Twelve years ago, if someone had mentioned renting someone's home for two days instead of booking rooms in a hotel, everyone would have said, 'You're crazy. That's impossible!' Now, in 2021, this idea has turned into a massive business that is worth $104 billion.
Nowadays people prefer having their own space, for activities without having to bother others. They like to go on a vacation where they can practice social distancing (thanks to coronavirus) without missing out on the fun. They want to have the pool all to themselves, unlike the ones in hotels. And today, they can do just that by booking/renting someone's space for few days via Airbnb.About Airbnb
Airbnb is an online marketplace where one can book vacation rentals, lodging, and tourism activities. The company is based in San Fransisco, California, and it was founded by Brian Chesky, Nathan Blecharczyk, and Joe Gebbia in the year. 2008. The company allows the potential customers to connect with the host of a rental via their website or app, which is readily available on Google Play Store and Apple App Store.Airbnb Success Story - History
Initially known as AirBedandBreakfast, the two founders Brian Chesky and Joe Gebbia, came up with putting a mattress in their living room and turned it into a bed and breakfast plan. After hearing this idea, Brian Cheeky's roommate, Nathan Blecharczyk, joined the duo and became the third founder of this new venture.
They came together and built a website that offered short-term rentals to people along with the facility of breakfast. Primarily, the founders listed their apartments on their website, and eventually, the number grew. They officially launched the AirBedandBreakfast website on 11th August 2008.
By March 2009, AirBedandBreakfast turned into Airbnb, and the company saw a massive growth of listings. From air beds, the company website witnessed a considerable surge of listings of properties, including entire homes, apartments, villas, and even private rooms.Airbnb Business Model
Airbnb is a virtual platform that allows hosts and guests to connect. Hosts are the ones who own properties like apartments, villas, condos, or even a private room. Guests get the chance to rent these properties listed by the hosts.
Airbnb takes commissions from both parties. It takes around 6-12% commission from the guests, and 3% from the hosts, which adds to their revenue. Presently, the company has over 7 million listings worldwide across 34,000 cities and 190 countries. In March 2017, the company was valued at $31 billion.Airbnb Success Story - Funding
After launching their website, the founder decided to raise money with the help of investors to sustain their business. The company gathered $30,000 from selling 800 cereal boxes for Barack Obama and John McCain.
Furthermore, the company was accepted into Y Combinator's Winter 2009 batch and received funding of $20,000. Y Combinator is a seed money startup accelerator based in America.
In a series of investments, the company raised a total of $615,000 from Sequoia Capital and Youniversity Ventures.
In November 2010, the company received $7.2 million from Sequoia Capital and Greylock Partners.
Over the years, Airbnb was consistently able to raise funds of $6 billion in 20 rounds from 70 investors like GC capital, BlackRock, T. Rowe Price, Fidelity, Oaktree Capital Management, Apollo, and many more.Airbnb Marketing Strategy
Airbnb has been able to create a strong position for itself in the hospitality industry, and it has been able to do so by adopting good marketing strategies.
- Development of Website:To bring in more traffic, the company made sure it builds a website that is reliable and easy to use. As the website is used by the guests and the hosts, the company added special features for them. Hosts have the privilege to choose the prices of their listing and even allows them to select a cancelation policy best suited for them. The website lets the hosts post pictures of their properties and additional information like their availability, other amenities.
- Paid Search Marketing: Paid Search Marketing contributes 12% of the total traffic on their website. By paying attention to keywords, landing pages, and calls-to-action, the company has also been able to attract organic traffic of 50.2 million
- Email- Marketing: Airbnb uses this old marketing technique to encourage potential customers to choose Airbnb over any other hotel by providing them with a list of activities they can enjoy at a particular destination. They also share the experiences of other Airbnb users via emails to assure potential consumers about their company's services.
- Social-Media Marketing: Social media has become an integral part of digital marketing, and to stay ahead of its peers, the company has dedicated social media handles across platforms like Facebook, Instagram, and Twitter, through which the company promotes and inspires people to travel. Airbnb has also created a blog where many users guests as well as hosts their experience.
- Referral Marketing: Everyone likes to enjoy discounts, and with referral marketing, the company aims to provide consumers with discounts while increasing their reach. The referrer and the referee both enjoy extra credits, which can be redeemed during payments. The hosts also receive a credit of $75 on their first booking.
Overcoming the global pandemic was one of the significant challenges faced by the company. Airbnb was among the many businesses which were hit hard by the Covid-19 pandemic. By April 2020, the company's value dropped to 18 billion, and it was forced to lay off nearly 1,900 employees. The company struggled with cancelations and reimbursements, after which it announced it would refund its customers whose reservations fell within a specific timeframe. The company changed its cancelation and refund policy overnight without consulting the hosts. It tainted the company's relation with the hosts, as the hosts had to bear the loss. To improve this relationship, Airbnb announced $250 million in funds for struggling hosts. Even guests faced issues while applying for a refund, for which the CEO received significant backlash.
Individuals were worried about the future of Airbnb after the pandemic, but the company dealt well with this crisis.Airbnb's Initial Public Offering
In early 2020, the company's CEO shared his plans of listing Airbnb on the stock market, but the company's plans got derailed due to the coronavirus outbreak. Nevertheless, Airbnb went public by the end of 2020.
On 10th December 2020, the company was listed on the NASDAQ, and immediately after debuting, the company's stock skyrocketed. It was listed at a 112% premium turning its market cap to $86.5 billion.
The day before its debut, the company's price was set at $68 per share, and it was listed at the price of $146 per share, making it the 10th best debut of 2020.
As of April 2021, the stock is currently trading at $178 on NASDAQ, and with the rollout of vaccinations across the globe, Airbnb's business is all set to recover and touch new highs.Final words
Airbnb is a unique concept that is cherished by people of all generations across the globe. Amid the pandemic, its growth stagnated, but that won't be the case forever. People love traveling, and they ought to travel more after the pandemic. This gives Airbnb a chance to recover and outdo others in the hospitality industry.
Airbnb remains a solid company with a solid business model which has vast potential to grow.