How Does Airbnb Business Strategies Make Money?

When it comes to lodging hospitality and tourism services, then Airbnb is the name of the game. It has become a global phenomenon in the last couple of years now. And this is evident with the fact that the company had over 4 million listings across 191 countries worldwide.

The company's net worth was valued at $35billion in 2019, though it was down from USD38 billion in 2018. 

If we talk about the revenue, Airbnb brought $335 million as of June 30, 2020, which is $1 billion more than from the same period last year. 

More than that, Airbnb is three times larger than Tripadvisor and growing much faster than its competitors, including Booking Holdings, Expedia Group, and Tripadvisor. 

When we go through all these, the one question that all of us get puzzled about is how the company makes so much profit in less time than most other similar companies in the world. 

There must be an X-factor which none of us know, or we did not introspect. We may not have analyzed the business strategies of Airbnb or haven’t gone through its business model. 

Do you know?: Airbnb spends 23.5m USD on advertising.

But, can you believe that it is the only advertising that makes Airbnb the highest-grossing company?

Obviously not!

There’s a lot of things, people and intelligence work from behind the scenes to make the company greater than others. So, let’s dig the secret out and understand what makes the company so significant and what we can learn from its business model and strategies. We shall discuss only the major points which will explain the top Airbnb business model and let you know how does Airbnb make money?

It’s not hidden to all of us how the company started. The base of the company begins from end-users and ends with them as well. 

Next comes the strategies which kept it going. So, let’s take a look at its business model canvas before we move forward. 

Airbnb Business Model

Key Partners: 

• Hosts

• Guests

• Freelance photographers

Key Activities: 

• Platform development

• Sales and marketing

• Managing bad behaviors and risks

• Protect sensitive information 

• Maintain Customer Service

• Manage Agreements

Value Proposition:

• Authenticity

• Simplicity 

• Transparent 

• Direct benefits 

Customer Relationship: 

• Self-Serve Platform

• Personalized recommendations

• Customer service support

Customer segments:

• Travelers 

• Tourists 

Key Resources:

• Website

• App

• Employees 

• Reviews

• User-generated content on the web

• Data

Channels: 

• App

• Website 

• Social Media

Cost Structure: 

• Marketing 

• Maintenance 

• People 

• Lawyers 

Revenue Streams: 

• Booking fees

After going through this, your canvas, you may find that almost all industries have similar strategies, isn’t it? So, we are right back to the main question —what business strategies make Airbnb profitable?

Here’s a quick look at how it woo guests and hosts simultaneously

Solve problems 

No matter how impressive your business looks, unless you feed your customers, they will not head out to your business. The business must take quick action on any queries coming from the customer's side. Airbnb does this effectively —it not only solves the problem but also addresses ambitions for many people. 

Trust 

Do you know, there are no booking agents or front desk receptionists to call? Everything is digital. Still, people trust the company and list their rooms and homes while customers confidently book reservations and make payments. That is happening all because of the transparent system and platform. 

Strong focus on customer retention 

One thing that I have realized is it focuses more on customer retention than attracting the new one. One of the biggest challenges that the company is facing is that shots and guests both can finalize the next deal without keeping Airbnb as a mediator. 

Guests can be friends with hosts, and the next booking can be private. However, Airbnb ensures that hosts and guests must be friendly by creating an experience and luring them into making transactions, but it must not be so much to get the clients out of the Airbnb marketplace. 

Employees are empowered to make decisions

One of the biggest challenges that every industry and business faces is a centralized power system. That is not good for private sector businesses, especially in the hospitality sector. Airbnb has simplified this by decentralization of power —every employee at the company is empowered to make decisions, which helps the company build strong ties with customers. 

Final thoughts 

To us, credibility, trust, and reliability play a vital role in a success story. The hospitality sector is all about how effectively you are connected to your customers, and quickly you solve their issues. 

These are the top reasons we believed played an important role in making Airbnb the world’s most popular online marketplace.

If you come across any new ideas, key points, or other facts that play an important role, let us know in the comments section.