also introduces a breakthrough experimental feature in long-context understanding.

Gemini 1.5 Pro comes with a standard 128,000 token context window. But starting today, a limited group of developers and enterprise customers can try it with a context window of up to 1 million tokens via AI Studio and Vertex AI in private preview.

As we roll out the full 1 million token context window, we’re actively working on optimizations to improve latency, reduce computational requirements and enhance the user experience. We’re excited for people to try this breakthrough capability, and we share more details on future availability below.

These continued advances in our next-generation models will open up new possibilities for people, developers and enterprises to create, discover and build using AI.

Context lengths of leading foundation models

Highly efficient architecture

Gemini 1.5 is built upon our leading research on Transformer and MoE architecture. While a traditional Transformer functions as one large neural network, MoE models are divided into smaller "expert” neural networks.

Depending on the type of input given, MoE models learn to selectively activate only the most relevant expert pathways in its neural network. This specialization massively enhances the model’s efficiency. Google has been an early adopter and pioneer of the MoE technique for deep learning through research such as Sparsely-Gated MoE , GShard-Transformer , Switch-Transformer, M4 and more.

Our latest innovations in model architecture allow Gemini 1.5 to learn complex tasks more quickly and maintain quality, while being more efficient to train and serve. These efficiencies are helping our teams iterate, train and deliver more advanced versions of Gemini faster than ever before, and we’re working on further optimizations.

Greater context, more helpful capabilities

An AI model’s “context window” is made up of tokens, which are the building blocks used for processing information. Tokens can be entire parts or subsections of words, images, videos, audio or code. The bigger a model’s context window, the more information it can take in and process in a given prompt — making its output more consistent, relevant and useful.

Through a series of machine learning innovations, we’ve increased 1.5 Pro’s context window capacity far beyond the original 32,000 tokens for Gemini 1.0. We can now run up to 1 million tokens in production.

This means 1.5 Pro can process vast amounts of information in one go — including 1 hour of video, 11 hours of audio, codebases with over 30,000 lines of code or over 700,000 words. In our research, we’ve also successfully tested up to 10 million tokens.

Complex reasoning about vast amounts of information

1.5 Pro can seamlessly analyze, classify and summarize large amounts of content within a given prompt. For example, when given the 402-page transcripts from Apollo 11’s mission to the moon, it can reason about conversations, events and details found across the document.

Reasoning across a 402-page transcript: Gemini 1.5 Pro Demo

Gemini 1.5 Pro can understand, reason about and identify curious details in the 402-page transcripts from Apollo 11’s mission to the moon.

Better understanding and reasoning across modalities

1.5 Pro can perform highly-sophisticated understanding and reasoning tasks for different modalities, including video. For instance, when given a 44-minute silent Buster Keaton movie , the model can accurately analyze various plot points and events, and even reason about small details in the movie that could easily be missed.

Multimodal prompting with a 44-minute movie: Gemini 1.5 Pro Demo

Gemini 1.5 Pro can identify a scene in a 44-minute silent Buster Keaton movie when given a simple line drawing as reference material for a real-life object.

Relevant problem-solving with longer blocks of code

1.5 Pro can perform more relevant problem-solving tasks across longer blocks of code. When given a prompt with more than 100,000 lines of code, it can better reason across examples, suggest helpful modifications and give explanations about how different parts of the code works.

Problem solving across 100,633 lines of code | Gemini 1.5 Pro Demo

Gemini 1.5 Pro can reason across 100,000 lines of code giving helpful solutions, modifications and explanations.

Enhanced performance

When tested on a comprehensive panel of text, code, image, audio and video evaluations, 1.5 Pro outperforms 1.0 Pro on 87% of the benchmarks used for developing our large language models (LLMs). And when compared to 1.0 Ultra on the same benchmarks, it performs at a broadly similar level.

Gemini 1.5 Pro maintains high levels of performance even as its context window increases. In the Needle In A Haystack (NIAH) evaluation, where a small piece of text containing a particular fact or statement is purposely placed within a long block of text, 1.5 Pro found the embedded text 99% of the time, in blocks of data as long as 1 million tokens.

Gemini 1.5 Pro also shows impressive “in-context learning” skills, meaning that it can learn a new skill from information given in a long prompt, without needing additional fine-tuning. We tested this skill on the Machine Translation from One Book (MTOB) benchmark, which shows how well the model learns from information it’s never seen before. When given a grammar manual for Kalamang , a language with fewer than 200 speakers worldwide, the model learns to translate English to Kalamang at a similar level to a person learning from the same content.

As 1.5 Pro’s long context window is the first of its kind among large-scale models, we’re continuously developing new evaluations and benchmarks for testing its novel capabilities.

