Airbnb

Airbnb is an online community marketplace where people can list any accommodation for rent and others can book the space for use. Designers Joe Gebbia, Brian Chesky, and Nathan Blecharczyk founded Airbnb in 2008. Airbnb lodgings can range from single rooms, apartments, single-family homes, and even luxury properties such as castles or yachts. By 2025, the company had a value of nearly $80 billion. In the mid-2020s, Airbnb had listings in 81,000 cities and towns across 191 countries.

History

Roommates Joe Gebbia and Brian Chesky, both graduates of the Rhode Island School of Design, were unemployed, broke, and struggling to pay the rent on their apartment in San Francisco in 2007. At the time, the Industrial Designer Society of America Conference was coming to their city, so affordable rooms in the area were in short supply. The roommates had an idea. They wondered if people would pay for space in their apartment. They bought three air mattresses and set up a website called Airbed and Breakfast. Three people took them up on the offer of a place to sleep and breakfast for $80 a night. Gebbia and Chesky fed their guests and helped them explore San Francisco. The pair decided their venture had a bright future.

The roommates hired their friend Nathan Blecharczyk to develop a website, and in 2008, the three founded Airbnb, named for the air mattresses that launched the business. They sought investors, but many big venture capital firms turned down Airbnb, leaving Gebbia, Chesky, and Blecharczyk struggling. In keeping with their entrepreneurial spirit, they found a creative way to raise desperately needed funds by recruiting people living in the Denver area to list spare bedrooms during the 2008 Democratic National Convention. They also bought generic oat cereal in bulk and packaged it to reflect the upcoming presidential election: Obama-Os and Cap'n McCains. The Airbnb founders gave cereal away at the convention and sold it online, generating plenty of publicity and some cash. The Obama-Os outsold the Cap'n McCains, so they ate excess cereal stock to save money. Airbnb was accepted into a Silicon Valley incubator for start-up companies a few months later and quickly attracted investors.

In its first four years, the company boasted four million guests. The following year, Airbnb served seven million and continued to grow, and during the first half of 2016, the company became profitable for the first time. In 2017, the company had 33.9 million users in the US alone. Despite its profitability in 2016, the company's financial performance varied through the remainder of the 2010s; while it earned a $200 million profit in 2018, the following year it reported losses of $322 million. Still, by 2019, an average of two million guests per night stayed in a property they booked through Airbnb.

During 2020, Airbnb faced a number of challenges and opportunities. Due to the onset of the COVID-19 pandemic early that year and its subsequent impact on the global economy, travel sharply dropped off; some cities saw Airbnb bookings decrease by 96 percent. As a result, the company laid off approximately a quarter of its global workforce in May 2020. However, despite the sharp plunge in rentals in most areas, the company did enjoy an increase in reservations in rural areas. The company also went public in 2020, with an initial public offering (IPO) that priced its value at $68 a share.

In 2021, as travel restrictions eased in much of the world and vaccination rates rose in many countries, Airbnb benefited from a surge in travel as the global tourism industry recovered. However, factors outside Airbnb's control continued to affect its business. In March 2022, the company suspended its business activity in Russia and Belarus due to the Russian invasion of Ukraine in February, and two months later the company also stopped operating in China due to the country's unpredictable public health measures against COVID-19 and other regulatory issues.

Business Model

A sharing economy is an arrangement in which people temporarily rent something. It is also referred to as peer-to-peer rental and has been described as collaborative consumption, referring to the transaction occurring between individuals rather than a consumer and a company, as in the traditional rental industry. Some companies help people arrange rentals of bicycles, vehicles, purses, or pets, while others foster shared rides or other services. By the early 2020s, ride-sharing companies such as Uber and Lyft had come to global prominence. Airbnb, Vrbo, and other online brokers specializing in short-term rentals had also become major contenders in the hospitality and tourism industries.

