September 26, 2022

The 8 Reasons Why AirBnb is a Winning Business Model

The recent years have seen many online marketing innovations that have disrupted traditional market practices. Some good examples are ride sharing apps like Uber, as well as online shopping sites like Taobao and AliExpress.

One such website and app that has disrupted the homestay and hospitality industry is AirBnb. It was started by a pair of college roommates, Brain Chesky and Joe Gebbia around 2008. They initially just wanted to rent out their living room as a bed and breakfast space to fellow young adults on a budget. However, the idea soon grew to encompass others wanting to offer up spaces in their own properties, sometimes the entire property, to vacationers.

What makes this type of business model stick? Here are some possible answers.

  1. A Personal Touch

There are many reasons why any one of us would choose to stay in someone’s home instead of a hotel when we holiday. One of the leading reasons is that personal homes have character. There is an element of human contact in the AirBnb business model, which is sometimes called the peer-to-peer model.

This alternative lodging arrangement appeals to those who travel to meet interesting characters. They feel like they would be able to experience a place better if they stayed with a local family, eating home cooked meals and participating in everyday activities rather than being holed up in a hotel where the staffs are distant and impersonal.

This is also the reason why AirBnb has expanded in recent years to include the renting of ‘experiences’.

These include cooking classes, guided tours, jungle trekking, traditional arts and culture classes; basically anything that will help you live like a local. This aspect of the AirBnb model is often lacking on more conventional lodging platforms.

2. Customizable and Flexible

Conventional hotels and other lodgings set strict terms and conditions on their guests, such as check-in time and cancellation policies. With the AirBnB model, these factors can be negotiated. For example, if you’re flying in to your destination before 2pm (which is the standard check-in time for most hotels), you will have to find somewhere else to rest while waiting for your room to be ready. With AirBnb, you can negotiate an earlier check-in with your host so that you don’t have to be stranded for hours without a proper place to wash up and take a nap.

3. Peer Reviewed Accommodation

Almost all the hosts on the AirBnB website are reviewed and rated in terms of their quality and performance. All the rooms and homes are reviewed as well. This helps travelers make a decision as to where they want to stay. Dirty accommodations and hosts that neglect their guests are usually given lower ratings, and will have to improve their services before any other guests check-in.

This level of honesty and transparency is good for both hosts and guests. For hosts, it encourages genuine competitiveness, which leads to better amenities and service for guests overall. The behaviors of guests are also highlighted on the website, especially guests who damage their host’s property or leave a serious mess. This way, other hosts can be wary of them.

4.The Ability to Compare

Travelers love options. The entire AirBnB setup is one that allows visitors to draw up a list of places that they want based on location, price range, amenities and a whole lot of other things. From this list, visitors can compare places from the pictures they see and the unique features offered.

This ability to compare places is what attracts people to the AirBnB model.

In the past, travelers had to visit different websites to find out about one or two homestays, hotels and the like. AirBnB places all the available accommodations in one page. This makes it easier and faster to decide based on different factors.

5. Easy User Interface

The AirBnB website is clean, minimalist and simple to use. Anyone who visits can navigate around smoothly without the need for a manual or instructions. Everything the common traveler needs is found on the main website, and controls can be understood within seconds. This emphasis on website design is one of the leading factors as to why people just love using AirBnB.

Another part of the website that many people love is the graphics and pictures. The amenities of each room, apartment or house are listed with simple icons that you can take note of at a glance. Texts are kept to a minimum, and hosts are encouraged to include plenty of high definition pictures so that travelers get a thorough impression of the place they’re about to rent.

6. Transparent and Secure Payments

With the AirBnB model, booking payments are made via the AirBnB website itself. This means that there are fewer opportunities for scams. AirBnb takes a 3% service fee from hosts whenever they secure a booking. On the other hand, guests have to pay 6-12 % which is their service fee to AirBnB. All transactions are processed by AirBnb themselves, who are responsible for disbursing the funds to hosts.

Any hosts that do not fulfill their end of the bargain will be reported to the AirBnB administration, and this minimizes the number of dishonest hosts. With the security provided by AirBnB, travelers know that their money isn’t going into some unknown stranger’s account, but through a regulated and vetted system. On the other end of things, hosts can be assured that their payments will be made in a timely manner.

7. Open Market

Both hosts and their guests do not need to register or pay any registration fees in order to sign up with AirBnB. This means that anyone can make money out of a spare room or spare property that they have. This easily accessible platform will definitely attract members of the public who want to make a side income, and not waste excess spaces that they have.

The ability of AirBnB to streamline the market and provide a platform for hosts also means more variety for travelers. They’re able to see various types of accommodations, from luxury apartments to cabins close to nature.

This variety is also something that attracts a steady traffic to the site, ensuring that hosts get views and bookings.

8.Value for Money

The open market nature of the AirBnB website also means that competition is stiff among the hosts. This leads to them offering rather affordable prices. There is a constant supply and demand dynamic on the site, and this helps keep prices from ballooning too much. Travelers have shown a preference for the AirBnB platform simply because they get more value for money.

On the site, entire studio apartments may only cost a third of what a similar sized hotel room might cost. Plus, visitors are spoilt for choice when it comes to amenities and location. All these factors lead to the popularity of AirBnb, especially for budget travelers. They know that they can depend on it for affordable accommodation, especially in places where conventional hotels are expensive.

Sustainable Business Models

AirBnB represents one business model that’s considered a market disruptor. This means that many conventional hotels and accommodations feel that they’ve lost some business due to AirBnB.  

This is why, in any business model, it’s important to ensure flexibility.

Where hotels are concerned, many have already embraced the online aggregator website business strategy. This is where they list themselves on sites like Trivago, Booking,com and Agoda. This teaches us that, rather than just complaining, it’s better to adapt and grow.

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