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How Airbnb Makes Money?

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 Airbnb, Inc. is an American holiday rental online marketplace organization based in San Francisco, California, United States. Airbnb gives proper arrangements for lodging, primarily homestays, or tourism experiences.

The company no longer hosts events nor doest it owns any real estate listings. Currently, the company acts as a broker which gets a commission on each booking.

The founder created the company after they got an air mattress for their room, effectively turning their condo into a bed and breakfast, to offset the excessive price of rent in San Francisco. Airbnb is a shortened model of its authentic name, AirBedandBreakfast.com.

On August 19, 2020, Airbnb introduced that it had filed for an initial public offering. The organization has been privately valued at $31billion.

Airbnb raised $3.5 billion on its IPO in December 2020 at a valuation of about $47.3 billion at an IPO price of $68 per share.

Airbnb at a glance:

  • A platform for individuals to rent their residence for travelers.
  • Founder: Brian Joseph Chesky
  • Ticker Symbol: ABNB
  • Currently, valued at more than $47 billion(2020).

Index:

Founder

Brian Joseph Chesky is an American businessman and commercial designer. He is the co-founder and CEO of Airbnb. He has a younger sister, Allison. As a child, Chesky showed his interest in art, drawing replicas of paintings, and design, redesigning footwear and toys. He later became inquisitive about landscape structure and design. Chesky during college met Joe Gebbia, who is the co-founders of Airbnb. In October 2007, the Industrial Designers Society of America became a web website hosting a convention in SanFrancisco and all motel rooms had been booked. The pair should not manage to pay for hire for the month and determined to hire their condominium for money. They bought 3air mattresses and advertised this concept as “Airbed and Breakfast”, with3 visitors staying the primary night.

What is the Airbnb business model?

Airbnb’s business model is an aggregator model much like Uber and OYO. They don’t have like lodges including Hilton and Marriott. Just like Grubhub’s enterprise version, Airbnb additionally runs with the assist of a web platform that connects every aspect within the model. Airbnb’s largest assets are the people and the hosts who’re the important things additives withinside the Airbnb process. Unlike huge resorts, Airbnb has a minimal price and doesn’t want big capital.

Airbnb acts as a platform for hosts and tourists. Hosts can place up their assets for life and if someone desires to live there, the hosts get a lease in exchange. Those who live at Airbnb get a very specific revel in with the aid of staying near the locals.

Airbnb has photographers who take high definition photographs of the homes which lets the travelers choose from the actual searching locations and make the proper choice.

Airbnb’s major source of revenue is from service fees from hosts and guests. Airbnb has more than $7 million listings in more than 200 countries around the world. The company also provide services like:

  • Airbnb Experiences: Renters can enjoy indulging in activities like cooking and tours.
  • Airbnb Plus: Airbnb Plus home is verified for quality and design to ensure they have all of the essentials to make you feel at home. These homes are in-person verified for quality and design.
  • Airbnb Luxe: It offers the world’s most extraordinary homes with the highest standard of service.
  • Airbnb for work: This provides service as per the business travelers’ needs.

Airbnb Revenue:

2014$423 million
2015$900 million
2016$1.7 billion
2017$2.6 billion
2018$3.6 billion
2019$4.7 billion

Funding Rounds:

Number of Funding Rounds 16

Total Funding Amount $5.4B

Airbnb has raised a total of $5.4B in funding over 16 rounds. Their latest funding was raised on Apr 6, 2020, from a Private Equity round.

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Announced Date Transaction Name Number of Investors Money Raised Lead Investors 
Apr 6, 2020Private Equity Round – Airbnb  2$1B 
Sep 5, 2018Secondary Market – Airbnb  2 
Sep 20, 2017 Secondary Market – Airbnb  1 
Mar 9, 2017 Series F – Airbnb  5$447.8M 
Oct 17, 2016 Secondary Market – Airbnb  1 
Sep 22, 2016 Series F – Airbnb  6$555.5M 
Jun 16, 2016 Debt Financing – Airbnb  4$1B 
Nov 20, 2015 Series E – Airbnb  1$100M 
Jun 28, 2015 Series E – Airbnb  16$1.5B 
Apr 1, 2015 Secondary Market – Airbnb  1 
 Investor Name Lead Investor Funding Round 
  Sixth Street  Yes Private Equity Round – Airbnb  
  Silver Lake  Yes Private Equity Round – Airbnb  
  Manhattan Venture Partners   Secondary Market – Airbnb  
G Squared    —
  K3 Ventures Secondary Market – Airbnb  
  Sequoia Capital   Series F – Airbnb  
  Andreessen Horowitz   Series F – Airbnb  
  Bracket Capital   Series F – Airbnb  
  CapitalG  Yes Series F – Airbnb  
  TCV  Yes Series F – Airbnb  

