airbnb-unit-economics

Airbnb Unit Economics

As a peer-to-peer platform, once the transaction between host and guest goes through, Airbnb will collect a fee from both key players. As an example from a $100 booking per night set by the host, Airbnb might collect $3 as a hosting fee. While it might increase the price for the guest at $116 ($16 above the price set by the host) to collect its guest fees of $12 and taxes for the remaining amount.

Therefore, for a similar transaction, Airbnb will collect $15, the host will make $97 from an initial set price at $100, and the guest will pay $116 (tax comprised). 

economics-airbnb-booking

Image Source: Airbnb Financial Prospectus

airbnb-business-model
Airbnb is a platform business model making money by charging guests a service fee between 5% and 15% of the reservation, while the commission from hosts is generally 3%. For instance, on a $100 booking per night set by a host, Airbnb might make as much as $15, split between host and guest fees. 
airbnb-competitors
The Airbnb story began in 2008 when two friends shared their accommodation with three travelers looking for a place to stay. Just over a decade later, it is estimated that the company now accounts for over 20% of the vacation rental industry. As a travel platform, Airbnb competes with other brands like Booking.com, VRBO, FlipKey, and given its massive amount of traffic from Google. Also, platforms like Google Travel can be considered potential competitors able to cannibalize part of Airbnb’s market.
economics-of-aribnb

Read Next: Airbnb Business Model.

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