Airbnb as one of the largest accommodation providers which establish an online platform between travelers and local house owners to rent houses. It was firstly founded in 2008 and then grew rapidly which now worth $26 billion this year (Yale 2018). A well-designed business and revenue model help Airbnb to maximize the profit and expand wider markets internationally.
Business model:
- Customer segment
Airbnb divides its segment into two catalogues which are travelers and the hosts, both of them are able to complete a deal through the online booking system. Travelers are the people who are interested in exploring new things and show their acceptance of sharing living space with strangers; Hosts are willing to rent their apartment to make money. In addition, it is reported that experience providers can also be a customer segment, which refers to people are paid to share their living experience with fine photographs of the house (Sherwood 2019).
- Value proposition
Airbnb enables a new way of renting without occupying any properties, which helps travelers to find suitable living space with an affordable price than hotels. For the hosts, they have chances to meet people from different countries and earn money by sharing available living space. Choices are made between two parties, the hosts have rights to choose tenants as travelers do which bring fairness and satisfaction of the process (Nath 2019). Airbnb creates value for its customers by providing a chance to understand various cultures from different people.
- Key partners
The main partners of Airbnb can be investors and regulators who all want to gain profit from the operating of the firm.
- Core activities
Airbnb is involved in various business activities which include regulation and maintenance as well as marketing and promotion activities (Sherwood 2019). It regulates the business by setting a review system to establish trust in the community and prevent frauds. Also, Airbnb may deal with concerns from customers which need it to adjust its strategy or to balance the price of the hosts in order to get a positive response in the future. Moreover, marketing activities such as advertisement, promotional offers, word of mouth and posts from social media can be mentioned.
- Channel
Customers can either use its app to make a booking or log in to the official website to manage their accommodation.
Revenue model- So how Airbnb generates revenue?
Obviously, Airbnb earns profit from its two main segments which are the hosts and the travelers. It is stated that Airbnb will charge travelers 10% to 12% of the booking fee and the hosts need to pay 3% for every successful booking (Nath 2019). Furthermore, Airbnb charges a valued-added tax or a service tax based on the political requirement of the market in different countries (Nath 2019).
To conclude, Airbnb use a creative approach to operating business which is beneficial for multi-parties; however, customers retention and safety concerns are still the problems it should be aware of.
References
Chaffey, D. & Ellis-Chadwick, F. (2019). Digital Marketing. England: Pearson.
Nath, T. (2019). How Airbnb Makes Money. Retrieved from Investopedia website: https://www.investopedia.com/articles/investing/112414/how-airbnb-makes-money.asp
Sherwood, H. (2019, May 5). How Airbnb took over the world. The guardian. Retrieved from: https://www.theguardian.com/technology/2019/may/05/airbnb-homelessness-renting-housing-accommodation-social-policy-cities-travel-leisure
Yale, A. (2018). 10 Years After Airbnb, Real Estate Developers See The Money In Home-sharing. Retrieved from Forbes website: https://www.forbes.com/sites/alyyale/2018/10/17/multi-family-developers-are-leveraging-the-short-term-rental-fad-heres-how/#2007bd5338e0
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Airbnb!!!!!!!!! everyone loves it, ty for sharing its business &revenue model
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ypast master
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You are past master in essay:)
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Very powerful job！！ It clearly illustrates Airbnb’s business and revenue model.
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Thanks for sharing the exact data of the profit!!!!
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Your blog gave me a lot of inspiration!!
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