You might be wondering how does Airbnb make money even though they do not have that much to do but simply connect people looking to rent out their homes or spare spaces. Well, the answer to this is not that simple and there is more to the story than what you think about Airbnb.
Let us not waste any time and get right into understanding all the specifics of it.
Airbnb Brief Overview
What is Airbnb?
It is like this awesome online hub where folks who have a spare room or a whole place can hook up with travellers looking for a cozy spot to crash. Founded back in 2008 by Brian Chesky, Nathan Blecharczyk, and Joe Gebba, these guys really nailed it. You just list your digs, and everything is set!
Furthermore, guests can scroll through and find their dream stay. Plus, Airbnb’s got your back with payments and support and the coolest part is that it is often cheaper and way more unique than your run-of-the-mill hotels. They rake in cash by charging a bit of a fee to both hosts and guests for each booking. And they are everywhere with over 7 million listings across 100,000 cities in 220 countries. They offer Experiences and local adventures hosted by cool locals, and they even cater to business travellers with Airbnb for Work.
How Does Airbnb Make Money?
They make their moolah mainly through service fees paid by both hosts and guests. Now, hosts dish out a service fee, which falls between 14% to 20% of the booking amount. Guests, on the other hand, fork out around 13% as a service fee, on top of their booking cost.
Additionally, Airbnb also has this thing called a host-only fee or a shared host & guest fee. In the shared fee setup, hosts shoulder a charge of 3% or higher per booking.
All these fees are what keep Airbnb’s wheels turning. They help cover the costs of running the show, like keeping the phone lines open for support and making sure everyone’s booking experience is smooth sailing.
Types of Properties on Airbnb
Types of Properties
You have got a bunch of options to choose from, like houses apartments, condos, private rooms, and shared rooms.
Firstly, houses are perfect if you want everything to yourself, all the amenities, all the space. Great for families or groups who want their own little world while they are away.
Then there are apartments and condos. These are like your own little slice of living space in a bigger building. You get some privacy but you are still connected to the local scene, which can be pretty cool.
Private rooms are next up and in them, you have your own space, but you might be sharing some areas with your host or other guests. It is a good balance if you like your privacy but do not mind a bit of interaction.
And finally comes the shared rooms. These are for the rare butterflies who are exceptional. You are sharing a room with fellow travellers, which can be a lot of fun if you are a person in a good mood and want to cut down on some expenses. Moreover, you may also be able to make some lifelong friends during the tours.
What is the Fee? How Does Airbnb Make Money?
Host-Only Fee Structure
When you host through this setup, the whole feel gets taken out of your payout. It usually falls between 14% to 16%. If you are rocking a Super Strict cancellation policy, you might end up paying a bit more. But if your guests are booking for longer stretches, like 28 nights or more, the fee might ease up a bit.
Now, this fee is pretty much non-negotiable for your typical hospitality setups, you know, hotels, serviced apartments, that sort of thing. And even if you are a host hooked up with fancy software, unless most of your listings are in certain countries like the USA, Canada, Mexico, Bahamas, Argentina, Taiwan, or Uruguay, you are still footing the bill.
Split Fee Structure
So when you are hosting, you usually kick in a 3% fee. But if you are listing in Italy, that number might nudge up a bit. It is like a little chunk taken from the total booking cost, including the nightly rate and any extra charges you throw in, except for the guest service fee and taxes.
Now, guests, have a service fee. Usually, it is hanging out under 14.2% of the total booking cost. But if they are booking in a different currency than what you are using, there might be a tad more added on, maxing out at around 16.5% of the booking subtotal.
Benefits of Using Airbnb: How Does Airbnb Make Money?
Quite Easy For The Host
When you rent a whole house, you will use it yourself whenever you need to, without the hassle of the tenant kicking out or the furniture rearrangement at the last minute. It is as if you are having your cake and eating it again, especially if your property usually remains unused during some parts of the year.
Maintenance of the Property
When you rent out your whole home, it is like having a built-in caretaker for your place. You can keep a keen eye on its condition and handle any maintenance needs that pop up more easily compared to having long-term tenants. Plus, the bonus is, that guests foot the bill for a professional cleaning at the end of their stay. So, it is a win-win for keeping your place in tip-top shape without the hassle.
Less Wear And Tear
Renting out a whole house might mean less wear and tear compared to when you are just renting out a room or sharing the space. It is when guests have the whole place to themselves, they tend to treat it carefully.
Bottom Line (How Does Airbnb Make Money?)
In conclusion, we would like to say that there are not one but a few ways how does Airbnb make money, and we hope all the aspects of that are covered here in the blog and there is nothing more left to say.
That’s it for now. Thanks for reading!
