What would have been just a drifting thought couple of years back is now a reality. Technology and innovation has taken imaginations of people into the virtual world. The Airbnb was also a creation of an imagination.
Airbedandbreakfast was invented in the year 2008 by Brian Chesky and Joe Gebbia when they converted their living room to accommodate three guest offering them bed and homemade breakfast. By doing so they could pay off their rent which they were finding it difficult to afford. Nathan Blecharczyk joined as the co-founder in February 2008. The officially launched the site on August 11, 2008. The name was shortened to Airbnb in March 2009 and also included homes, apartments, castles, boats, tree houses, igloos, tipis, private islands other than air beds and shared spaces.
In order to accommodate the newly added manpower, a year later they moved to its first office space. The company continued to grow at a rapid rate. In June 2012 they announced 10 million nights booked and of these 75% came from markets outside U.S. Ashton Kutcher, actor and partner has a significant investment in the company and also is a strategic brand advisor for the company.
Airbnb is an online portal that connects people looking to rent their homes with people looking for accommodations. Airbnb users include hosts and travelers n 192 countries worldwide. According to an article in Investopedia last year Airbnb raised $1.5 billion in funds that brought the value of the company to about $25.5 billion. This made it worth more than the Chicago based Hyatt Hotels Corp (NYSE:H) and the Parsippany-Troy Hills, N.J.-based Wyndham Worldwide Corp (NYSE:WYN), respectively.
Travelers looking for accommodation can search for properties available in the listings, but have to create an Airbnb profile to book. Once the reservation request is submitted and payment details are entered, they get a confirmation from the host. Travelers pay a guest service fee of 6-12% towards customer support and the Host Guarantee. Airbnb takes a 3% service fee from the host for each reservation to cover the cost of processing the transaction.
Airbnb can benefit both hosts and travelers, while the host can meet people from around the world while making a little extra money, travelers can often stay for less than the cost of a hotel room. While there are benefits, there are concerns for both hosts and guests. The biggest risk for hosts is that their property can get damaged. Airbnb in " their Host Guarantee program” "provides protection for up to $1,000,000 in damages to covered property in the rare event of guest damage, in eligible countries."
The short-term accommodation industry in India is heating up with new and existing firms such as Stayzilla, Zostel, OYO Rooms and Guesthouser. Airbnb has over 1,500,000 listings in 34,000 cities in 190 countries.
-Bindu A Menon
Senior Faculty, INLEAD