Important Facts

Airbnb was started on 1 August, 2008 and in a short period it grew as a stunning success. Having
received a huge funding of $2.3 Billion from 31 different investors, Airbnb finds itself in the billion
dollar club.
Here are few interesting facts about Airbnb.

Founders: Nathan Blecharczyk, Joe Gebbia and Brian Chesky.

Funding received: $2.3 Billion (Till June 2015)
Airbnb company valuation: $25.5 Billion (As of June 2015)
Airbnb is present in 34,000+ cities across 190+ countries.
Having 1.2 Million listings, the company has served over 35 Million guests.
Headquarters: San Francisco, California, USA.
140,000+ people stay at an Airbnb listed place every day.

The massive funding received by Airbnb has made it enter the million dollar club. Airbnbs recent
funding of $1.5 Billion in one go is one of the largest funding rounds ever conducted.
What is Airbnb?
Airbnb is an e-marketplace linking travellers with native hosts. On one side the platform empowers
people to list their accessible space and make extra income in the form of rent. On the other hand,
Airbnb allows travellers to book exclusive home stays from local hosts, saving them cash and giving
them an opportunity to connect with people in the area. Supplying to the on-demand travel
industry, Airbnb is existing in over 190 countries through the world.
Airbnb is a leading community-driven hospitality enterprise where people can
List, discover, and book unique places-to-stay across the globe. Whether travellers want an
Apartment for the night, or a mansion for a month, Airbnb brings together people from more than
34,000 cities in 190 countries. Airbnb uses its website and world class customer service to enable
people to list their spare space and showcase it to millions of people.
To keep its services running 24x7, Airbnbs philosophy is similar to those of many other companies:
the engineers who build an application are ultimately responsible for it maintenance. According to
Dave Augustine, Engineering Manager at Airbnb, The implications of users not being able to reach
our website can be a serious issue because, if we dont fix them quickly, travellers may miss out on
once-in-a-lifetime trips or not feel supported on their vacations.
The Need: Standard systems for a service-based architecture
To be able to adjust quickly to new business prospects while continuously maintaining the reliability
of their services, Airbnb came up with a service-based architecture for some components of the site,
while keeping the rest to be part of their main application. Separate engineering teams have been

created to support the separate components and features. The engineering team has a central
dashboard application, but each individual team contributes its own operational and business
metrics to create the full picture. Eventually, each team utilize open source projects that come up
with their own dashboards.
Simplicity that Enhances Scalability
Standardization is very essential at the organisation to scale its customer base and infrastructure.
The employees also know that it is necessary for the solution to be easy to use and scale along with
their growing business. In addition to providing comprehensive monitoring, reliable alerting and oncall management, the platforms can also be customized to improve their ease-of-use and
effectiveness. Airbnb is a data-informed company, and this combination gives them the ability to
collect and correlate metrics from 15 different systems into dashboards, and then aggregate
incidents from any system and inform the right person at the right time.
Optimized on-call workflow improves productivity
With the combination of some voluntary and scheduled, and multiple teams responsibility for
different parts of the world, Airbnb needs a central location to handle their on-call workflow.
PagerDuty, an IT firm and AirBnbs associate, gives Airbnbs employees the flexibility they need by
associating the teams with their services and allowing engineers to be notified in the ways that work
for them. On-call engineers and support staff customize the metrics that are to be monitored and
thresholds that need to be crossed before being notified. By optimizing the way incidents are
aggregated and organized, engineers are then informed about real problems, which results in better
productivity and responsiveness. The teams assess their own processes to identify bottlenecks that
might exist throughout the incident resolution lifecycle, and improve response times and
effectiveness. PagerDuty refines the data it gets from Datadog to identify critical issues and routes
alerts to the respective engineers and teams. With comprehensive incident trend data, Airbnb has
been able to identify critical versus nuisance issues and cut out the additional noise and focus on
those that require immediate attention. The Airbnb team frequently re-evaluates these incidents
and their thresholds, so time is no longer spent filtering through noise to determine whats critical
versus informational. Engineers can then focus on continuing to build out Airbnbs product and
protecting its back-end.
Infrastructure-wide Visibility
The company wants to have full infrastructure visibility in order to lower their resolution times and
provide a highly available service. The large and increasing number of integrations available for
Datadog and PagerDuty including Amazon Web Services, StatsD, and Redis are very important
because they help in connecting to a wide range of commercial and open source softwares. This
prevents Airbnb engineers from checking multiple different tools for the information they need to
solve the problem. Datadog helps in finding relevant details that Airbnb might have missed earlier,
and it also helps in correlating variables to reveal dependencies that were earlier concealed.
PagerDuty takes this information and then automates the process, which gives the company better
understanding on teams and service performance. These powerful capabilities have made Datadog
and PagerDuty a necessity at Airbnb.
Airbnb & the Shared Economy

