It started in 2007, with two hosts offering their San Francisco home to three guests. Since then, the online marketplace Airbnb has grown to feature 6 million active listings worldwide with over 4 million hosts.
Every month, 14,000 new hosts join this platform.
And as of February 2022, these hosts have earned a whopping total of more than 150 billion dollars in revenue. The vacation rental industry continues to grow steadily.
In 2020 alone, there were reportedly 115,000 vacation rental companies worldwide. Twenty-three thousand of them are found in the US alone.
Airbnb's Unique Selling Proposition for Their Online Rental Marketplace
Airbnb may get a massive share of the pie, but that doesn't mean that it's getting everything. Many competitors for a vacation rental or apartment booking marketplace like Airbnb exist.
What turned Airbnb into a huge success was how it provided options for guests looking for more intimate accommodations.
Whereas traditional travelers might have booked hotels or hostels, the Airbnb platform brought them a more local experience by booking rooms or houses of hosts.
By doing so, it disrupted an over 1000-year-old hotel industry with its "collaborative travel revolution." And contributed to the thriving sharing economy industry.
In the United States alone, it was forecasted that more than 85 million people would be using sharing economy services like Airbnb by the end of 2021.
What Do Individuals Look for in Hosted Accommodations?
According to a survey conducted among 844 respondents that have booked Airbnb accommodation, 61% opted to rent a place through the platform because it was more cost-effective than staying in a mid-range hotel.
Additionally, people like having access to convenient locations and amenities. Among these amenities, top of the list are pools, WiFi, and good kitchens.
Similarly, the Airbnb platform listings allow guests to explore unique accommodations, accommodations they can't get anywhere else. One group of travelers, for example, was able to book a place atop some horse stables.
On top of these, Airbnb and other rental marketplaces are packed with features that make it easy for guests and hosts to find each other. E.g., creating an account can be done quickly with Google or social media integration.
The separate user roles (guests and hosts) tailer to the user's needs, including customizing search filters for specific property types, budgets, and amenities. Similarly, property pages are comprehensive, listing your regular details and maps, photos, and reviews.
In the case of Airbnb, these features allow homeowners to easily rent out their homes while the platform handles the transactions.
Still, Airbnb has quite a few challenges in running its platform -- most of which may be beyond the platform's control (as in the case of guests who get noise complaints from neighbors). Another example is that hosts get hefty penalties for canceling a guest reservation, even if they may feel that it is not warranted.
Test your Online Marketplace Idea in the Real World
It started in 2007 with an air mattress and three guests. And a few years down the road, their founders navigated several roadblocks that left them selling cereals, at one point, to make ends meet.
Then they looked at their data and realized a common theme found in photos of their listings: they were terrible. Shortly after, they commissioned high-resolution photos for their listings and saw their weekly revenue double to $400 a week.
In the same way, start small. Start with what's called an MVP (Minimum Viable Product).
An MVP or Minimum Viable Product is the simplest "saleable" version of a product or service you can offer. Done right, there are a lot of benefits with an MVP. It allows you to understand the demand for your business offering better, release increasingly better iterations of your product, find your first customers, and even secure funding.
And it's what the founder of the company that Amazon bought for 1.2 billion dollars first did.
Nick Swinmurn of Zappos wanted to buy a pair of shoes but couldn't find them in the closest mall he went to. So he thought he'd build a basic website where he could sell shoes and approached a local shoe store to take pictures.
He uploaded the photos on the website, got some orders, and returned to the shoe store to buy and ship the shoes. While he didn't earn a lot, he did learn that there was a ready market for what he wanted to do.
In addition to your MVP, spend some time on market research to create your rental marketplace's MVP. Market research helps you to identify your customers, know what they think of your product, assess your offering against the competition, and evaluate whether your marketplace will be profitable.
An easy place to start is using something like SurveyMonkey to ask users what they are looking for.
Creating an MVP (a minimum product to start) will also help you determine if you have the right value proposition. It will also tell you whether you are communicating your online value proposition in the right way.
Plan the Features for Your Online Rental Marketplace
For a marketplace website like Airbnb to work, you'll target two different user groups: your hosts and your guests. Some features overlap for both hosts and guests, such as authorization, messaging, geolocation, and payments.
And then, there are features that are specific to hosts, like property listings and management. Guests want to be able to conveniently search and filter results according to specific metrics like location and price.
How Does Airbnb Monetize its Online Marketplace?
Airbnb mostly earns through service fees from bookings. Guests are charged up to 14.2% of service fees, while hosts pay 3% of fees for each transaction.
Additionally, Airbnb charges a host a 10% commission fee. Airbnb also offers to promote listings at a price.
For your marketplace, you might choose from 6 revenue models.
- Sign-up or registration fees
- Subscriptions fees
- Product listing fees
- Transaction fees
- Sponsored or promoted listings
- Potentially show ads from third-party advertisers
Start Your Marketplace Website With Yclas
Generally, building a marketplace website like Airbnb costs around $300,000, depending on where you live. And it can take up as long as 3,000+ hours.
Don't have that much money or time to build your online marketplace, try building an Airbnb-like website with a marketplace solution with Yclas. With ready-made templates that you can customize, you don't have to worry about hiring a design team to get started.
And with features that are already built into the software, having no coding skills isn't an issue.
Yclas also integrates with several payment gateways to ensure secure and convenient payment transactions for your hosts and guests. Get started today.