Air B And B is one of the leading platforms in the world that capitalizes on short-term rentals. The company connects travellers to hosts and facilitates searches and rentals without owning any piece of real property by itself. This has shown to be a pretty effective way to earn revenue while providing hosts a way to earn revenue as well, aside from expanding the accommodation options of travelers around the world.
Founders Joe Gebbia and Brian Chesky first got the idea for an accomodation-sharing platform when they had trouble paying rent. So they began to advertise their own space composed of three mattresses and home-made breakfasts, on their website which they dressed up with high-resolutin photos and maps to the space. Four years later, AirBnB has overtaken booking rates of major chains like the Hilton and today the company has grown to 1,500,000 listings all over the world. AirBnB has also refined its booking, selection, and review process and can be accessed on any mobile device. In 2015, the company was worth 25.5 billion.
AirBnb earns revenue from commissions coming from two sources
the hosts and the guests. The site charges a flat 10 commission from hosts for every successful booking. The site also charges a 3 booking fee from travellers for every confirmed booking.
Due to the ease with which one can post a listing for an empty, unused apartment or an extra room, more and more hosts are turning their AirBnB activities into a business. It is not uncommon to see multiple listings on the site owned by one host. A host owning there or four listings in a major city like New York or Portland can easily earn a six-figure income in a year from these listings alone.
However, this trend is becoming the subject of increasing tighter regulation by local authorities because these activities resemble those of hotels and therefore would need to be regulated as such. AirBnB has also maintained that hosts who own multiple listings on the site should be responsible for hotel taxes, occupancy taxes, and other fees imposed by local authorities.
For hosts, AirBnB offers an attractive source of alternative income and not as a business, something that has been shared in a blog post by CEO Brian Chesky. According to him, the demographic of AirBnb hosts is composed of people who do not see the site as a business, but rather as one avenue to earn extra money to buy property, pay off student loans or to meet new people.
Portland was one of the first cities to openly work with Air BnB when it legitimized short-term rentals by levying lodging taxes. However, with increased rental prices putting the squeeze on Portland locals, authorities have turned their attention on companies like AirBnb whose sharing platform is considered to be one of the driving forces behind the housing crisis exacerbated by the conversion of affordable housing stock into hotel rooms for tourists and short-term renters.
The city has already caused the shutdown of more than a hundred listings on the site that flouted rental regulations. For one, the city
requires that the listers live in the units being rented. A permit from the city is also required before a host can rent, and in order to get that permit, listings must pass a safety inspection. Portland also has a maximum room limit for rentals and landlords must consent to the listing before it can considered a legal rental agreement.
Recently, the company informed the authorities that it would block hosts from posting more than one listing at a time according to its “one host, one home policy.” However, it is also seeking a relaxation of the city’s short-term rental rules, which it sees as too rigorous.