The Airbnb Business and Revenue Model: A Comprehensive Overview

Airbnb Business Model & Revenue Model

As everyone knows mobile phones and apps have come a long way if we search how far it is, it can be witnessed that you can do anything at one click, even booking rooms in other countries has become simpler with this cutting-edge technology.

Many of you have heard about Airbnb business, a vacation rental platform. This is what we all know about it! But do you know how exactly the platform works and earns profits?

Here’s the breakdown of Airbnb’s business model and revenue model. Continue reading to learn more interesting facts.

Origin of Airbnb Business

People love Airbnb because it’s cheaper and provides huge and different kinds of housing offers that fit their needs.

Let’s quickly remind you how things were before Airbnb was created. Classified advertisement websites like Craigslist allow people to rent their apartments, but it was not as close to global success as Airbnb has for itself. 

Airbnb started a new market that allows renters to rent rooms in other people’s homes. Brian Chesky and Joe Gebbia are the founders who sowed the seed for Airbnb. They planned to start a website after they rented their living room in San Francisco for $80 each night when every hotel room was taken. 

Later in 2008 along with Nathan Blecharzchyk, Brian and Joe developed a website that became noticeable among renters. And this is how Airbnb emerged! 

The business model of Airbnb: Explored!

Have you heard about the sharing economy? If not, the sharing economy is a commercial model referred to as a peer-to-peer economy. The business involved in this economy does not directly deal with customers, instead, it connects each individual to transact their business. And the business model of Airbnb is based on this sharing economy. The platform provides a marketplace for both guests and hosts and puts them in contact.

Airbnb is the online rental marketplace that puts guests and hosts in contact, moreover, it is not a real estate rental company so they don’t have the operational fees as hotels have.

In the case of hotels, the buildings are their key resources but it depends on whether it is a franchise or fully owned. So the major key partners of Airbnb are house owners. 

And the key activities of hotels are hospitality management, while for Airbnb marketing and maintenance of service or platform are the major activities.

Market segment of Airbnb 

There are three market segments in the business model of Airbnb, let’s take a look into them.


Guests can search and book for properties on the platform, various filters like price range, location, and property type have made a hassle-free booking experience for guests. And it allows the guests to make payments online.


Hosts are the ones who publish their room listings on the platform, they can either accept or reject the booking request when guest books for their place.

In addition to this, think of the host experience as a tour guide. The host can become a guide to explore the city whether it is a city tour, a visit to secret places, or tasting local kitchens, this option reduces the chance of hiring a separate guide. 

This feature of Airbnb doesn’t change the renting business model but gives renters a hassle-free experience as they don’t need to hire separate tour guides.


The quality pictures in the listings get the most bookings on the platform. Airbnb hires freelance photographers to capture high-definition photos of the property.

Unique features of Airbnb

Airbnb Small House
Airbnb Small House

Last minute accommodation

Last-minute booking is always critical but not with Airbnb, this feature in Airbnb enables guests to deal with urgent accommodation needs.


This feature saves the properties that you are more interested in, with this option you can always save the properties on the app, this way you don’t need to search for that place again while booking.

Easier listing process for the host

As not every host on Airbnb is a holiday rental professional, Airbnb simplified the listing process into ten simple steps in the application.

Trip planning ideas

When planning for a stay relevant ideas and experiences are suggested to guests to make the best decisions.

Airbnb video

This feature is a promotional tool to show hosts’ potential to guests. One may not upload the video to the listing page of Airbnb instead they can upload it to other digital platforms and add the link of your video in the Airbnb listing description.

Revenue Model of Airbnb

Airbnb Rental Room Key
Airbnb Rental Room Key

Everyone wants to know about how Airbnb makes money, right? Talking about their listings on the platform, it has seven million listings in more than 200 countries. Do you know it is recorded that every second, an average of six renters check the listed properties on the platform?

Guests are required to pay a non-refundable service fee based on the size of the reservation. And an expensive reservation results in lower service fees. 

The major source of Airbnb revenue comes from service fees and booking fees charged to both guests and hosts. The host service fee depends on two methods: Host-only fees and split fees ( fees split between guest and host )

In the host-only fees structure, the host has full control over service fees, guests won’t pay service fees, and it allows the host to have full control of nightly rates he/she may indirectly be able to allot some service fees to guests. In this structure, the host pays 14-16% of the total payout.

In split fee hosts will pay 3% of the total payout and guests charged a service fee between 13-20%.

Airbnb has continuously changed and modified its business model, website, and mobile app. It is recorded that most of the guests prefer Airbnb service over hotels because Airbnb allows them to save more money compared to hotels. It aims to serve 1 billion guests annually by 2028.

Wrapping up

The reason why people choose Airbnb over hotels is that the prices are less compared to hotels with infinite varieties. Since the start, Airbnb has seen only growth rates but along with growth rates, it also has competition with its business model. Many app development companies took inspiration after the success of Airbnb and developed Airbnb Clone scripts. 

Hope you find this article helpful!

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top