How Airbnb Rose to Fame and How You Can Mirror Its Success
Airbnb was started back in 2007 by roommates–Brian Chesky and Joe Gebbia—who let out the living area as an experiment. The idea has since developed into a 31B USD investment and is currently in over 200 countries.
The idea helps guests find affordable accommodation easily at all the listed countries. Guests particularly love being hosted in Airbnb facilities because of the unique home feeling.
Here are top Airbnb statistics for a better view of the business model
- Employees– The company has employed 14,384 members of staff—includes software engineers, developers, coders, and other support staff. 48% being female and 52% male.
- Airbnb Map– It’s hosted in more than 200 countries and 100,000 cities. The most popular host cities include New York, Paris, and Tokyo. The United States has 660,000 listings and it is the most popular listing nation.
- Economic impact by countries– This business model highly supports the local economy in terms of taxes, employment, and foreign currency exchange earner. In France Airbnb earned the country $10.8bn, Canada had $4.33bn and Mexico got $2.7bn as a contribution to the GDP.
- Revenue– The company made $2.bn revenue and $93m profit in 2019. It also projects to make 3.5bn revenue in 2020.
The above statistics depict a company whose tentacles are spread across many regions and countries in the world. It also has a big impact economically on global economies by creating employment and other related services.
How does this business model work?
Ecommerce is one of the brightest business models in the 21st century. It has been responsible for creating global brands like Amazon, E-bay, Jumia, Alibaba, and others like Shopify. This is the model at play in this idea.
Consumers globally use online platforms to find solutions. This, therefore, creates a web of related solutions like review sites, affiliate marketers, and related professionals.
Note that Airbnb is a platform that unites people with extra space to people looking for accommodation. Airbnb’s responsibility lies in enabling customers to make bookings seamlessly.
This is how the platform is beneficial to clients.
- Payment platforms– To effectively complete these transactions, payment gateways have to be provided. This platform partners with international payment platforms like Visa, PayPal, MasterCard, Payoneer, and others to make guests experience seamless.
- Verification and Fraud prevention– One of the challenges the site experienced was scamming through fictitious listings. This led to losses and erosion of brand image. The management now does a thorough job in background checks in liaison with local laws and authorities.
Most businesses offer e-commerce or online purchase options. However, for businesses to get to the level of Airbnb, a comprehensive investment is needed. TPG Capital invested $400 million in the business and this explains the continued success.
Big businesses are made out of huge ideas that transform the lives of consumers or the public. Google, for instance, is a very successful brand because of the uniqueness of the idea. It can discover website content and bring it to the feed of user queries.
Airbnb operates in a similar model. The idea can be segmented into two parts
- Leveraging on Available space– Instead of wealthy people building more hotels or buildings, homeowners can easily let out available space. This helps to distribute wealth and income to people from all aspects of life.
- Affordability– Accommodation in Airbnb costs 18.8% less than an average hotel room. This is made possible due to the little licensing, overheads, and other related costs. This helps to encourage a large number of people to be tourists.
How can your business Mirror Success of Airbnb?
Leverage on Available ideas and Technology
When trying to invent the wheel, it can be time-consuming and capital-intensive exercise. If your business is premised on existing technology like e-commerce, social media, or other existing platforms, it’s easier to build on it.
This helps to reduce capital costs and the business benefits from existing support functions.
The attraction of Capital Investments
Airbnb’s idea was able to attract venture capitalists. This has made it possible to compete with other players in the hospitality industry. The initial funding was $20,000 but they later received an extra $400m in 2014.
Structuring your business strategy can help you attract seed capital or a much-needed boost to startups.
For your business to mirror the success of major successful brands like Airbnb, forming alliances can help a lot. This includes payment partners, local authorities, internet giants, and other learning institutions.
Can your Business Succeed like Airbnb?
One of the pre-requisites to a great business, as demonstrated by Airbnb Model is a big idea. Your business has to offer a unique solution that reduces customer pain points. Airbnb complements hotel owners’ and homeowners’ income while providing available and affordable accommodation.
Also, your business should be structured to leverage available resources, technology, and capital.