|Industry||Social networking service|
|Headquarters||San Francisco, California, U.S.|
|Key people||Brian Chesky, CEO
Joe Gebbia, CPO
Nathan Blecharczyk, CTO
Airbnb is a website for people to rent out lodging. It has over 500,000 listings in 33,000 cities and 192 countries. Founded in August 2008 and headquartered in San Francisco, California, the company is privately owned and operated by Airbnb, Inc.
Users of the site must register and create a personal online profile before using the site. Every property is associated with a host whose profile includes recommendations by other users, reviews by previous guests, as well as a response rating and private messaging system.
As of July 2011, the company had raised $119.8 million in venture funding from Y Combinator, Greylock Partners, Sequoia Capital, Andreessen Horowitz, DST Global Solutions, General Catalyst Partners and undisclosed amounts from Youniversity Ventures' partners, Jawed Karim, Keith Rabois, and Kevin Hartz, and from A Grade Investments’ partners, Ashton Kutcher and Guy Oseary.
- 1 History
- 2 Company
- 3 Mergers and acquisitions
- 4 Business model and disruption
- 5 Operation
- 6 Impact
- 7 Criticism and controversies
- 8 Partial list of competitors
- 9 References
- 10 External links
Shortly after moving to San Francisco in October 2007, Brian Chesky and Joe Gebbia created the initial concept for AirBed & Breakfast during the Industrial Design Conference held by Industrial Designers Society of America. The original site offered short-term living quarters, breakfast and a unique business networking opportunity for attendees who were unable to book a hotel in the saturated market.
At the time, roommates Chesky and Gebbia could not afford the rent for their loft in San Francisco. They made their living room into a bed and breakfast, accommodating three guests on air mattresses and providing homemade breakfast.
In February 2008, Harvard graduate and technical architect Nathan Blecharczyk joined as the third co-founder of AirBed & Breakfast. During the company’s initial stages, the founders focused on high-profile events where alternative lodging was scarce. The site Airbedandbreakfast.com officially launched on August 11, 2008.
To help fund the site, the founders created special edition breakfast cereals, with presidential candidates Barack Obama and John McCain as the inspiration for “Obama O’s” and “Cap’n McCains”. In two months, 800 boxes of cereal were sold at $40 each, which generated more than $30,000 for the company’s incubation and attracted Y Combinator’s Paul Graham.
After its inauguration, the site expanded to include properties in the market between hotels and CouchSurfing. In January 2009, Y Combinator invited Chesky, Gebbia and Blecharczyk to join the incubator’s winter session for three months of training. With the website already built, they used the $20,000 Y-Combinator investment to fly to New York to meet users and promote the site. They returned to San Francisco with a profitable business model to present to West Coast investors.
In March 2009, the name Airbedandbreakfast.com was shortened to Airbnb.com, and the site’s content had expanded from air beds and shared spaces to a variety of properties including entire homes and apartments, private rooms, castles, boats, manors, tree houses, tipis, igloos, private islands and other properties.
One year later, there were 15 people working from Chesky and Gebbia’s loft apartment on Rausch Street in San Francisco. To make room for employees, Brian Chesky gave up his bedroom and lived through the Airbnb service until the company moved into its first office space.
The company continued to experience rapid growth through the year and in November 2010 raised $7.2 million in Series A funding from Greylock Partners and Sequoia Capital, and announced that out of 700,000 nights booked, 80% had occurred in the past six months.
In July 2014, Airbnb revealed design revisions to their site and mobile app, and introduced a new logo. Some considered the new icon to be visually similar to genitalia, but a consumer survey by Survata showed only a minority of respondents thought this was the case.
In May 2011, Airbnb acquired a German competitor, Accoleo. This acquisition launched the first international Airbnb office in Hamburg. Then, in October 2011, Airbnb established its second international office in London.
Given the growth of international users, Airbnb opened 6 additional international offices in early 2012. These cities include Paris, Milan, Barcelona, Copenhagen, Moscow, and São Paulo. These are in addition to existing offices in San Francisco, London, Hamburg, and Berlin where Airbnb maintains its international presence for the EMEA markets within a German incubator space. Airbnb announced in September 2013 that its European headquarters would be located in Dublin.
At the beginning of November 2012, Chesky announced his focus on Australia, the second largest Airbnb market behind the United States, as well as Thailand and Indonesia. To support this effort, Airbnb opened its 11th office in Sydney. The Australian consumer accounts for one-tenth of the Airbnb user base.
