When it comes to having a holiday with friends or family, of course, everyone wants to get the best and cheapest accommodation as possible as they could get. But don’t you guys realised that it used to be really difficult to find accommodation back in 15 years ago, even if the Internet already exists? It because there was no application or even website that allow us to find a place to stay. The only thing that you can do was only make a booking through a phone call. But it was so inconvenient, you couldn’t even look at the pictures of the place that you were going to stay at, so you’ll never know how it looks like if you never came to that hotel before. The only thing that you can rely on was word-of-mouth from friends and family.
But then, more and more technology came such as websites to booked hotels and especially Airbnb. Airbnb is an American company based in San Francisco which was created in 2008. I believe most of us know this company because it is different from other businesses. Airbnb is not like Trivago or Agoda which use to booked hotel rooms. Airbnb is an economy sharing business model which allow the owners to rent their houses or apartments to the guests. According to DMR (2017), the coverage of Airbnb has reached 65,000 cities around the world with 640,000 hosts.
Source: DMR
The reason why I think Airbnb is an interesting topic for blogging because when I travelled to Gold Coast with my friends on Easter break, we used Airbnb to find an accommodation. It was very easy to use just like an app to book hotel rooms. But then after we finished our short holiday, I personally was thinking how does Airbnb make money?
This is what I found:
- The primary source of Airbnb’s revenue originates from service fees that they get from guests’ reservations. It depends on the size of the reservation, guests are required to pay a 6-12% non-refundable administration fee. The less expensive reservation will make the service fees higher (Unicornomy, 2016).
- They also charged the hosts with 3% fee to cover the handling of guests’ instalments. When a reservation is successfully booked, guests pay the administration fee unless the host cancels the listing. In this case, if the reservation is modified, Airbnb will adjust administration fee to accommodate users (Unicornomy, 2016).
Can you imagine how much they will earn money from charging the guests 6-12% and the hosts 3% with the average number of nightly Airbnb stays is 500,000? There is also one more thing that interested me, they don’t make money from any ads (pop-up) appear on their website.
Please share your thoughts or your experiences (if any) with Airbnb. Why would you use it? Or why wouldn’t use it?
I think airbnb is a great site and is extremely useful. Personally I am yet to use it however, when trying to plan holidays away that is the first thing I’m checking out. All my friends are going overseas and are also using it for the majority of their trip! I had also been wondering how airbnb made money, and am interested in the way they are creating revenue, it seems like a very smart business plan! I’m just wondering why they don’t make revenue from the ads on their website? And therefore what is the purpose of having the ads there?
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Yeah, most of the people that I know usually use Airbnb too. But I don’t know why they don’t make money from ads on their website, while the majority of big companies such as Facebook have their main revenue from advertising. Maybe it’s different to Airbnb because they primary income is from charging customers and hosts with service fees.
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