For more details, see our Gemini 1.5 Pro technical report .

Extensive ethics and safety testing

In line with our AI Principles and robust safety policies, we’re ensuring our models undergo extensive ethics and safety tests. We then integrate these research learnings into our governance processes and model development and evaluations to continuously improve our AI systems.

Since introducing 1.0 Ultra in December, our teams have continued refining the model, making it safer for a wider release. We’ve also conducted novel research on safety risks and developed red-teaming techniques to test for a range of potential harms.

In advance of releasing 1.5 Pro, we've taken the same approach to responsible deployment as we did for our Gemini 1.0 models, conducting extensive evaluations across areas including content safety and representational harms, and will continue to expand this testing. Beyond this, we’re developing further tests that account for the novel long-context capabilities of 1.5 Pro.

Build and experiment with Gemini models

We’re committed to bringing each new generation of Gemini models to billions of people, developers and enterprises around the world responsibly.

Starting today, we’re offering a limited preview of 1.5 Pro to developers and enterprise customers via AI Studio and Vertex AI . Read more about this on our Google for Developers blog and Google Cloud blog .

We’ll introduce 1.5 Pro with a standard 128,000 token context window when the model is ready for a wider release. Coming soon, we plan to introduce pricing tiers that start at the standard 128,000 context window and scale up to 1 million tokens, as we improve the model.

Early testers can try the 1 million token context window at no cost during the testing period, though they should expect longer latency times with this experimental feature. Significant improvements in speed are also on the horizon.

Developers interested in testing 1.5 Pro can sign up now in AI Studio, while enterprise customers can reach out to their Vertex AI account team.

Learn more about Gemini’s capabilities and see how it works .

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Say What? Chat With RTX Brings Custom Chatbot to NVIDIA RTX AI PCs

Chatbots are used by millions of people around the world every day, powered by NVIDIA GPU-based cloud servers. Now, these groundbreaking tools are coming to Windows PCs powered by NVIDIA RTX for local, fast, custom generative AI .

Chat with RTX , now free to download , is a tech demo that lets users personalize a chatbot with their own content, accelerated by a local NVIDIA GeForce RTX 30 Series GPU or higher with at least 8GB of video random access memory, or VRAM.

Ask Me Anything

Chat with RTX uses retrieval-augmented generation (RAG), NVIDIA TensorRT-LLM software and NVIDIA RTX acceleration to bring generative AI capabilities to local, GeForce-powered Windows PCs. Users can quickly, easily connect local files on a PC as a dataset to an open-source large language model like Mistral or Llama 2, enabling queries for quick, contextually relevant answers.

Rather than searching through notes or saved content, users can simply type queries. For example, one could ask, “What was the restaurant my partner recommended while in Las Vegas?” and Chat with RTX will scan local files the user points it to and provide the answer with context.

The tool supports various file formats, including .txt, .pdf, .doc/.docx and .xml. Point the application at the folder containing these files, and the tool will load them into its library in just seconds.

Users can also include information from YouTube videos and playlists. Adding a video URL to Chat with RTX allows users to integrate this knowledge into their chatbot for contextual queries. For example, ask for travel recommendations based on content from favorite influencer videos, or get quick tutorials and how-tos based on top educational resources.

business model airbnb pdf

Since Chat with RTX runs locally on Windows RTX PCs and workstations, the provided results are fast — and the user’s data stays on the device. Rather than relying on cloud-based LLM services, Chat with RTX lets users process sensitive data on a local PC without the need to share it with a third party or have an internet connection.

In addition to a GeForce RTX 30 Series GPU or higher with a minimum 8GB of VRAM, Chat with RTX requires Windows 10 or 11, and the latest NVIDIA GPU drivers.

Editor’s note: We have identified an issue in Chat with RTX that causes installation to fail when the user selects a different installation directory. This will be fixed in a future release. For the time being, users should use the default installation directory (“C:\Users\<username>\AppData\Local\NVIDIA\ChatWithRTX”).

Develop LLM-Based Applications With RTX

Chat with RTX shows the potential of accelerating LLMs with RTX GPUs. The app is built from the TensorRT-LLM RAG developer reference project, available on GitHub . Developers can use the reference project to develop and deploy their own RAG-based applications for RTX, accelerated by TensorRT-LLM. Learn more about building LLM-based applications .

Enter a generative AI-powered Windows app or plug-in to the NVIDIA Generative AI on NVIDIA RTX developer contest, running through Friday, Feb. 23, for a chance to win prizes such as a GeForce RTX 4090 GPU, a full, in-person conference pass to NVIDIA GTC and more.