Investors

Number of Lead Investors 14

Number of Investors 57

Airbnb is funded by 57 investors. Sixth Street and Silver Lake are the most recent investors.

Which investors participated in the most funding rounds?

 Investor Name Lead Investor   Partners 
  Sixth Street  YesAlan Waxman
  Silver Lake  YesEgon Durban
  Manhattan Venture Partners  Jared Carmel, Rashaun Williams
G Squared  
  K3 Ventures  Meng Xiong Kuok
  Sequoia Capital  Alfred Lin, Michael Abramson
  Andreessen Horowitz  Jeff Jordan
  Bracket Capital  
  CapitalG  Yes
  TCV  Yes

Competitor Analysis of Airbnb

Tripping.com

A leading search engine for holiday leases, Tripping.com has managed to get over eight million houses in 150,000 destinations, providing vacationers with greater than huge sort of specific accommodations specifically for the long-term. It’s been deemed as the “Kayak for long time leases,” a one-prevent save for vacay-houses that has partnered up with numerous essential hotshots within the VR commercial enterprise to permit customers to effortlessly evaluate vacation rentals throughout vendors.

HomeToGo

HomeToGo.com is the world’s biggest search engine for holiday rentals, with greater than 15 million gives in over 2 hundred international locations across the world. With this type of significant variety of houses, HomeToGo offers its customers an unrivaled quantity of choice. More than three hundred carriers are included in the platform, which includes HomeAway, Booking.com, VRBO, Expedia, and TripAdvisor.

FlipKey

Acquired through TripAdvisor in 2008, FlipKey is one of the foremost Airbnb competition and gives tourist in search of adventure with both domestic and global offerings, with every assets profile detailing everything from the variety of bed/bathrooms, facilities available, and certain descriptions of the space, to control information, photographs, and weekly availability. Though cancellation and price guidelines range through belongings, this VR preferred gives the cap potential to effortlessly browse listings based on positive parameters which include low-cost, family-friendly, luxury, or maybe through the kind of experience you’re hoping to embark on—i.e. city, beach, mountain getaway, etc.

Is Company Profitable?

Airbnb is profitable, making almost $100 million in profit closing 12 months on $2.6 billion in revenue. At the equal time, the CEO introduced that the enterprise might now no longer cross the public in 2018. It all indicators an inner conflict that despatched the CFO for the door. Airbnb had a superb 2017.

Late closing 12 months, as many technology startups have been suffering to live afloat, Airbnb Inc. quietly reached a milestone few of its friends had achieved: profitability. Airbnb became worthwhile for the primary time at some stage in the 2nd 1/2 of 2016, by people near the enterprise

Amazing facts on Airbnb:

  • In an attempt to pay their forthcoming rent, Brian Chesky and his roommates rented out an air bed on the dwelling room floor. The rapid coins maker has since blossomed into what we’ve come to understand and love as Airbnb. The use of “air” withinside the call is a tribute to the enterprise’s roots.
  • he predominant cause humans to pick out Airbnb is the price, fifty-five consistent with cent say it’s inexpensive than different providers. After price, the most important element is a location (selected by 33 percent), observed with the aid of using proper experience (31 percent) and uniqueness (24 percent).
  • The majority of Airbnb guests live at leases for 3 to 5 nights. The chart suggests the common life at Airbnb leases differs from conventional resorts. For example, the simplest seven consistent with cent live one night, while 25 percent of people live at resorts for the simplest one night.
  • Forty- consistent with cent of people that generally pick out resorts have changed it with Airbnb in the beyond 12 months. Other lodging alternatives which have been affected consist of mattress and breakfasts and excursion leases. People are even selecting an Airbnb over staying with family and friends, 31 consistent with cent to be exact!

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