HomeBUSINESSMeaning And How Airbnb Works

Meaning And How Airbnb Works

What Is Airbnb?

Airbnb is an online market place that links individuals who want to rent out their homes with individuals who are looking for accommodations in distinct locales.

The company had arrived a long way since 2007 when its co-founders came up with the concept of inviting paying visitors to sleep on air accommodations in their living room. According to Airbnb’s most delinquent data, it has more than 5.6 million listings, covering more than 100,000 cities & towns and 220-plus nations worldwide.12

This article breaks down how Airbnb works, how it makes funds, and the pros and cons of operating its online marketplace.


  • Airbnb is an online market place that links individuals who want to rent out their homes with individuals who are looking for accommodations in specific locales.
  • Airbnb offers individuals an easy, relatively stress-free way to gain some income from their property.
  • Guests often find Airbnb is more inexpensive, has more character, and is homier than hotels.
  • Airbnb makes the majority of its revenue by charging a service fee for each booking.
  • Cons of using this service contain not getting what you expected and, for keepers, renting your place to someone you have not had the chance to meet first.

How Airbnb Works

Airbnb has revolutionized the hospitality enterprise. Prior to 2008, travelers would have probably booked a hotel or hostel for their trip to another town. Nowadays, many of these same individuals are opting for Airbnb.

The idea after Airbnb is simple: Find a way for regional people to make some extra money leasing out their spare home or room to people visiting the area. Hosts using this podium get to advertise their rentals to millions of people worldwide, with the comfort that a big company will handle payments and offer help when needed. And for guests, Airbnb can provide a homey place to stay that has more personality, perhaps even with a kitchen to prevent dining out, often at a more down price than what hotels charge.

Airbnb stands for “Air Bed & Breakfast,” a name that reflects the company’s early roots—its co-founders invited paying guests to sleep on an air bed in their living room to help cover the rent.1

To make a booking, you typically need to take the following steps:

  1. Reach the Airbnb website.
  2. If you haven’t already done so, log in or make an account. Signing up can actually take a bit of time. Among other items, you’ll need to verify your phone number & upload some form of identification.
  3. Specify the place and date(s) you’re after, and then start looking for a place that’s available, using the area’s various filters to customize your search.
  4. When you’ve discovered the ideal accommodation, make a booking or reserve it—sometimes bookings won’t be completely validated until the host abides.
  5. Pay for the housing and receive notification of your booking, including the address where you’ll be dwelling. For longer-term stays, it’s possible to position a payment plan by which you’ll pay an initial deposition and the rest in installments.


Reading studies is a key part of finding the honorable place to stay. However, they can’t invariably be 100% relied on: Reviews sometimes tend to be more gracious than usual, perhaps because visitors are worried a bad review will direct the host to fire one back.

How Does Airbnb Make Money?

Airbnb’s business model is fairly profitable. Like Uber, Lyft, and others, the business has capitalized on the sharing economy, effectively making money renting out possessions that it doesn’t own.

Every time a compunction is made, Airbnb abides a cut. When you click on a parcel, you’ll find a breakdown of the fees you’ll be charged if you proceed ahead and book to the right of the page. One of these costs is a service fee, which conceals the cost of running the platform and delivering support; this makes up the bulk of Airbnb’s revenue.

According to the organization’s website, most guest service fees are under 14.2% of the booking subtotal. Hosts, meanwhile, are levied 3% or more of the total amount accumulated for each booking.4

Airbnb also utilizes an alternative payment structure that you might see from time to time. It’s compulsory for hotels and some specific types of hosts (including software-connected ones) found in certain regions of the world to obscure the service fee in full rather than divide it with guests. The person offering to the house will usually be charged about 14% to 16% of the booking subtotal when this is the case. Exceptions involve mainland China, where the host-only fee is set at 10%.4

Airbnb competitors

Though relatively unusual, Airbnb does face challenges, including from the likes of Agoda, Booking.com, Expedia, HomeToGo, Google, TravelStaytion, Tripadvisor, TUI Villas, & Vrbo. 

Some of these opponents, such as Vrbo, offer solutions that are similar to Airbnb’s. Others are effective online travel agencies that enable travelers to find hotels and other personal accommodation in the area they are dwelling in.

