Airbnb: Bringing Business from the Bottom to its Best
Humble Beginnings
World-renowned company Airbnb began simply from the bare bones in its name: an airbed and breakfast. When the 2007 San Francisco Design Conference left all hotels fully booked in the area, the now Airbnb CEO Brian Chesky and his college friend Joe Gebbia sprouted the idea that would make their careers. Amidst high demand for room and board, the two decided to rent out their shared apartment, rather, their three air mattresses for the night, and provide breakfast for their customers. This first transaction coined their startup “Airbed and Breakfast” and thus they devoted the rest of their time and effort into raising money to get this seedling of a company above ground. Chesky recruited another college friend, Nathan Blecharczyk, and launched their website, which allowed other individuals to rent out their spare rooms, apartments, or houses to customers. “Airbed and Breakfast”, soon shortened to “Airbnb”, was accepted by Venture Capital firm Y Combinator where they provided funding for the company to truly sprout and spread its roots.
Components of the Company
Airbnb’s calling card for years has been short-term rental stays in private homes, apartments, and other properties for people to easily book online. Thriving in busy cities with scarce or expensive hotel options, Airbnb is a pioneer in the hospitality industry as it has brought forth the “sharing economy” to the field. For reference, “sharing economy” is a peer-to-peer economic model allowing individuals to utilize idle assets through online platforms–well known examples include Uber and Poshmark. Airbnb connects renters to customers with just a few clicks of a button, deriving their revenue off of a fee (~15%) from the transaction. Whether looking for a change of scenery to work remotely, or to plan an exotic family vacation, Airbnb allows for customers to stay in unique homes across the globe while being cost effective. Options vary from apartments, cabins in the woods, houseboats, luxury villas, or even treehouses. Continually, short term rentals allow for a more personalized stay, away from the clutter of traditional hotels. Airbnb is a great example of mutualism, as the company, customer, and renter all benefit from the sale.
Advancements in the Air(bnb)
Airbnb constantly pushes its service to new heights. Chesky has worked diligently to shape the future of his company, his own way, building from ingenuity and the interest of his customers. This has been apparent since day zero, as Chesky and Gebbia went as far as to sell election-themed cereals to raise around $30k in their startup phase.
Before Airbnb became a household name, it struggled with attracting customers to its products. A major turnaround came from rebranding the appearance of their website, as early on, they did not take priority in their facade. They posted low-quality photos of the rentals provided, making it hard for users to see what they were spending their money on, which led to a lack of trust and low booking rates. The solution was found in utilizing professional photography for their properties, to show the real guest experience of the space, as well as customer and host reviews. Nowadays, Airbnb puts their best foot forward–their site is flourishing with attractive photos that look like they could be framed in galleries.
Picking a place to stay with Airbnb has been made into so much more than a simple bed and breakfast. The recent “maps” feature shows nearby restaurants, public transportation, and places to shop around their rental to adhere to the wants and needs of their customers beyond their property. Furthermore, the layout of Airbnb has expanded to include two other categories: Experiences and Services. The driver of this expansion was purely from Chesky’s emphasis on human connection in a growing digital world. With the new additions, you can book every facet of a vacation within the Airbnb hub itself.
From experiences, you can book vetted tours, workshops, and cooking classes in the local area. Guests who choose to share their profiles can also see who else is joining them on the “experiences” trip, and can directly message each other to keep in touch and compare/suggest their different excursion plans. The main goal for these features is to connect modern travelers to one another, so that they can share past exposures and travel knowledge to help someone else's future.
With services, third parties are allowed to offer their own goods and services within the Airbnb rental. Airbnb hopes this will make the lodging more competitive with hotels, as they can offer commodities without leaving the property. For example, one can set up a private chef or a workout instructor for their stay. While seemingly attractive, this has caused some backlash from hosts as it just adds in another variable–you already are letting a random person, though verified through Airbnb’s site, stay at your property, adding another layer of risk that renters don’t even receive commission from.
Turbulence in the Air(bnb)
There have indeed been some obstacles over Airbnb’s existence. To no surprise, COVID-19 put the company in irons as everyone was confined to their own homes. The pandemic caused mass cancellations and a near-collapse of travel, and forced Airbnb to start using enhanced cleaning & safety protocols when travel resumed.
The increase in supply for short-term rentals and over-tourism has contributed to rising house prices. This has encouraged landlords to move their properties out of the long-term rental markets and into the short-term rental markets with the platform of Airbnb. As prices go up and up, locals are being pushed out of their homes and must head to cheaper neighborhoods.
The inevitability of property damage, parties, and services (if allowed) being provided within Airbnb homes brings a looming risk for all renters. Featuring many Airbnb properties in neighborhoods takes away from the sense of community in the area. Airbnb also faces competition from hotel chains and rival booking services such as Booking.com and Expedia Group’s Vrbo who continue to climb in the hospitality game.
Decisions with AI
In coupling their motives for constant innovation with maintaining a brand built on human relation, the rise of Artificial Intelligence has brought ambivalence to Chesky’s decisions. Though Airbnb has implemented AI in things like customer service and tailoring searches for viewers, Chesky has vowed to keep AI as only an aid to the company, maintaining Airbnb as a community not a commodity. He continues to focus on the people aspect of travel, and what they want: relationships, memories, and for that to become easier. Human perspectives on travel, within Airbnb’s communities, create intangible links with people, and pushes what's real past what's artificial.