Airbnb, the successful C2C rental platform

Understanding all the stakes of the rental platform

What is Airbnb?

Airbnb is an international accommodation rental platform created under the name “Airbed and breakfast” in 2008 in San Francisco, which has since become the benchmark for successful C2C marketplaces.

Key facts:

• One of the platforms most severely impacted by the pandemic, the platform still generated $3.4 billion in 2020 (-30% compared to 2019).
• The platform has 150 million users (2018)
• Airbnb counts 7 million listings for 4 million hosts

How does Airbnb get paid?

On a rental marketplace, the most common business model is the commission model, although a subscription model could also be quite coherent. There are various commission models: fixed commission, commission on customers, commission on sellers, hybrid model…

On Airbnb, it is a hybrid model: the platform adds 6 to 12% of service fees on the price set by the host, the host will leave 3% of these revenues.

A tripartite platform for trust

Marketplaces are tripartite platforms unlike traditional e-commerce: there is an operator, sellers and buyers. Depending on the level of management of the marketplace, the platform operator is more or less involved in the actions performed on the platform. The more managed a market place is, the more insurance you will have, and the higher the price of the service fees will be. When you book an accommodation with Airbnb, you have additional insurances: identity verification, background checks, risk prevention, secure payments, fraud prevention, account protection… All to ensure a near-perfect experience, trust on marketplaces being its main retention lever.

Some characteristics of the platform

Airbnb is a switch platform, which means that each user can be a host as well as a traveler: the major advantage of this type of platform is that the cost of acquiring a user is halved. A particular point of attention is that a platform can only be switched if the user typologies are similar (B2B platform, C2C platform).
The platform obfuscates the exact location of the hosts, to avoid that the users pass by the platform for their trip.
Volume discount: The more nights you stay, the lower the price per night and the lower the service fee.
Seasonal price variation: for tourism actors, the notion of high season and low season is key to setting the price of a night’s stay; it was therefore essential for Airbnb to allow sellers to vary the price of a night’s stay depending on the date or season.

Can a new platform compete with Airbnb?

Although other generalist short-term accommodation rental platforms exist, Airbnb remains the reference rental marketplace. Can we take on Airbnb?

The question arises for many other well-established service marketplaces: can we compete with Uber? Can we compete with Uber Eats?

While it is not impossible to compete with a giant with a generalist platform, the angle of attack that has the best chance of success seems to be the verticalization of the platform.

Misterbnb, successful vertical platform

A good example of a successful verticalized rental marketplace is misterbnb. The platform, created in 2014, allows members of the LGBTQ+ community to rent accommodations and travel safely; the founders starting from the observation that the community was particularly at risk of being unwelcome or even assaulted by Airbnb hosts. Today the Misterbnb platform is :

• 310 000 hosts
• Accommodations in 135 countries
• More than 270 000 reviews

No doubt about the success of the platform. Other vertical platforms also seem to be on the road to success, such as Fairbnb, which offers fair and sustainable vacations, and Sportihome, which connects sportsmen and women.

The impact of the online platform on the territories

Airbnb, a vector for gentrification of city centers

Definition: Gentrification is the metamorphosis of a working-class neighborhood due to the arrival of more affluent classes who change their lifestyles and consumption patterns.

If we cannot “accuse” Airbnb of causing the gentrification of city centers, we cannot deny that the C2C platform is participating in it.

Airbnb tourism in the center of major tourist cities is leading to a decrease in the number of homes intended for residents (an estimated 15,000 to 20,000 homes lost in Paris) in favor of homes dedicated solely to airbnb rentals. Due to the high concentration of tourists, businesses whose prices do not correspond to the means of the inhabitants are being established in the area, driving up the price of rents and pushing the original inhabitants to leave.