By now we all know someone that has booked or hosted an Airbnb. It is fast becoming the new way to travel and experience the world like never before. So what is an Airbnb? And what is the meaning of Airbnb?
An Airbnb is a residential property that hosts rent on a short term basis to travelers. It can be anything from a house, a single room, a boat or even a tree house. Think of it as pop-up accommodation – a market place where people rent out their properties.
In this article, I will tell you exactly how two guys started Airbnb, and how it has exploded into over 80,000 cities around the world.
How did they do it? How is Airbnb the biggest player in the real estate game without owning any property? And how YOU can get in on the very lucrative ride.
Lets get you up to speed so far. Let’s start with the Airbnb meaning.
Airbnb Meaning – What does it stand for?
Airbnb stands for Air Bed and Breakfast, a fairly simple meaning. But what’s the Air part all about? You would think it relates to flying up in the air right? Not even close!
Back in 2007, cash strapped Joe Gebbia and Brian Chesky were living in San Francisco. Every year a design conference came to town, filling every hotel room he brink. Being savvy entrepreneurs, they thought to themselves “why not rent out our floor space in our lounge room?”.
So they went out and purchased 3 air beds. They blew them up and advertised them on their website which they called Airbed and Breakfast. A week later they had their first guests at $80 a night.
And, well, we all know what happened next, Airbnb was born!
How much is Airbnb Worth?
From a modest lounge room with three blow up beds, Airbnb is now worth around $38 Billion dollars. Cue the jaw-drop action here.
Airbnb is on track to net around 3.5 billion in the year 2020. They are now in over 81,000 cities with 6 million properties listed on their home sharing website. The company is reportedly worth a whopping $31 billion.
Their latest round of funding came in at 1.8 billion and now there is talk that the company is going public. This will send their valuations soaring even higher. It means Airbnb is now one of the largest companies on the planet.
Also worth mentioning is back in 2017, they bought out Luxury Retreats for $300 million. As a result, the Airbnb Luxe brand was created, and they are now dominating the luxury home space.
Does Airbnb Own any Property?
With the above valuation and the staggering amount of money that Airbnb is making, you would think they have a huge property empire. But no, the company make all their money off property that WE own!
But don’t get me wrong, Airbnb has been acquiring a lot of tech companies in the accommodation industry. With the new technology, they offer up a better user experience. For example, split payments, pricing tips, and business travel.
With each acquisition, they gain more and more traction and are now venturing into luxury and upmarket properties.
Did you know you can earn money on Airbnb without owning property? Why not take a leaf out of their book.
So how do they make their money?
You may be asking yourself how does Airbnb make money? The answer is simple. Airbnb works as a middle man for people that want to rent out their property (hosts) to people that need a room (guests).
A host can list their property free of charge, but pay Airbnb a 3% fee. This will happen each time a guest stays at their property.
When a guest books and pays the host, Airbnb will add on an extra fee of around 5% – 15% of the total. This number can be higher or lower depending on the total cost. This is known as a service fee. I have written a detailed guide on how Airbnb price breakdown works.
So with 6 million listings operating throughout the world, the $3.5 billion dollar paycheck is starting to make more sense. And the good news? You can make good money from Airbnb too!
The Key Drivers
There are four key drivers that effect the value of Airbnb.
- Number of listings
- Average guest arrivals per listing
- Average rent per guest arrival
- Airbnb’s share of rental income
Forbes has written a great guide on how this works. In short, Airbnb focuses strongly on the average price a guest pays per booking.
They pride themselves on being a cheaper alternative to hotels, which in return increases the number of guests. As of 2017, the average rent received by a host was $174.
If you are an Airbnb host, you must ensure you get your pricing right. You also need to make your property easy to book as possible to book, with little restrictions. Here are 51 ways to improve your Airbnb ranking that I encourage you to read.
Is Airbnb considered a Bed and Breakfast?
The simple answer is no, Airbnb is not considered a bed and breakfast. But that’s not to say you won’t find bed and breakfasts, in fact, they are common.
When you think of a traditional bed and breakfast, you think of a modest room with a live-in host. This host would greet you when you arrive, show you to your room and give you your key.
Then, come morning, you awake to the smells of a breakfast fit for a king. Cooked eggs, cereal, fruit, coffee, and tea.
Back when our two founders Joe and Brian hosted their first guests, this is exactly what they did. But now, as Airbnb has grown from renting out your lounge room floor to renting out an entire house, the breakfast part of a BNB has all but disappeared.