Learn more about Chat with RTX .

NVIDIA websites use cookies to deliver and improve the website experience. See our cookie policy for further details on how we use cookies and how to change your cookie settings.

IMAGES

  1. Airbnb Business Plan PDF Template

    business model airbnb pdf

  2. Airbnb Business Model

    business model airbnb pdf

  3. Airbnb Business Model

    business model airbnb pdf

  4. Airbnb Business Model

    business model airbnb pdf

  5. Airbnb Business Model

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  6. Airbnb-business-model-canvas.pdf

    business model airbnb pdf

VIDEO

  1. REQUIREMENTS FOR A SUCCESSFUL AIRBNB INDUSTRY || BUSINESS PLUS EPISODE 51

  2. World's first Airbnb designed for baseball team. Sleeps 40 ⚾️

  3. How to Start an Airbnb Business

  4. Airbnb Business Mistakes

  5. Airbnb Arbitrage Is Dead

  6. Sei ein guter Gastgeber!

COMMENTS

  1. PDF Airbnb

    Business Model By allowing free membership and free access to list properties, Airbnb quickly overcame the initial mobilization hurdle and attracted a dedicated following of guests and hosts.

  2. The evolution of Airbnb's business model

    The business model perspective provides insights into how Airbnb's context and business model shape one another. In this chapter we explore in detail the evolution of Airbnb's business model across three distinct development periods.

  3. Airbnb Business Model Canvas

    The Airbnb business model is a multisided platform that connects travelers with hosts from all corners of the planet. By commoditizing trust between property owners and short-term renters, Airbnb has become one of the most recognized companies in the hospitality industry. If you like to travel, you've certainly heard of or used Airbnb's services.

  4. Airbnb: Business Model Development and Future Challenges

    In 2007, the founders of Airbnb were looking to solve a problem and ended up transforming their idea into a $10 billion company. What started as a quick website to advertise an overnight stay on their apartment airbeds along with breakfast in the morning eventually grew into an online accommodation booking business that spanned the world. Airbnb used its business model to carve out an ...

  5. (PDF) Airbnb's Business Model

    Airbnb's Business Model December 2017 In book: Peer-to-Peer Accommodation Networks: Pushing the boundaries (pp.27-38) Chapter: 3 Publisher: Goodfellow Publishers Editors: Sara Dolnicar Authors:...

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    contemporary hotel business and amplifying its influence on the mainstream. This article aims to evaluate Airbnb in the light of business model innovation and disruptive innovation theory. Themes will be discussed and presented on how to enhance innovative business strategies based on the unique organisational framework holacracy, which

  7. Airbnb, Inc

    Airbnb, Inc By: Frank T. Rothaermel The case is set in 2022, and the protagonist is Brian Chesky, co-founder and CEO of Airbnb, Inc. - an online rental platform. As the Covid-19 pandemic took hold in the U.S. in 2020, Airbnb faced an… Length: 25 page (s) Publication Date: Feb 4, 2023 Discipline: Strategy Product #: MH0072-PDF-ENG What's included:

  8. (PDF) Sharing Economy: An Analysis of Airbnb Business Model and the

    To summarize Airbnb's business model, Table 2 below illustrates the important elements that play roles in Airbnb using Osterwalder's business model canvas. Table 2. Airbnb Business Model Canvas 2.7.2 Airbnb Business Model Airbnb streamlines its operations by acting as an intermediary for host and guest to interact and arrange a short-term ...

  9. The evolution of Airbnb's business model

    A summary of Airbnb's business model is provided in the figure. The model outlined here represents the core of its sharing business model -not the experiments with different extensions...

  10. The evolution of Airbnb's business model

    CHAPTER 2 - The evolution of Airbnb's business model. pdf (733.66 kB) File info This item contains files with download restrictions. Fullscreen. The evolution of Airbnb's business model. Cite Download (733.66 kB)Share Embed. book. posted on 2021-04-20, 22:16 authored by Stephan Reinhold, Sara Dolnicar.

  11. PDF Airbnb-Business-Model-Canvas

    THE BUSINESS MODEL ANALYST - Business Model Canvas Airbnb Website Make money renting idle rooms/properties or experiences in a easy and secure way Hosts Technology Platform Airbnb Platform Platform Development ... Airbnb-Business-Model-Canvas Created Date: 10/22/2020 6:45:14 PM ...

  12. (PDF) The Future of Shared Economy: A Case Study on Airbnb

    The business model that provided a handful of earning opportunities to both the hosts and the business is no more in existence. However, Airbnb adopted a series of measures to protect the...

