Airbnb’s Evolution From Renting a Spare Room to Global Platform

Airbnb’s key business resources include its customized marketplace, trust-based relationships, extensive reviews tied to network member profiles and knowledge resources – these resources are difficult for competitors to replicate.

Airbnb has taken steps to broaden its value proposition by diversifying its growth pathways, including partnerships with housing conglomerates and ticketing solutions providers for tourist experiences (Gallagher, 2017). These enable it to increase revenue potential.

The Origins of Airbnb

Airbnb’s story of its founding is an inspiration in vision and creativity. Two entrepreneurs set out on a journey from humble ideas into global platforms that have revolutionized travel around the globe.

Many entrepreneurs struggle to launch their ideas into reality. Brian Chesky and Joe Gebbia’s remarkable journey from renting out an extra room to founding the global accommodation platform is truly inspiring.

In 2008, our founders first launched our site as a platform for sharing accommodations and experiences. Though investors were initially skeptical, that didn’t stop our founders – they remained determined to create a successful company using all available capital to ensure its success.

After receiving funding from Y Combinator (YC), they immediately began expanding their operations and building an infrastructure capable of supporting its growth. As their platform became more popular, new features and functionalities were added in order to broaden its appeal among more users.

In 2011, the company began expanding internationally. This was an intentional strategic move as it allowed them to capitalize on their growing notoriety while meeting travelers’ needs across various regions.

Airbnb quickly realized the aspirational qualities of travel were at the core of customer loyalty, so they began offering experiences which allowed guests to connect with local communities and explore areas they may have missed otherwise, in addition to services like cleaning, laundry and food delivery designed to increase satisfaction among its guests.

The company shifted its focus from catering solely to leisure travellers to serving business travellers as part of a wider trend towards experiences as alternatives to traditional hotel stays. While targeting this market, the company continued investing in its core accommodation listings while testing social features designed to provide seamless user experiences.

Airbnb has put great emphasis on content marketing, creating an extensive library of videos and photos to help potential guests imagine themselves staying at the company’s properties. Creative in-house content only accounts for approximately 30% of Airbnb’s marketing efforts; user-generated content makes up the remaining 70%. This approach helps the company connect with customers more personally while simultaneously cutting costs; much user-generated content is generally free or at a low cost.

The Early Years

Airbnb was first popularly promoted as an alternative to traditional hotels during its initial days, offering almost anything imaginable from homes, apartments, rooms in condos, treehouses, barns, tents and cruise ships to be rented by travelers – from private rooms or whole homes for sharing – all under one umbrella. Airbnb even promoted itself as such an innovative service.

Airbnb was an innovator and disrupter in the hotel industry, fueling significant growth through a disruptive model of value creation that stemmed from tailored marketplace, trust-based relationships and extensive reviews tied to network member profiles – key resources difficult for competitors to duplicate that gave Airbnb a significant competitive edge (Barney 1991).

Brian Chesky and Joe Gebbia established the initial business model configuration of Airbnb in 2008. Peer-to-peer marketing with guest referrals and direct bookings became its core marketing approach by 2010. By 2010, Airbnb had over 200,000 listings in 200 countries and was valued at $31 billion, more than Hilton/Wyndham combined and just behind Marriott in terms of market capitalization. By 2012, with NabeWise London acquired and Neighborhoods introduced by Airbnb for guests to understand local neighborhoods better, growth continued rapidly for this global brand.

By 2016, Airbnb had achieved dominance of the global lodging market, with over 50% of bookings occurring outside its home markets (Carty, 2017). Growth continued into the 2020s through experimentation and exploring different growth paths.

Airbnb began to capitalize on its platform by charging listing fees and creating the “superhost” program to attract top hosts. In addition, new services such as Experiences and Collections allowed users to participate in activities that create an overall sense of community involvement.

Airbnb began expanding its ecosystem of products and services in the 2020s with the launch of Trips, where guests could book guided experiences provided by professional providers. Furthermore, partnerships were formed with airlines and car rental companies so as to offer more travel options on its platform. Finally, in 2022 Airbnb introduced a host-only charge option which enabled professional hosts and hotels to omit guest fees altogether and maintain control of prices and yield management without incurring guest fees from users.