Majority of hosts that offer breakfast will host a private room or shared house. These listings have a more personal touch as the host lives in the property. Entire house listings may leave things like cereal, milk, eggs or bread, not much else.
If no breakfast is a deal breaker, fear not, you can select “Breakfast Provided” when searching for somewhere to stay. This will only bring up properties that provide breakfast. Crisis averted.
So don’t be confused that the meaning of Airbnb means breakfast is included. It’s not always the case!
Do you need a business license for Airbnb?
This has been a bit of a sore spot for Airbnb over the last five years as the company has grown.
So many homeowners and tenants are listing their properties on the platform. This has started to skew the rental market as well as infuriate the neighbours.
“Most major cities will require you to obtain an Airbnb business license”
Why you ask? I recently visited a popular town in New Zealand and tried to find a house to rent for a 12 month period. There were at least 30 people that turned up to apply for the house. This was the same at every house I went to that day.
I spoke to the agent who said that 90% of the rentals in the town were now listed on Airbnb. There is a huge shortage of houses for rent which is driving the prices sky high.
So to curb this, major cities around the world now require hosts to get a city-approved license. They must do this before listing their house or apartment. Failure to get a license has seen countless properties delisted off the platform. Some cities are even enforcing a city tax onto each booking.
The toughest regulations have come from the city of Santa Monica. Here you must be a live-in host, obtain a license from the city and collect a 14% tax that is payable to the city. As a result, these tough regulations saw listings in the area drop 80%.
These regulations, however, haven’t hit every area. Most small towns and smaller cities remain unaffected. So if you are considering listing your place on Airbnb, it is best to check with your local council. Failure to do so could result in fines and your home delisted.
Airbnb regulations around the world
Let’s take a look around the world at some of the biggest cities. The rules and regulations change depending on the city. So if you are hosting in these cities, you will need an Airbnb license.
New York. This is where you will find some of the strictest laws in the world. Hosts in New York may only list one home, their own home, at a time. Furthermore, it’s also illegal to rent out an entire apartment for a stay less than 30 days. So if you’re considering making a living from Airbnb in The Big Apple, think again!
Los Angeles. In December 2018, Los Angeles City Council past a new law for strict Airbnb regulations. As a result, it restricts hosts to a maximum of 120 nights per year. In addition to that, hosts must register with the city for an annual $89 fee. But the kicker? Hosts may only rent out their primary residence, where they spend at least 6-months year.
Amsterdam. The city of Amsterdam was one of the first to enact harsh Airbnb regulations. Hosts may only rent out their home or apartment for a maximum of 60 nights per year. But that figure will drop to 30 nights should a new law pass, expected in 2019.
Paris. Airbnb is massive in Paris with excess of 60,000 properties listed. It comes as no surprise that Paris is heavily regulated on Airbnb. For instance, there is a maximum of 120 nights per year. Plus you must register with the city and hope they approve you.
Barcelona. All hosts in Barcelona must register their property with the city and obtain a permit number. Hosts must display their permit numbers online for all to see. The city is very strict in cracking down on unregistered listings, with big fines.
Japan. Thinking of hosting in Japan? Well think again. The Minpaku law came in June 2018 and saw 80% of all listings in Japan wiped. Hosts must apply to the government and obtain permission to list their house on Airbnb. Like Barcelona, hosts must display their permit numbers clearly. Furthermore, there is a maximum 180 nights a year restriction.
How do I become a member of Airbnb?
With so many people jumping on the Airbnb roller coaster, it couldn’t be easier to join in the ride. All you need to do is sign up!
You can sign up using a valid email address, your Facebook account or your Google account. Just fill in the details and you’re ready to go.
If you want to sign up to book a property, you will need to validate your email address, phone number and even add a government-issued ID. This will help you gain the trust of your host and get your booking accepted.
Are you are a brand new Airbnb user and want to use Airbnb as a guest? You can use our Bnb Duck sign up link to receive $55 to use on your first trip.
Likewise if you want to sign up to host your own Airbnb, we have a signup link for you too.
We have many great articles if you are planning to be a host. A good place to start would be how to setup an Airbnb business. Then you will want to get yourself 5-star reviews to help attract more guests.
Now you know meaning of Airbnb
So now you know the Airbnb meaning is Air Bed and Breakfast. You also know how they began in a living room, and now are a billion dollar company worldwide.
You may also be wondering can you make good money on Airbnb? I have written a guide answering that question that I recommend checking out.