Airbnb hosts and guests create accounts through the airbnb.com website. Both parties provide as much information as they like in their profiles and can link to their Facebook and other social media profiles as well. According to the website, Airbnb provides some confidentiality. It does not show full names or contact information on public profiles, and it verifies listings and profiles. Hosts and guests communicate only through Airbnb until reservations are confirmed; both parties are encouraged to leave reviews. Airbnb also offers meetups for members of its community.

Airbnb collects a commission on each transaction of 6 percent to 12 percent, which is less than typical standard rental agent transactions. When a reservation is made, Airbnb collects payment and holds it in escrow. Funds are released to the host twenty-four hours after guests arrive, a feature the company says allows any issues to be resolved before the payment is transferred.

The company offers additional services to boost business. Because quality images sell travelers on a property, Chesky and Gebbia personally flew to New York and photographed Manhattan properties when they were building the business. They then hired someone to create a database of professional photographers who could be booked by property owners to take photos for their listings. Airbnb even paid the photographers, adding a level of professionalism to some of their listings.

In 2016, the company introduced Airbnb Experiences, which are tourist activities that users can book through the Airbnb platform. This represented a shift beyond simply renting accommodations and signaled the company's interest in venturing into other aspects of the tourism industry. The feature's success led to the launch of Airbnb Adventures in 2019, which focused on off-the-beaten-path excursions.

Controversies and Challenges

Airbnb's first significant problem arose in 2011 in the city where it all began—San Francisco. A property owner found her Airbnb guest and several accomplices had vandalized her apartment and stolen valuables, her passport, and other property. At the time, Airbnb had a small customer support staff available during limited hours. The company eventually added twenty-four-hour staffing for phone calls, developed and staffed a trust and safety center, and began offering property insurance.

Airbnb's business model has also been accused of helping drive gentrification and housing crises in various cities around the world. This is mainly due to the fact that some companies and individuals buy properties in which they do not plan to live and simply use these properties as Airbnb rentals, which can drive up housing costs and restrict the supply of available housing. This trend, as well as other issues associated with Airbnb rentals, has led cities around the world to scrutinize and, at times, restrict the company's activity. In New York City, rentals of fewer than thirty days are against the law, so authorities stated opposition to Airbnb rentals during the 2010s, placing restrictions on the practice in 2011 and 2016. The 2016 law allowed individuals to rent out their own apartments on a short-term basis, but attempted to prevent residences from serving as year-round guest accommodations. San Francisco passed a law in 2017 requiring those who wish to become Airbnb hosts to register with the city before they can rent any units, and stating that any given unit cannot be rented out for more than ninety days per year. Outside the United States, cities that have attempted to place restrictions on Airbnb include Paris, Barcelona, Berlin, Vancouver, and Toronto. However, Airbnb pushed back against many of these restrictions with lawsuits and other methods, and many policies restricting short-term rentals had mixed results; for example, despite the restrictions in place, New York City had, by some estimates, more Airbnbs than vacant apartments available for rent in 2021.

In 2016, a controversy emerged when a number of Airbnb hosts were accused of discriminating against guests of color. To address this issue, Airbnb worked with former US attorney general Eric Holder to develop a new anti-discrimination policy; as part of a series of reforms, hosts would not be able to view the profile pictures of guests until an accommodation request had been accepted. Despite these reforms, travelers of color, particularly Black Airbnb users, continued to report discrimination when trying to book properties on Airbnb. Responding to these ongoing issues, in January 2022 the company began to test a new booking system with its users in Oregon; under the new system, hosts would only be able to view the first initials of prospective guests.

Privacy concerns in Airbnb rentals arose in 2024, when it was revealed that the company had received tens of thousands of complaints regarding hidden cameras and other surveillance devices used in Airbnb properties. Although Airbnb strengthened its policy on security cameras in March 2024 by banning the use of all indoor cameras in its rentals, the issue raised significant concerns about guest privacy and Airbnb's ability to protect its users.

Many regulatory issues have arisen in the peer-to-peer rental arena, though to what degree they will affect such businesses has yet to be determined. Some cities and advocates maintain that such transactions in the housing rental market should be subject to the same laws and taxes as the hotel and motel industry, including inspections of the property.

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