Weeks after announcing the focus on Australia, Airbnb announced its strategy to move more aggressively into the Asian market with the launch of their newest headquarters in Singapore. The company's goal is to acquire an additional 2 million properties within the continent.
Location and revenue
The Airbnb founding team acts as the key managerial staff for Airbnb: Brian Chesky, Co-Founder and Chief Executive Officer; Joe Gebbia, Co-Founder and Chief Product Officer; and Nathan Blecharczyk, Co-Founder and Chief Technical Officer.
Airbnb has its twelve offices in Barcelona (Spain), Berlin (Germany), Copenhagen (Denmark), Dublin (Ireland), London (UK), Milan, (Italy), Moscow (Russia), Paris (France), San Francisco (US), São Paulo (Brazil), Singapore, and Sydney (Australia).
Airbnb’s primary source of revenue comes from service fees from bookings. Fees range between 6% and 12% depending on the price of the booking. Airbnb also charges the host 3% from each guest booking for credit card processing.
In March 2014, the company announced plans to open a new "operational headquarters" for North America in Portland, Oregon, in summer 2014, but indicated that its main North American headquarters would remain in San Francisco.
In February 2011, Airbnb announced its 1 millionth booking since its inception in August 2008. Then, in January 2012, Airbnb announced its 5 millionth night booked internationally through the service. Of these bookings, 75% of the business came from markets outside of the continental United States. In June 2012, the company announced 10 million nights booked, doubling business in 5 months.
By October 2013, Airbnb had served nine million guests since its founding in August 2008. In December 2013, the company reported it had over six million new guests in 2013, and nearly 250,000 properties were added in 2013.
Mergers and acquisitions
Prior to the 2012 Summer Olympics, Airbnb acquired London-based rival CrashPadder, subsequently adding six thousand international listings to its existing inventory. This acquisition made Airbnb the largest peer-to-peer accommodations website in the United Kingdom.
Airbnb acquired NabeWise, a city guide that aggregates curated information for specified locations, in November 2012. This acquisition shifted the company focus toward offering hyperlocal recommendations to travelers.
In December 2012, Airbnb announced the acquisition of Localmind. Localmind is a location-based question and answer platform that allows users to post questions about specific locations online. These questions are then answered in real-time by experts on the specified territories.
Business model and disruption
Airbnb runs on a marketplace platform model where it connects hosts and travelers and enables transactions without owning any rooms itself. Such platforms disrupt traditional industries by creating new sources of supply and relying on curation for developing quality. Unlike traditional hotels, Airbnb scales not by scaling inventory but by increasing the hosts and travelers and matching them with each other.
Airbnb is an online marketplace for vacation rentals that connects users with property to rent with users looking to rent the space. Users are categorized as “Hosts” and “Guests;” both of which must register with Airbnb using a variety of means. A valid email address and valid telephone were initially the only requirements to build a unique user profile on the website, however as of April 2013, a scan of a government issued ID is now required.
Profiles include details such as user reviews and shared social connections to build a reputation and trust among users of the marketplace. Other elements of the Airbnb profile include user recommendations and a private messaging system.
In addition to providing personal information, hosts display listing details including price, amenities, house rules, imagery, and detailed information about their neighborhood. Due to the nature of the business, a merit system is in place to allow guests and hosts to leave references and ratings which are displayed to the public in order to provide an evaluation method.
Since 2008, the website has developed to include social connections pulling data from social networking services such as Facebook. As of May 2011, the site uncovered over 300 million connections between Airbnb and the Facebook user groups.
Signup and reservations
It is free to create a listing using Airbnb. Users fill out form with initial details. Changes can be made at a later date. The listing will not go live until the user is ready to publish. Pricing can be determined by the user. User can charge different prices for nightly, weekly, and monthly stays as well as seasonal pricing. Users can use the Titles and Descriptions section to advertise their space. They can outline house rules or other descriptions regarding the residence. Airbnb allows users to publish up to 24 photographs of the place. Airbnb, on a limited basis, is offering free professional photography in most of the listed areas. Profile is a place where the guests can research more about the users. This section is often used for users to display who they are as well as their philosophies on hosting.
Guests are required to message the user directly through Airbnb to ask questions regarding the property. Users have 100% control over who books their place. When a potential guest puts in a reservation request, the host has at least 24 hours to accept or decline the request.
