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In the early days of Airbnb, the company stretched it’s reach to Craigslist and that gave the platform the kick-start it needed. Uploading onto Craigslist is no longer allowed but Airbnb has now grown into a world-wide open platform that stands independently as a 30 billion dollar business. Airbnb’s popularity lies in its affordability and adventurous nature. If you want to know the two words that appeal to a frequent travelers and millennials – it’s ‘affordability’ and ‘adventure.’
Could I have guessed or gauged the popularity of Airbnb 2 years ago?
Not at all. Even I’m caught off guard at the growing popularity of Airbnb and the wide age and ethnic groups I get to host as well. It’s almost a household name now, both in the U.S. and internationally. I started on Airbnb believing I would pull in a 50% occupancy rate at best. My first 3 days on the platform produced no reservations (and even some weird inquiries). Things picked up after that and now as we are heading into another winter, I have dropped my expectations down coming off the summer rush but I’m still crossing my fingers for a solid month. At the end of the year, we’ll give a full earnings report as a part of our monthly family income reports. Then my husband can get the Airbnb tax post out before the start of tax season.
PSA: Airbnb is not passive income.
Here are a few hypothesis on why the Airbnb platform is now easily worth 30 billion dollars.
What is art?
A 3 letter word.
The obvious (almost deadpan) answer why Airbnb is so popular is demand. The simple answer for us is because local demand exists.
One of the most beautiful things about Airbnb is the conceptualization and execution of a free market. Airbnb reservation prices are often much lower than the local rates that a traditional hotel or motel demands to keep its books balanced. Airbnb just lets the simple ebbs and flows of supply vs demand set prices because the company itself holds no physical real estate to balance.
If Airbnbs becomes saturated then the prices will naturally become more competitive. The lower prices will eventually push hosts either to hold prices stable and lower expectations or change their direction of utilization. No hurt feelings; the free market is a beautiful thing.
Although there is more competition than ever on the AirBnB platform, strong hosts and hostesses are still getting a fair share of the growing pie. If you want a more detailed answer then yes, it is more complicated than just the basic principles of supply vs demand at play, although not by nearly as much.
Airbnb streamlined an outdated, inefficient industry and maximized the utilization of traditional homes across all user bases across the span of continents. Cool, huh?
Airbnb is a platform business that provides and guides an opportunity for trade between two groups. It is a non-linear form of business starting with it’s producers, aka hosts and hostesses. Anybody with an open room or free space can become a producer on Airbnb. It is a good way to provide extra income with minimal effort depending on the set up. Hosts give the platform variation. It is an idiot proof way to advertise space because the platform has the traffic and user base to support it. Airbnb gives hosts an easy way to monetize a space that would otherwise be going to waste. The danger is obviously the legality of such an open platform longterm and the stability of Airbnb’s future…but we’ll leave that discussion for later.
Sometimes you just need a place to crash. A small portion of my quick one nighter stays are hospital related where the appointments run late and people fear driving on the road back home tired. I notice Airbnbs around the local hospitals that purposefully offer lower rates for people staying there due to family tragedies and such. I think that is such a sweet thing to do. The hotels in that area can charge up to $100/night. In Seattle, one Airbnb family rents their space out for $10 (the minimum price required to host) for any parents or family of sick children because they’re right across the street from the hospital.
Plus let’s be realistic on the real reason of affordability: Airbnb can skirt around a lot of the fees and regulations that standard lodging business cannot. Since the company itself holds no inventory, it is purely a facilitator in the process of renting.
Airbnb provides a free for all platform for all houses, condos, apartments, castles, houseboats, tree houses, barns, mansions, caves (caves!) – in any given city, all around the big wide world. Man, I’ve always wanted to rent out a party mansion! It’s probably not a good idea to buy one for fun but short term rental? Hmmm!
There are numerous number of options and variety. If you rent out a traditional hotel, the rooms are more or less than same style for around the same price. Which brings me to why Airbnb is so success.
If that’s your thing. If you’re into making connections with people from all around the world, it’s a great game! Hubby and I are introverts so we hide from our guests. Jared sits on top of the stairs to avoid being seen haha. If you are our guests, don’t go in thinking you’ll be greeted with a hug and a kiss from grandma. If you are an introvert host, you can choose to hide from guests like we do. Long ago, I use to greet guests personally, but I rarely greet guests anymore as a personal preference; meeting people gives me social anxiety.
I get asked about horror stories a lot and yes there are some minor stories but the overwhelming majority of my Airbnb experiences have been pleasant. You are constantly reminded that the basis of majority of humans are indeed good. If there’s a mistake, it is almost always a small misunderstanding of some kind. Oh oh, we haven’t been robbed yet, not being robbed is always good.
This is just logic. Hotels occupy a single large chunk of space usually clustered around the areas that has the most demand for tourist and business travelers. Moving away from those areas, it usually leaves motels that are often very expensive for what you get. They’re not usually as reputable and they’re often void of the family home feel.
I do not believe Airbnb is a killer to high-end luxury hotels located in downtown etc. but mid range and lower end lodgings? Absolutely.
There are homes everywhere and lots of people have that extra room open. A portion of my guests are simply visiting families in our neck of the woods. There is no reason for them to pay 5x as much to stay downtown if they’re visiting family or friends. The motels in our area are objectionable. Really…remember Seattle’s reputation as a former grunge town? Well, these are the grunge motels! Hubby and I sort of live in the more run-down / suburban side of the town and even though we’re not close to any famous destination, we fill a necessary space and we offer an alternative to the local motels.
~ This is an installment of my Airbnb series. Browse all my Airbnb content here. ~
All in all, Airbnb is *for now* a solid win-win for the both guests and the hosts. Why do you think Airbnb is so popular?