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What is Airbnb?

Airbnb is on the internet connecting travellers with local hosts. At This platform enables people list their free space and get extra income in the form of tariff. On the other, Airbnb offer travellers to book your on choice home stays from local owners, saving them money and providing them a chance to interact with hosts. Catering on-demand travel industry, Airbnb is present in over 190+ countries across the world.

Founders, Funding received, Salient features & Facts:

Airbnb was establised on 1 August, 2008 and in a short span of time it grew as a technology masterpiece. Having received a big funding of $2.3 Billion from 31 different investors, Airbnb entered in Billion dollar club. Here are few great facts about Airbnb.
• Founders: Nathan Blecharczyk, Joe Gebbia and Brian Chesky.
• Funding received: $4.25 Billion (Till December 2016)
• Airbnb company valuation: $30.50 Billion (As of July 2016)
• Airbnb is present in 40,000+ cities across 190+ countries.
• They have 1.6 Million listings, the company has provide services over 40 Million guests.
• Headquarters: San Francisco, California, USA.
• 150,000+ people stay at an Airbnb listed place every day.
The huge funding received by Airbnb has made it step in the million dollar business. Company’s recent funding of $1.5 Billion in one go is one of the largest funding rounds ever conducted. Can Airbnb generate such massive amounts of revenue? Answer is yes. Before discussing about Airbnb’s consumer segments, value propositions and understanding its business model canvas, lets go through Airbnb Timeline.

Airbnb Timeline

Three customer segments defining Airbnb’s Business Model

Hosts:

• Hosts are the owner of the property and want to earn some money by renting his/her property.
• They can create a list for their rented space on Airbnb, add property details and set their own rent, check-in, check-out time, conditions etc.
• After going through social profile of the traveller hosts can accept or reject a booking after reading the reviews of the traveller.

Travellers:

• Travellers are the person who hires the listed property from local hosts.
• Travellers have the option to find out the rented space filtering them according to rent, location, amenities provided etc.
• Guest can book a property by paying through the Airbnb portal.

Freelance Photographers:

• Airbnb has a huge network of freelance photo graphers in all big cities of the world who go to a hosts location and click high-definition photographs of the rooms.
• Good quality photographs get more responses.
• The freelance photo graphers are paid by Airbnb directly.

Airbnb Business Model Canvas

The business model canvas of Airbnb explains the key partners, key activities, key resources, channels and customer segments of Airbnb.
So, the revenue streams and cost structure of Airbnb have also been listed. Check it out:

Five step model about how Airbnb works:

1. Property owner list out their property details on Airbnb along with other factors like pricing, amenities provided, conditions etc.
2. If available Airbnb sends a professional photographer to the owner location in order to take high quality photographs.
3. Travellers search property in that location where they wish to stay and catch available options according to price, amenities etc.
4. Property booking is made through Airbnb where visitor pays the amount mentioned by owner and some additional money as transaction charges.
5. Owner approves the property booking. Traveller stays there and finally Airbnb pays the amount to the host after deducting their commission.
The host and the visitor can rate each other and can write reviews based on the experience.

Revenue Model: How Airbnb Makes Money?

Airbnb offers free listings to property owners and let’s travellers browse the listed spaces and select the one which best suits their needs on the platform.This is from where the company generate revenue from 2 different sources which have been explained below:
Commission from Property Owners
10% commission charged by Airbnb from property owners upon every booking done through the platform.
Transaction fee from Travellers (Guests)
Airbnb collect 3% of the booking amount as transaction charges from guests upon every confirmed booking.

How Airbnb Finds Customers?

A customer for company is that person who adds up to the company’s revenue. He can be a property owner who offers his space for rent and he can be a guests who books a space. So, from where does Airbnb find property owners and guests? Well, Airbnb was founded in year 2008 and its first customers came through a simple website built by the owners. The major sources to accumulate hosts and travellers include:
1. Word of Mouth
2. Social Media
3. Digital Marketing including online ads.
4. Promotional or Discout offers
5. Affiliate Model / Refer and earn offers

Key Problems and Solutions:

Faith Problem:

The major problem faced by guest or property owner using Airbnb is the trust factor. Giving your space to a any stranger as a host and staying with strangers at their place as a guest might not be easy. But Airbnb has a verification process in place for every host and traveller on its platform. Airbnb also motivates people to sign up with their Face book account or at least link it with their airbnb account for better transparency.

The Future of Airbnb:

Airbnb is already in club of multibillion dollar and is sure to grow further. Having a presence in 190+ countries across the world, it is now focusing to further increase the daily transactions on its platform. With a total funding of $2.3 billion till date, the different business model of Airbnb has even become stronger as people prefer staying at an Airbnb in rather than a hotel.

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