How Airbnb Revolutionised Hospitality: A Case Study for Entrepreneurs

Dear readers

Imagine this: You’re planning a trip, and instead of staying in a boring, overpriced hotel, you find a cozy apartment with a view that feels like home—at half the price. Sounds good, right? That’s the magic Airbnb has brought to the world.

Today, I’m diving deep into Airbnb’s journey, its innovative business model, how it makes money, and the entrepreneurial lessons it offers. So grab a cup of coffee, and let’s explore what makes Airbnb tick.

How It All Started

Back in 2007, Brian Chesky and Joe Gebbia were struggling to pay rent in San Francisco. To make some extra cash, they decided to rent out air mattresses in their apartment to attendees of a local design conference. They called it “Air Bed and Breakfast.”

Soon, Nathan Blecharczyk joined them, and together, the trio launched a website that allowed people to list their spaces for short-term rentals. The idea seemed simple, but it was revolutionary: turning underutilized spaces into money-making assets.

Fast forward to today, Airbnb is a multi-billion-dollar company operating in over 220 countries. But how did it get there? Let’s break it down.

Airbnb’s Business Model

At its core, Airbnb operates as a platform business model. It connects two groups of people:

1. Hosts who want to rent out their properties.

2. Guests who need a place to stay.

Airbnb doesn’t own any properties—it’s simply the middleman. And that’s where its genius lies. By creating a platform, Airbnb avoids the massive costs associated with owning and maintaining properties.

Here’s how it works:

1. Listing: Hosts list their spaces on Airbnb’s platform, providing details like price, photos, and availability.

2. Booking: Guests browse the listings, choose one that fits their needs, and book it.

3. Transaction: Airbnb facilitates the booking and payment process, ensuring security for both hosts and guests.

How Airbnb Makes Money

Airbnb’s revenue comes primarily from service fees:

1. Host Fee: Airbnb charges hosts a 3% fee for every booking. This covers payment processing and operational costs.

2. Guest Fee: Guests pay a service fee ranging from 5% to 15% of the booking subtotal.

For example, if a guest books a $1,000 stay, Airbnb might take $30 from the host and $100 from the guest, earning $130 in total. Multiply this by millions of bookings, and you see why Airbnb is so profitable.

In addition to these fees, Airbnb has ventured into other revenue streams, such as:

• Experiences: Guests can book unique activities hosted by locals, like cooking classes or guided tours.

• Airbnb for Work: A service tailored for business traveler’s.

• Advertising: Airbnb promotes certain listings for a fee, giving them more visibility.

How Airbnb Saved Its Own Butt

Oh, the drama! When Airbnb started, nobody cared. Hosts didn’t list, and guests didn’t book. So, what did the founders do? They grabbed cameras, went door-to-door, and took professional photos of host homes. Imagine Brian Chesky awkwardly staging someone’s messy living room for a photoshoot. That’s hustle.

Later, when no one was booking, they listed on Craigslist. Yup, they borrowed traffic from a classified ads website. Moral of the story? Never be too proud to hustle.

What Makes Airbnb Unique?

Airbnb isn’t just a booking platform—it’s an experience-driven brand. Here’s what sets it apart:

1. Personalised Stays: Unlike cookie-cutter hotel rooms, Airbnb offers diverse accommodations—from treehouses to castles.

2. Community Trust: Airbnb’s review system builds trust. Both hosts and guests leave reviews, ensuring accountability.

3. Affordability: Traveler’s often find cheaper options compared to hotels, especially for longer stays.

4. Local Flavour: Staying in a local neighbourhood gives guests a more authentic travel experience.

Challenges Airbnb Faced