  13. How to Write Up an Airbnb Business Plan: Free PDF Template

    Click here. Contents show First, what is an Airbnb business plan? An Airbnb business plan is a living document that outlines the direction you want your business to go in and strategies for getting it there. It will include details such as your target market and customers, financial plan, and goals and milestones.

  14. PDF Airbnb: A Disruptive Innovation-based Business

    With the rise of the sharing economy and a platform grounded on a disruptive innovation-based Customer-to-Customer (C2C) business model, Airbnb has become a strong competitor for the lodging indus-try. Since its business expanded throughout the world, there are now over two million house, room, and apartment listings on Airbnb.com.

  15. Airbnb Business Plan + PDF Template (2023 ver.)

    1. What Is an Airbnb Business Plan? An Airbnb business plan is a vital docume­nt that outlines the strategic approach and obje­ctives of a business aiming to gene­rate revenue­ through the Airbnb platform. The plan encompasse­s a comprehensive strategy, goals, and objectives for successfully utilizing Airbnb arbitrage­.

  16. PDF case study Airbnb: A Disruptive Innovation-based Business

    a business entity, a typical hotel organization may be better equipped to manage various regulations and associated legal issues than Airbnb. Given Airbnb's unique and relatively new business model, legisla-tors have had a hard time introducing timely regulations to manage its immense growth and adverse impact on communities (Peterson, 2016).

  17. PDF Sharing Economy: An Analysis of Airbnb Business Model and the Factors

    1. INTRODUCTION In recent years, sharing economy has gained attention among traditional firms and academic researchers in which they have provided various definitions, explanations and assessment on its economic, social and environmental impact as it begun to put different industries at high risk.

  18. (PDF) Airbnb

    Airbnb - New Business Model in the Lodging Industry DOI: Authors: Minju Kim Lan Nguyen Tran Pacific international Hotel Management School Michael Potroz Pacific international Hotel Management...

  19. Airbnb: Business Model, SWOT Analysis, and Competitors 2023

    An in-depth explanation of the Airbnb Business Model Canvas, highlighting its key components and how they contribute to the company's success. The major competitors of Airbnb and the challenges they pose to the company's market share. A comprehensive SWOT analysis of Airbnb, examining its strengths, weaknesses, opportunities, and threats in the ...

  20. Airbnb Business Model in a Nutshell

    The Airbnb business model is designed for a mass market that it connects in a one-of-a-kind way. Airbnb has created a community and within that community, people are working to make the company money. Hosts, travelers, renters, guests, property managers, and experience and adventure providers are all a part of the ever-growing Airbnb community ...

  21. Airbnb Business Model Canvas PDF

    Airbnb-business-model-canvas.pdf - Free download as PDF File (.pdf), Text File (.txt) or read online for free. Scribd is the world's largest social reading and publishing site.

  22. Have Text Will Travel

    Business document from Indian School of Business, 2 pages, BA 800 - Marketing Management Have Text, Will Travel: Can Airbnb Use Review Text Data to Optimize Profits? Airbnb, founded in 2008 and based in San Francisco, California, is an online platform connecting owners of homes, condos, apartments, villas, and ev

  23. Introducing Gemini 1.5, Google's next-generation AI model

    A note from Google and Alphabet CEO Sundar Pichai: Last week, we rolled out our most capable model, Gemini 1.0 Ultra, and took a significant step forward in making Google products more helpful, starting with Gemini Advanced.Today, developers and Cloud customers can begin building with 1.0 Ultra too — with our Gemini API in AI Studio and in Vertex AI.

  24. (PDF) Airbnb disruptive business model innovation: Assessing the impact

    This paper is an attempt to highlight how business model innovation can be a disruptive force in any industry which can shake the roots of a well-established firm by using a case study on Airbnb ...

  25. PDF Hyper-disruption demands constant reinvention

    business-model disruption driven by technology risk. 1. Employees across all sectors now use generative AI tools such as ChatGPT to help carry out day-to-day tasks. It has huge benefits, but it also creates major risks. Executives are often completely unaware of how these tools are being used. For example,

  26. Chat with RTX Now Free to Download

    Chatbots are used by millions of people around the world every day, powered by NVIDIA GPU-based cloud servers. Now, these groundbreaking tools are coming to Windows PCs powered by NVIDIA RTX for local, fast, custom generative AI.. Chat with RTX, now free to download, is a tech demo that lets users personalize a chatbot with their own content, accelerated by a local NVIDIA GeForce RTX 30 Series ...

  27. (PDF) Airbnb: The future of networked hospitality businesses

    ... Among them, the diversification of hosting supply, namely the change in the traditional accommodation system based on hotels and B&Bs [16], is recognised as the main factor together with the...