🛖 Airbnb: Off the beaten path
🛖 Airbnb: Off the beaten path
How the marketplace quietly became the most profitable online travel company
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Airbnb (ABNB) recently reported its Q3 FY22 earnings report.
Today, we’ll cover the following:
Airbnb has enabled home sharing on a global scale and created a new category of travel. So much so that it has become a verb.
The company’s mission is "to help create a world where you can belong anywhere and where people can live in a place, instead of just traveling to it."
While travel has become commoditized, Airbnb thrives through its unique stays and one-of-a-kind activities.
Airbnb is a two-sided marketplace business model.
The platform connects:
Guests: From the remote worker looking for an extended stay to the family looking for a weekend getaway.
Hosts: They provide access to a vast world of unique homes and experiences previously inaccessible or undiscovered.
At the time of the IPO in 2019:
90% of hosts were individual hosts.
79% of them had just one listing.
These numbers show the uniqueness of the inventory since most listings come from individuals (as opposed to businesses promoting vacation rentals).
The company now counts:
4 million+ hosts.
6 million+ active listings worldwide.
220+ counties with listings available.
1 billion+ guest arrivals.
Hosting is the foundation of the Airbnb experience. Therefore, the company's long-term success depends on its capacity to acquire and retain hosts on its platform.
Airbnb facilitates the transaction between guests and hosts.
Before we start, let’s discuss how Airbnb makes money.
Revenue has two main components:
🛖 A host fee, in % of the price set by the host.
3% for accommodations.
20% for experiences.
👨👩👧👧 A guest fee, in % of the price set by the host (14%).
For a night priced at $100 (cleaning fee included), the guest pays $114 (+taxes), the host receives $97, and Airbnb keeps $17 in fees.
The dollar value guests spend on Airbnb is called Gross Booking Value (GBV). It includes host earnings, service fees, and taxes. The example above assumes cleaning fees or additional guest fees in the price per night. With a mix of accommodations and experiences, Airbnb’s take rate is approximately 19% of the GBV.