After user accepts a reservation, they can coordinate meeting times and contact information with guests. After the reservation is complete, users are encouraged to leave a review. Reviews help build validity and references both for the guests and the host.
In addition to the Airbnb website, the company offers mobile applications for iOS and Android customers. As of September 2012, users had downloaded the mobile application over 1 million times which accounts for over 26% of the company’s overall traffic.
Through the mobile channel users have all functionality of the website which includes private messaging making communication three times faster between users. The application also allows users to find listings based on what is available using geolocation.
In November 2013 Airbnb launched new versions of its iOS and Android apps, adding the ability for hosts to communicate with guests and respond directly to guest messages.
Airbnb user profiles contain recommendations, reviews, and ratings to build credible online reputations within the platform. Additionally, the site provides a private messaging system as a channel for users to message one another privately before booking and accepting reservations. Hosts are never required to accept a reservation. After the guest has checked out, the parties review one another to build website credibility similar to online marketplaces like eBay.
Airbnb facilitates online payments from guest to host through its Security Payments feature which processes payment transactions 24 hours after check in. This protocol offers a guarantee for guests and helps to uphold host cancellations policies before processing payments. Additionally, the Airbnb website facilitates security deposits and cleaning fees, the former of which is held until the property is vacated. The company’s revenue comes from a 6% to 12% commission of the guest payment and 3% of what the host receives.
Any Airbnb host can now require their prospective guests to obtain Verified IDs before booking. Initially trust was tit-for-tat so any host who requests this condition must also get verified. However this has been changed such that all guests must have a verified ID before booking.
In June 2012, Airbnb launched a wish list feature offering users the ability to create a curated catalog of desired listing they would like to visit. Co-Founder and Chief Product Officer, Joe Gebbia and his team conceived the idea of changing the website from an online marketplace to a source for aspiration. Users can curate their favorite destinations into organized lists and share these with other users. Since the launch of the Wish List functionality in June 2012, engagement with the Airbnb website increased by 30%. 45% of users engage with Wish Lists and had added over 1 million accommodations to personalized lists.
In creating Wish Lists, the product team designed a proprietary "info scrolling system" which allows users to engage with these lists without the website slowing down the user experience. Additionally, Airbnb open sourced the code, Infinity.js to the software developer community.
In November 2012, Airbnb launched the Neighborhoods product. This travel guide helps travelers choose to the ideal neighborhood match based on a series of collaborative filters and attributes such as Great Transit, Dining, Peace & Quiet, Nightlife, Touristy, and Shopping. Currently[when?], the Neighborhoods product is enabled for San Francisco, New York, London, Paris, Berlin, Washington, D.C., and Rio de Janeiro giving in-depth information for selected neighborhoods in these cities through photos, essays, maps, tags from locals, and assessments of public transportation.
The Airbnb product team hand-mapped 300 neighborhoods within these seven cities and had local editors curate content for each neighborhood. Airbnb also added 70 street photographers who generated 40,000 photographs for the project.
Airbnb has been compared to Craigslist, HomeAway, Flip Key, WorldEscape, Uproost, and Groupon, other sites that offer spur-of-the-moment rentals. Airbnb won the "breakout app" award at the 2011 South by Southwest conference. Along with Quora and Dropbox, The New York Times listed Airbnb among the next generation of multibillion dollar start-ups. Following Airbnb, other services such as Getaround, Vayable, Guidehop, myTaskAngel and Task Rabbit launched with a similar model.
New York's state legislature passed a law in July 2010 making it illegal to rent out Class A residential space for less than 30 days. However, the bill's sponsor, State Senator Liz Krueger said Airbnb and its competitors are not the law's target. In Quebec, the government has specifically targeted individuals renting out their homes and apartments through Airbnb.
In July 2010, the company received more than 300 emails from people who were on the brink of losing their homes through foreclosure due to financial hardship from the economic recession; these people said that they depended on their continued ability to sublet rooms in their residences. Airbnb is also appealing to luxury homeowners. While most wealthy homeowners would have never considered renting out their properties over traditional bulletin boards, classified ads, or Internet sites like Craigslist, Airbnb offers a much more reliable service for affluent users to earn revenue from their second homes. This phenomenon has caused much discourse for the American Hotel & Lodging Association as short-term private rentals continue to disrupt the hospitality industry.