In what is called collective consumption, the sharing economy or the peer economy, proprietors rent
out properties that they are not using, such as a car, house, bicycle or a room in case of Airbnb to an
outsider by means of these peer-to-peer services. The company typically has an eBay-style rating or
review system so individuals on both sides of the operation can trust the other. With the success of
these services, many people don't need to purchase when they can rent payment from others.
Tourists can rent a room or even a whole home or a British castle on Airbnb. The San Francisco start
up is the poster child of the collaborative consumption/peer economy sector.
Value Proposition

Permits proprietors to list their space on the platform and earn rental money.
Airbnb offers insurance to listed properties.
Provides cheaper alternatives to travellers to stay with local hosts.
Enables the process of booking living space for travellers.
Rating and review system for hosts and guests.

Customer Segment of the Business Model

Hosts:

Hosts are the people who possess property and want to make some money by leasing out
their available space.
They can submit a listing for their property on Airbnb, add property details and set their own
rent, check-in, check-out time etc.
Hosts can accept or reject a booking after analysing the reviews of the travellers or after
going through their profiles.

Travellers:

Travellers are the people who list their available spaces from the local hosts.
Travellers have the option of searching for properties by filtering them according to the rent,
amenities provided, various locations etc.
Travellers can reserve a space by paying through the Airbnb portal.

Freelance Photographers:

Airbnb has a huge setup of freelance photographers in all major cities of the world who go
to a location and click high-definition photographs of the properties.
The high quality photographs get more reviews and the freelance photographers are
remunerated by Airbnb directly.

Working of the Business Model

1. Hosts list out their property information on Airbnb along with other aspects like pricing,
amenities provided etc.
2. Airbnb organises professional photographers (if available) to the property location to take
high quality photographs.
3. Travellers search for a property in the city where they wish to stay and browse available
options according to price, amenities etc.
4. Booking is made through Airbnb where travellers pay the fee mentioned by the host and
some additional money as transaction charges.
5. Host accepts the booking. Traveller visits there and finally Airbnb pays the amount to the
host after subtracting their commission.
6. The host and the traveller can review each other and can write based on the experience.
Revenue Model
Airbnb provides free listings to property owners and lets travellers look through the listed spaces
and select the one which best suits their requirements on the platform. The business model of
Airbnb is such that the booking and monetary transactions are done on Airbnbs platform. This is
from where the company makes its share of revenue from 2 diverse sources which have been
explained below:
Commission from Property Owners (Hosts)
Airbnb charges flush 10% commission from hosts upon every booking done through the platform.
Transaction fee from Travellers (Guests)
Airbnb charges 3% of the booking amount as transaction charges from travellers upon every
confirmed booking.
How Airbnb finds its customers?
A customer for Airbnb is the one who contributes to the companys revenue. He can be a host who
offers his space and lists it on their website or he can be a traveller who books a space. So, from
where does Airbnb discover hosts and travellers? Well, Airbnb was founded in the year 2008 and its
first customers came through the website built by the owners. Since then Airbnb has grown into 1.2
Million listings on the platform. The major sources to accumulate hosts and travellers include:

Social Media
Word of Mouth
Digital Marketing including Internet ads.
Promotional offers
Affiliate Model / Refer and earn offers