The Evolution to a Global Platform

As Airbnb expanded, its business model evolved into that of a multi-sided platform business. This type of enterprise connects different stakeholders who trade over time (Rumble & Mangematin 2015; Reinhold et al 2021). For Airbnb this includes guests seeking short-term accommodations and hosts who rent out space for short durations.

Airbnb expanded in its second phase of growth by meeting more of their user’s needs than just accommodation for travelers, such as local experiences, business travel solutions and luxury accommodations. This expansion resulted from Airbnb shifting their strategic direction based on user needs.

Airbnb sought to gain a competitive advantage against traditional hotels and vacation rental agencies by expanding its offering, investing in partnerships and acquisitions to do so. Example: It joined forces with property planners and real estate investors to establish Niido, a hotel-like concept offering apartment units that can be rented individually or as entire homes for up to 180 days each year (Ting, 2018l). RXR Realty and Airbnb joined forces to transform ten floors of 75 Rockefeller Plaza into apartments featuring meeting rooms, social areas and co-working facilities – these can now be booked on Airbnb under Niido branding as well as via a platform called Airbnb for Work (Airoldi, 2020).

The company also invested in other partners to improve its services for guests and hosts alike, such as Resy, which allows guests to make restaurant reservations through its platform; Accomable provides accessible travel for people with disabilities (Randle & Dolnicar, 2019).

Airbnb has expanded its services, as well as expanded their offerings, to help guests quickly locate hosts and properties to suit their specific needs. This includes providing information about hosts and spaces such as pictures, check-in/check-out times, house rules, pricing (Aversa et al. 2017; Gardiner & Dolnicar 2020).

Airbnb focused its second phase of development on strengthening its safety measures. For instance, they implemented a guest guarantee program and neighbourhood hotline to address complaints regarding its platform; as well as new safeguards to protect guests’ belongings such as keyless entry systems and secure payment solutions.

The Future

Airbnb represents an example of a multi-sided platform business model where multiple stakeholders interact and create value for the platform (Schaal, 2019a). A key factor of Airbnb’s value creation lies in their ability to attract hosts and guests while upholding trust between market segments – this goal can be met through investing in various initiatives.

Airbnb has developed tools to mitigate risks associated with its platform by strengthening its review and rating systems, such as decreasing fake reviews by tracking guest behavior and removing those based on features beyond host control (Schaal, 2018b). Furthermore, customer support was expanded with 24/7 assistance via phone calls in English and Mandarin as well as helplines and live chats during business hours; helplines provided assistance during regular hours; plus reservation screening processes which combine computerised checks with human judgement in order to detect fraudulent bookings (Schaal 2019a).

Airbnb goes beyond hosting and guest services by partnering with third-party payment processors and property management companies for rapid expansion. Furthermore, they partner with corporate travel companies by offering Experiences tailored specifically for their programs.

Airbnb has also partnered with local tourism boards in select markets for marketing purposes and made their listings visible through Google searches alongside Expedia in certain countries (Schaal, 2019k, 2019l). Airbnb has further increased the availability of hotel rooms by investing and partnering with HotelTonight to cross-promote their room offerings and increase availability (Schaal 2019k, 2019l).

Although many studies have examined Airbnb’s key stakeholders (guests and hosts), which have been extensively covered in literature (for an in-depth discussion, please refer to Dolnicar, 2019), less attention has been paid to other stakeholder groups that interact with it. As evidence, take for example the negative externalities experienced by local residents living near tourist hotspots where Airbnb is most active. Resident complaints about Airbnb include competition for scarce public resources like parking space; nuisance caused by tourists stopping to ask directions in residential areas and the lack of respect shown for local culture (Gallagher 2017). Airbnb has responded by developing policies and practices to promote responsible use of their products while lobbying local government bodies to secure appropriate zoning approval for new developments.