Benefits and Drawbacks of Using Airbnb

For hosts, partaking in Airbnb is a way to earn some income from their possessions, but with the risk that the visitor might do damage to it. For guests, the benefit can be relatively inexpensive accommodations, but with the risk that the possessions won’t be as attractive as the listing made it seem.

Here’s a more in-depth glimpse at some of the pros & cons:


  • Wide Selection: Airbnb hosts list numerous different kinds of properties, from single rooms, flats, & houses to houseboats, caravans, and even castles.
  • Free Listings: Hosts don’t have to expend to list their properties. Listings can contain written descriptions, photos with captions, & a user profile in which probable guests can get to know a little bit on the hosts.
  • Hosts Can Set Their Own Price- It’s up to each keeper to decide how much to demand per night, per week, & even per month.
  • Customizable Searches: Guests can explore the Airbnb database—not only by date and place, but by price, type of property, amenities, & the language of the host—and add keywords (such as “tight to the Louvre”) to help limit their search.
  • Additional Services: Airbnb offerings contain experiences and restaurants. People exploring by location will see a list of experiences, such as courses and sightseeing, offered by local Airbnb hosts. Cafeteria listings also include reviews from Airbnb hosts.
  • Protections for Guests and Hosts: Airbnb holds individual guests’ payments for 24 hours after check-in before discharging the funds to the host. Airbnb supplies up to $1,000,000 to cover unreasonable damage imposed on the property for hosts. This safety comes at no additional cost but doesn’t cover everything.5


  • What You hope See May Not Be What You Get: Personal hosts create their own listings, and some may be more genuine than others. One way to avoid dissatisfaction is to read comments from earlier guests.
  • Potential Damage: Although most visits go without incident, property harm is probably the most significant risk for hosts. Airbnb’s Host Damage Defense program provides some assurance, but it may not protect everything, such as cash, rare artwork, jewelry, & pets. Hosts whose homes are sometimes damaged may also experience significant inconvenience.
  • Added Fees: Like hotels, Airbnb charges a number of additional fees. Both guests and hosts spend a service fee to Airbnb for each booking, which can be vertical. Banks or credit card utilizers may also add costs, if applicable.
  • Taxes: Hosts and guests in several nations may be subject to a value-added tax (VAT).6 And relying on their location, hosts may be subject to rental revenue taxes. To assist with U.S. tax compliances, Airbnb collects taxpayer data from hosts so they can provide an account of their gains each year via Form 1099 and Form 1042.7
  • It Isn’t Legal Everywhere: Before documenting a property on Airbnb, a would-be host requires to check local zoning ordinances to make sure it’s lawful to rent out their property. Hosts may also be needed to obtain special permits or licenses.


If your trip gets annulled at the last minute due to COVID-19-related issues, you will only be repaid if the host allows it. A unique exception is if the guest or the host tests favorable for the virus, which is protected by Airbnb’s extenuating circumstances revocation policy.89

Is Airbnb Cheaper Than Hotels?

In many cases, yes. Airbnb costs tend to be lower than those of hotels, in part because the lessors of these places don’t have the exact overhead costs.

Can You Stay in an Airbnb for a Long Term?

Yes, some hosts supply an option for longer-term visits and may even throw in a

discount for these kinds of reservations. Bear in mind, however, that stays longer than 28 days require settling each month upfront and are subject to Airbnb’s long-term revocation policy, which states that guests must give 30 days’ notice before matching in to receive a total refund. If you miss this deadline day or wish to withdraw during your stay, you will still be billed for the next thirty days or the total cost of the compunction if it is for less than a month.10

What Is Airbnb’s Refund Policy?

When the compunction has been made, you may be able to get a full or partial refund if you decide to revoke. Generally, the amount you’re entitled to depend on the host’s policy and how much time is left before checking in. If you click on the opportunity to cancel your reservation, you’ll be presented with a whole breakdown of how much you will get back if you proceed.11

It’s also possible to get a partisan refund after you’ve checked in, provided you file a proposal within 24 hours.12

What Are the Regulations for Having an Airbnb Business?

People interested in renting out an extra room or property need to do their homework before counting a listing on Airbnb. In many metropolia, some licenses and permits must be obtained before a parcel owner is legally permitted to take in paying visitors. Certain limitations may be put in place, too.13

Failure to endure these regulations, or to report all earnings to the Internal Revenue Service (IRS) or local tax administration, could lead to a hefty fine.13

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