Key Problems face by Airbnb

Trust Problem:
The biggest problem faced by travellers or hosts using Airbnb is the trust factor. After all giving your
space to a stranger as a host and living with strangers at their place as a traveller might not be easy.
But Airbnb has a verification process in place for every host and traveller on its platform. Apart from
the verification badge, Airbnb also motivates people to sign up with their Facebook account or at
least link it with their Airbnb account for better transparency.
This is not all. In case something goes wrong, then Airbnb has an insurance policy.
Traveller Retention:
Another problem being faced by Airbnb is the retention problem. In order to grow, the company
needs to retain its travellers so that they do not choose a hotel on their next vacations. In order to
retain them, Airbnb gives offers, promotional codes and credits to frequent travellers. As a solution
to this problem, Airbnb also sends such promotions to hosts as to motivate them to take a vacation
and stay in an Airbnb at their favourite destination.
Airbnbs Future Plans & Growth
We want tourists to be able to book households anywhere. Anywhere comprises Asia. Asia is a
nascent market for the company. Secondly, the company is also looking at other use case. They
started as a company that wanted to assist tourists who wanted to spend a holiday on a modest
budget in a given city. Though now what can be seen is that there are customers who arent looking
to travel on a budget and want a high end experience. Thirdly, this company is looking to involve
itself further into the experience of a customer and not only help them book a room or a place to
stay. They want to immerse themselves into the travel plans and help make it notable.
Airbnbs Flexibility for the Future
Airbnb has made a strategic decision to be hosted entirely on Amazon Web Services (AWS) and its
Relational Database Service (RDS) to benefit from the wide variety of services. This helps the
company with the necessary flexibility to expand quickly and efficiently. They try to make sure that
the systems and tools they adopt meets their current needs and also helps to grow with as their
needs expand and evolve. With Datadog and PagerDuty, Airbnb has been able to improve its
availability and make sure that its customers get the best experience possible. These powerful pair
of tools are now fully ingrained in Airbnbs engineering culture and processes, and the engineering
team continues to gain competitive advantage from a combination of more insightful monitoring
and more actionable alerting. This has led to an increase in uptime. Therefore, just as travellers and
hosts trust Airbnb as a reliable place to plan and book their next adventurous trips, Airbnbs
engineering team trusts companies like Datadog and PagerDuty in enhancing and growing the
companys services into the future.

CITY WISE ECONOMIC IMPACT OF AIRBNB

San Francisco
The city in which Airbnb started its operations, the company evaluated their economic impact
in San Francisco first. This evaluation was piloted in 2012, the study established that Airbnb
generates roughly $56 million in local spending and funds 430 jobs in San Francisco. Of the
total guest spending, $12.7 million goes straight to local host households.
Highlights from the study include:

The average San Francisco hotel guest stays for 3.5 days and expends $840. The
average San Francisco Airbnb guest stays for 5.5 days and expends $1,045.

56% of Airbnb hosts in San Francisco said they use their Airbnb profits to help pay
their debt.
72 percent of Airbnb assets in San Francisco are located outside the central hotel
district.
42 percent of hosts in San Francisco use their Airbnb revenue to pay for fixed living
expenditures

Paris
In June 2013, Airbnb disclosed the outcome of a study, which valued the monetary impact of
Airbnb guests and hosts in Paris. Covering a timeframe of a year, the study stated that Airbnb
generated revenue of 185 million (roughly US$240 million) of monetary activity in Paris,
and sustained 1,100 careers.
During the years 2012 and 2013, 10,000 local hosts greeted over 223,000 guests to Paris,
principally renting the homes in which they resided. Nearly 50 % of the hosts specified they
rely on Airbnb revenue to pay for domestic expenses. Around 20 percent of hosts say that
hosting revenue has permitted them to follow other professional or individual interests,
supporting a strong, inspired and inventive society.
Highlights from the study include:

Airbnb guests stay a usual of 2.9 nights longer and spend 426 more over the course
of their journey, compared to hotel guests.
27% of guests said that they wouldnt have come to Paris or remained as long without
Airbnb.
93% of visitors want to live like a local and 80% use Airbnb to discover a specific
neighbourhood. During 2012-2013, 611 hosts in the 20th Arrondissement received
9,199 guests, who spent 3.5 million in the area. Of that, 1.2 million went directly to
hosts and 2.3 million was expended at local businesses.

Airbnb is balancing to the existing tourism industry in Paris. 70% of Airbnb possessions in
Paris are situated outside the central hotel corridor. Hotel tenancy and average daily rates
have developed to record highs as Airbnb has succeeded.
DRIVING FORCES FOR AIRBNB IN INDIA
GROWTH OF TRAVEL AND TOURISM IN INDIA

Tourism in India accounts for 6.8% of the GDP and is the third largest foreign
exchanger in the country.
In 2015, the tourism and hospitality industry contributed US$ 44.2 billion to the
nations GDP.
The direct contribution of travel and tourism to GDP is expected to grow 7.2% p.a. to
US$ 88.6 billion (25% of GDP) by 2025.

INCREASE IN FOREIGN ARRIVALS

Over 7.5 million foreign tourist arrivals were reported in 2015

Foreign tourist arrivals are increasing on an average of approx. 7.1% each year.
According to World Trade Organisation, foreign tourist arrivals are expected to
increase to 15.3 million by 2025.