In November 2012, Airbnb commissioned HR&A Advisors to conduct a study which measured the market impact of collaborative consumption by users within urban populations. Specifically, the study measured the impact these companies had on the economy of San Francisco. The study found that from April 2011 to May 2012, guests and hosts utilizing the service contributed $56 million in spending within the San Francisco economy, $43.1 million of which supported local businesses. Over 90% of hosts surveyed rented their primary residences to visitors on an occasional basis, and spent nearly half the income they make on living expenses. The study also found the average guest stay was 5.5 days, compared to 3.5 days for hotel guests, and the average guest spent $1,045 during their stay, compared to the $840 spent by hotel guests.
In the aftermath of Hurricane Sandy, Airbnb partnered with New York City Mayor Michael Bloomberg to offer free housing for persons displaced by the storm. Airbnb built a microsite for this effort alone where victims register for housing and meet property owners with free housing. Additionally, Airbnb waived all service fees associated with these listings while maintaining the Host Guarantee for all properties listed.
Criticism and controversies
||This article's Criticism or Controversy section may compromise the article's neutral point of view of the subject. (July 2014)|
Use of spam
In June 2011, blogger and competitor Dave Gooden claimed that questionable sales practices including sending mass, automated emails to property owners on Craigslist led to Airbnb’s success as an Internet startup company. This user acquisition tactic was used along with several others when building the company business in 2009. However, the company found the practice largely ineffective.
Incidents and renters' security
In July 2011, there were first reports from a host, "EJ", who had her apartment burglarized and vandalized by an Airbnb guest. After 14 hours of no response, Airbnb initially indicated that they would not compensate the host for damages. They later reversed this decision amidst public backlash. After three days of helping the victim, she claims Airbnb encouraged her to remove her complaint noting the "potentially negative impact" it could have on the company, and stopped contacting her completely. Following the incident, more hosts came forward expressing similar experiences, including a man whose home had been rented through Airbnb to a meth addict who later stole the host's birth certificate, went through "everything he owned," and caused thousands of dollars in damage. He expressed similar dissatisfaction with Airbnb's response to the situation.
In response to the property damages claims, Airbnb launched its “The Airbnb Host Guarantee” property protection program in August 2011 which covered property loss or damage due to vandalism and theft for up to $50,000. Additionally, the company initiated a 24 hour customer service hotline, established a taskforce to review suspicious activity, and implemented a suite of security features.
In 2012, two prostitutes rented an apartment which the police raided.
In March 2014, comedian and entrepreneur, Ari Teman, leased his New York apartment. Under the guise of using the space for relatives, it was rented for the purposes of an orgy. Teman said that $87,000 in damages were caused and that the building is considering his eviction. The guests had references and verified their account.
Financial, tax, and legal liabilities
In January 2013, Airbnb user Nigel Warren faced the prospect of paying fines to New York City for renting his room on Airbnb. The case was made that certain language in New York's administrative code allowed temporary renters to lawfully stay for periods under 30 days. On 20 May 2013 a New York City administrative law judge, Clive Morrick, disagreed with this interpretation citing Mr. Warren a $2,400 fine. This new ruling does not make using the service "illegal", as long as stays are for more than 29 days. If not, users do stand the chance of facing fines per New York City.
In January 2014 the Federal Court of Germany ruled that a transfer of residence to tourists is not covered by a permission to sublet. In this case the tenant was previously warned by the landlords. A pending new case centers around the question if even a termination without notice is possible if no explicit permission from the landlord is obtained.
According to a study commissioned by Airbnb itself, in fiscal year 2011-2012, Airbnb should have collected and remitted $1.9 million to the City of San Francisco, but they have yet to do so as of 2014.
In San Francisco, Airbnb hosting is illegal under most circumstances whether you rent or own your property. Airbnb hosts have been fined by the city and received eviction notices from landlords. Airbnb hosting is also illegal in New York City under many circumstances.
The new[when?] identity verification system "Verified ID" is perceived by customers as excessively intrusive and "creepy." It requires three layers of customer identification: telephone, photo of ID (such as passport or driver's license), and verification of Facebook, Linkedin or Google+ account. It is impossible to use the system if one of these data is not provided.
The verification system is not undertaken by Airbnb, it is outsourced to a company called Jumio (www.jumio.com) and although the data provided to Jumio is encrypted in flight and storage, Airbnb does not state who has access to this stored data or how it is used within the company.[original research?]
The etiquette of Airbnb hosts has also come under criticism, citing unreasonable checkout duties, long wait times for hosts’ keys and unkempt rental properties.
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