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How Airbnb Works: Everything You Need to Know

How Airbnb Works: Everything You Need to Know


Airbnb was founded in 2008 by Brian Chesky and Joe Gebbia as a way to supplement rent in the expensive city of San Fransisco. The founders turned their living room into a bed and breakfast for three guests, who slept on air mattresses and ate a homemade breakfast.

How Airbnb Works - Airbnb Logo

Airbnb was born.

Now, there are over 600,000 properties listed on Airbnb. And, on any given night, there are 500,000 people staying in an Airbnb property.

What is Airbnb? Some Figures

Since 2008, Airbnb has turned into an online marketplace where hosts can rent out their property, or portions of their property, to renters. Airbnb is currently available in over 34,000 cities across 191 countries.

Business is certainly booming for Airbnb, who have welcomed over 60 million guests at their 2 million listings worldwide.

As a comparison, Starwood-Marriott, the largest hotel chain in the world, has only 1.1 million rooms worldwide.

As of 2015, it was estimated that Airbnb was worth over $20 billion.

Also of note, is that Airbnb hosts are more likely to be women than men. Unlike other sharing economy services like Uber, the majority of Airbnb hosts are female at 54%, compared to 46% who are men.Airbnb1

How Airbnb Works

As a guest, it’s easy to register for Airbnb. You can register through various social media accounts in a matter of minutes, or with your email.

You can then search properties and contact owners for further information. As a guest, you can read reviews from other guests who have stayed at that property. Before renting, you can also view photos and detailed descriptions of the particular property.

As a renter, you can filter your search based on location, room type, amenities, property type, price, size, keywords, and much more. After conversing with the Airbnb host, you can choose to book the property, which then locks you in as the renter for the selected dates. You can then continually communicate with the owners of the property up to, during, and following, your trip.

Similar to other sharing economy platforms, Airbnb facilitates all the transactions through its platform, so hosts and guests don’t worry about the transaction.


How to Make Money on Airbnb

How Airbnb works as a host obviously is a bit more involved than being a guest.

As a host on Airbnb, you begin by registering, and then you go through a number of steps to list your property. This includes linking your social media accounts, giving detailed information about your property, and uploading photos.

The average host on Airbnb earns about $7,000 a year from renting out a property or portion of a property.

Want to know exactly how much you can make? Check out our article here to discover your potential Airbnb income. Or, check out our sharing economy income calculator for a quick estimate.

As a renter, you pay right away when you book. Hosts however, don’t get paid until 24 hours after check-in. This is a security mechanism to make sure everything is in order. As security for hosts, Airbnb provides them with $1 million insurance policy in case of damages.

How Airbnb Works: Concluding Thoughts

Airbnb has become popular because it allows people to monetize their underused assets, such as their homes. Airbnb also helps connect travelers with locals who can share their love of their city.

This is how Airbnb works. It facilitates a social experience, rather than a simple boring hotel stay.

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