Airbnb.Inc is an American company with an international presence in the tourism sector. It provides a vacation-rental online marketplace. The marketplace can be accessed by consumers through the website or by using an app. The original name of the company is AirBedandBreakfast.com.
The Airbnb.Inc headquarters is located in San Francisco, California. The company was founded by Brian Chesky, Joe Gebbia and Nathan Blecharczyk. It was a humble beginning in the year 2007, starting with renting out a few airbeds. The company raised funds by selling cereal boxes in the initial years. Subsequently, it got sufficient funding from venture capitalists to scale up its operations. Today the company is present in almost 200 countries and 100000 cities.
How does it operate?
Airbnb does not own any property for carrying on its booking business. Its revenue is generated through commission earned while booking accommodation. The listing size of the company is 6 million, to offer the reservation services. Its offers vary from a treehouse to a complete home. For enhanced consumer experiences, there are add-on facilities such as dance lessons, specially designed cooking classes or hosted journeys. Every stay is assigned a real host to help and provide necessary information to guests. Airbnb provides a safe online payment interface for travelers and payment outside is strictly prohibited. The Extenuating Circumstances Policy of the company explains the cancellation issues.
The company markets its service packages using names such as Airbnb Plus, Airbnb Luxe and Hotel Tonight. Each category is designed with a specific customer segment and expectation in mind. All Airbnb services conform to safety, comfort and hygiene standards set by the company.
Airbnb offers the option of hosting one’s property with the company. The basic condition is that the space offered for hosting must be clean. The offered space may be a complete home, a room or even a sofa. Information provided by the host must be correct and accurate. The host must offer the guest warm hospitality. By hosting, one can advertise his space on Airbnb. The host has to fix the rates. The money is handled by Airbnb and the host is paid directly in his account within a stipulated timeframe. Hosting at Airbnb can be a good source of income.
The founders, Brian Chesky, Joe Gebbia and Nathan Blecharczyk, are in the Board of Directors of the company. Other members of the Board are Angela Ahrendts, Kenneth Chenault, Belinda Johnson, Jeffery Jordan, Alfred Lyn and Ann Mather.
The largest shareholder of the company is Sequoia Capital. Its stake in the company is 16.6 percent. Brian Chesky holds a 15.4 percent stake. Joe Gebbia and Nathan Blecharczyk hold a 14.2 percent stake individually. In December 2020, Airbnb went public. The idea of going public was to raise funds for future growth. However, experts were apprehensive about the timing of going public. A company goes public in times of growth. It is a major contradiction in the case of Airbnb. The company has been making losses in recent years.
The Airbnb Initial Public Offering or IPO proved to be a grand success. Initially, the shares were priced at USD 45 to 50. It went up to USD 68 at the time of listing. The success of Airbnb IPO is attributed to factors such as existing brand image, technology-driven business, and the rollout of Covid-19 vaccines. Another big positive factor for the company is that it does not own fixed assets. It does not have to bear huge maintenance costs like hotels or airlines. By the end of 2020, travel destinations in South Asia, Latin America and Africa opened up, signaling positive sentiment for the Airbnb IPO.
In the first nine months of 2020, the company reported a net loss of USD 697 million. The reported revenue for the same period was USD 2.5 billion. For the same period last year, the company reported a loss of USD 323 million and a revenue of USD 3.7 billion. From 2017 to 2019, Airbnb could maintain decent yearly revenue growth. Due to high operating expenses, it could not make a net profit in these years.
Some Airbnb competitors are VRBO, HomeAway, Booking.com, Trivago and Expedia Group. In FY 2019, only Expedia group reported net profit. Airbnb had raised the highest funding of all the peer companies.
The home rental business has done better than the hotel business since the beginning of the Covid-19 crisis. During the summer of 2020, the demand for larger homes increased, and rentals increased accordingly. Airbnb dropped some non-core business plans such as transportation and entertainment following the pandemic and decided to focus only on its core business. Airbnb executives believe that their business is more aligned with the post-Covid-19 way of traveling and accommodation.