Corporate Brand Retail 

#MotivationalMonday: What’s Airbnb’s secret sauce to success? Find out here

What if I tell you that the biggest accommodation provider in the world ‘Airbnb’ does not own a single room? Yes! You read that right. Then, how do they make money? What is their secret sauce to success? With so many questions erupting onto your minds, we will give a through breakdown of how things work at this online marketplace.

How it started: A look back…

Airbnb is an online marketplace connecting travelers with local hosts. Their business model builds on the share economy.

The Airbnb story started back in 2008, with the two founders, Joe Gebbia and Brian Chesky and 3 air mattresses in San Francisco, California. Without employment, they were having trouble paying their rent and were looking for a way to earn some extra cash.

The youngsters started “Air Bed and Breakfast,” to offer visitors a place to sleep and breakfast in the morning. They charged $80 each a night and it was a success!

Soon after, Harvard graduate and technical architect Nathan Blecharczyk joined the team as the third co-founder.

And the rest is history. Airbnb founder story is one of the most inspiring stories of the 21st century.

According to the recent statistics, Airbnb now has over 2 million listings in over 190 countries and 34,000 cities. Airbnb hosts have hosted over 40 million guests. The company is worth an estimated 25.5 billion, based on the latest round of funding of 1.5 billion.

The Indian Scenario…

During Brian Chesky’s visit to India early in 2017, he highlighted how India is on the rise to become one of the Airbnb’s key revenue generators. He foresees that in about 10 years’ time, India will be one of the world’s biggest markets for Airbnb.

“We see a huge potential in meeting the demand of the 230 million urban millennials in India who want new and more exciting ways to travel,” Brian told ET in an exclusive interview.

India follows the ideology of the popular Sanskrit phrase – Athithi Deva Bhava, which means ‘Guests are like God,” and that’s truly reflected in the growth numbers.

With over 30,000 listings in the country, Airbnb listings in India have grown by 115% over the past year. There has been almost 2x growth in the number of nights booked on Airbnb in India since 2016. We have witnessed over 100% YoY growth in inbound guests from around the world during 2017-2018, as per the ET report.

Also, Indian guests have travelled to nearly 160 different countries on Airbnb including France, Italy, the UK and the US. An increase of 2.1x growth in domestic travel have been witnessed on Airbnb within India.

Understanding the business model….

Airbnb uses an Aggregator Business Model, as Uber or the Indian organization Oyo Rooms. It doesn’t have a straight plan of action like the conventional lodging networks. Airbnb does not rent the accommodation from the host but conveys only between supply and demand.

The platform allows individuals to list their accessible space and gain additional income as rent. Whereas, on the other side, it also allows travelers to book one of a kind home remains from local host, sparing them cash and allowing them to collaborate with local people.

How does it make money?

The company gets its income from these exchanges through two sources:

  • Commission from hosts 3–5% per rented place.
  • Commission from guests 6–12% per rented place.
  • Commission from experiences from both the host and the guest.
  • Airbnb also charges hosts a 3% host service fee
  • Charges for photographs.
  • Commission for table booking in restaurant from the guests.
  • Commission for per table booked in restaurant from the restaurateurs.
  • Cancellation fees from the stakeholder who cancels the booking made.

(Citations: Several media reports)

Marketing Strategy:

Airbnb has practically become the market leader for travel accommodation, and when it comes to marketing strategies, no one can beat this leader! Be it Shahrukh Khan seeking a royal mansion, or a commoner asking for a vintage cottage, Airbnb has all solutions!

These are the primary strategies adopted by the company to strengthen its brand:  

  • Brand partnerships
  • Promo Codes/ Referrals
  • Discounts/ Deals
  • Word of Mouth Marketing
  • Social Media Marketing
  • SMS and email Marketing

Besides, the company had recently turned towards a traditional marketing strategy with the launch of its new print magazine, Airbnbmag. The publication is up for sale for $3.99 at newsstands around the United States. However, Airbnb will offer complimentary copies to hosts and some of its most loyal guests.

Things to learn for this business canvas……

Be transparent:

With the onset of the hastag era, the expectations of the consumers have been skyrocketing these days. So, m sure your customers know exactly what they’re getting to avoid negative feedback and disappointment.

Innovation is the key to success:

Disruptive innovations drastically change the market. Businesses that have traditionally dominated the market need to adapt new aggressive technique to strengthen its brand value among the consumer market.

Airbnb is one of those rare startup gems that makes money in a pretty direct way. From a tree house to exotic villas or even castles; Airbnb hosts have very unique properties to offer.

With the ‘Sharing is Caring’ mantra, Airbnb is one of those rare startup gems that makes money in a pretty direct way.

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