Airbnb takes a unique approach toward lodging. Part of the “sharing economy,” Airbnb offers you someone’s home as a place to stay instead of a hotel. On Airbnb, you can find places to crash on your backpacking trip through Europe, or you can find a place to stay for a month during your internship in Los Angeles. Also, if you want to rent out extra space in your own home, you can host through Airbnb and make money for allowing a guest to stay the night.
This all sounds pretty simple, but what is Airbnb exactly? Here’s what you need to know about the popular home-sharing site before you book a stay or become a host.
Airbnb had a rough start
Airbnb founders Joe Gebbia, Brian Chesky, and Nathan Blecharczyk developed the business in 2008. Initially, Gebbia and Chesky started off using their own place as a bed and breakfast to make a few extra bucks to pay rent. With a big design conference coming to the San Francisco area and a city full of sold-out hotels at the time, they saw a potential market for the idea and developed a website called airbedandbreakfast.com. To fund their operation, the guys sold breakfast cereals during the 2008 presidential race — Obama O’s and Cap’n McCains — and the cereals earned them around $30,000.
Airbnb was not an immediate success, though. The startup experienced several ups and downs, and it went through at least three separate launches. A number of investors didn’t take the idea seriously. However, one venture capitalist, Paul Graham, did see a potential lottery ticket in Air Bed & Breakfast. Graham invited the founders to join a program called Y Combinator, which provides a startup with cash and training in exchange for a percentage of their company. In 2009, Air Bed & Breakfast became Airbnb, and that was the company’s turning point. Recent estimates value the home-sharing company at $35 billion.
Here’s how Airbnb works for guests
Airbnb does not own properties. It acts as an intermediary between those who want to rent out space and those who are looking for space to rent. Creating an account on Airbnb is free, and it is relatively simple. To do so, you enter your name, email address, birthday, and a password. Airbnb also asks that you agree to treat everyone equally, regardless of race, religion, sex, or other factors. Once you agree, your account is active. You also have the option to sign up through Facebook or Google.
If you like the listing, you can request to book it. The site prompts you to go through a few more steps, like entering in more of your information. Once you complete those steps, you can complete your request and pay for your room. After your first booking, the process is much quicker and easier.
Before your reservation is final, however, you must wait for approval from the host, unless your listing is an “instant book” listing, as those listings don’t require host approval.
For non-instant book listings, Airbnb also recommends that guests message hosts before booking to double-check availability. If you don’t hear back from the host in a timely manner, you can continue to message other hosts in the area until you find one you like. Under the host information section of each listing, you can see the host’s response rate and response time to get an idea of how quickly a host will respond to your message.
Airbnb is now offering a new ‘tier’ of homes called Airbnb Plus, an elite selection of properties that Airbnb representatives will have personally inspected and identified as top of the line. The average price for these is around $250 per night, for rentals where guests can expect a well-stocked kitchen, fast Wi-Fi, and comfortable bedding.
Here’s how Airbnb works for hosts
To rent out extra space in your home, you must first create a free Airbnb account. Then, you click on “become a host” in the upper right-hand corner of the page. After that, you’ll need to create a listing for your space. A listing is a lot like a profile page for the space you want to host; just like a social media profile, the nicer your page looks, the more attention it will draw. It’s a good idea to make your space look as nice as possible and take flattering pictures of the space. How much should you charge? Airbnb helps you set the pricing by indicating the averages for your area.
You can also make money on Airbnb by hosting an experience. “Airbnb experiences are activities designed and led by inspiring locals. They go beyond typical tours or classes by immersing guests in a host’s unique world,” says the Airbnb site. If you want to host an experience, review Airbnb’s quality standards, which indicate requirements for experiences. Basically, the guest must be gaining access to something, participating in something, and offered an original perspective. After reviewing the quality standards, design your experience and submit it to Airbnb for approval. Once approved, you are ready to publish and host your experience.
Airbnb has hefty fees, but it’s probably cheaper than a hotel stay
In addition to the cost of the room, Airbnb charges a guest service fee that typically maxes out at 13%. Hosts also pay a service fee of around three percent, which Airbnb adds to each transaction. Hosts who offer experiences are subject to a 20% service fee.
The price of a room on Airbnb depends on a variety of factors, including location, the quality of the listing, and the amenities. You can find very inexpensive rooms on Airbnb, just as you can find very inexpensive hotels. In cities on the outskirts of major metropolitan areas, you can generally find the best deals. We found a room for $28 in Marietta, which is a city near Atlanta, Georgia.
In most major cities, Airbnb’s rates are more competitive than traditional hotels. In New York City, Airbnb’s average rates are around $119 less than average hotel rates, though, in Berlin, Airbnb’s average rates are just $22 less than the average hotel rates. In 2018, Forbes analyzed eight major cities in the world and Airbnb offers lower rates in each one with an average savings of $68.
Airbnb hosts and guests do not exchange money in person. Guests pay for everything on the Airbnb site when they make their reservation, even having the option to split costs between friends, and hosts receive pay from Airbnb. Airbnb uses PayPal, direct deposit, and other payment methods.
There have been reports of safety and security issues
You may have heard reports of a guest destroying a host’s home, a host endangering a guest’s safety, or an Airbnb host watching a guest through a hidden camera. Airbnb has taken some actions to help promote safety and security for hosts and guests, such as having users provide identification, improving profile and review systems, and implementing a host guarantee that reimburses eligible hosts for damages up to $1 million. Airbnb may also conduct public records checks, such as of sex offender registries, to see if a user has a past record.
Airbnb has had its share of controversy
Airbnb isn’t all underwater aquarium rooms. It has invited its share of controversy. Cities from San Francisco to New York to Barcelona to Chicago to Berlin have clashed with the company, and Airbnb has been attempting to find ways to compromise with places that want to see more regulation. Critics have accused Airbnb of exacerbating the housing crisis in San Francisco, and a judge dismissed the company’s lawsuit against the city.
Individuals have also complained about the service, with some people saying they’ve had hosts discriminate against them while trying to find a rental. In response to a review, Airbnb changed some of its policies, such as blocking hosts from accepting guests for a certain date if they’ve already rejected someone else first.
In the latest controversy, Airbnb is being accused of deleting negative reviews after a guest claimed that the home she arrived in looked completely inferior to the photos of the five-star property she booked.
Should you use Airbnb?
One benefit of using Airbnb is the cost, as you can legitimately find a cheap place to stay on the site. Also, you find out a great deal of detailed information about where you’ll be staying beforehand, and you can talk to your host before your stay. The experience is much more relaxed and personal than a traditional hotel or motel.
For hosts, renting a room in your home without a permit is a legal grey area. In some localities, it is illegal. In addition to the legal implications, and the obvious safety concerns, it’s a good idea to make sure you know what you’re getting yourself into. This means reading the terms, conditions, fine print, and reviews from other users. It’s wise for hosts to review local laws and maintain the necessary insurance coverage before renting out space in their homes. If you decide to book a stay with Airbnb, it’s smart to let a close friend or relative know exactly where you’ll be staying, and follow all of the safety advice and instructions on the Airbnb site.