The vacation rental marketplace Airbnb started trading on NASDAQ last Thursday initially pricing its IPO at $68. This was highly regarded as a strong move by experts since this year was a huge sink for the travel industry.
Despite this, the California-based marketplace chose to trade at almost double the number at $146 per share. Recording a stellar performance, Airbnb capped the market at $86.5 billion and happened to outdo the market cap of hotel reservation behemoth Booking.com, which currently rests at $86 billion.
The year has seen a rise in relatively newer companies going public with the food delivery app DoorDash starting to trade at NYSE on Wednesday, just a day before Airbnb.
Why did Airbnb go public with double the initial IPO price?
We mentioned the travel industry is in dire straits post-COVID, and still, Airbnb managed to open its gates to the public with a bang. Now, this is something to think about. Let’s understand why.
Firstly, Airbnb comes with a unique stay structure for travelers. It focuses on providing them with a homely and personalized experience, against what commercialized hotel chains do. Most Airbnbs are priced reasonably, are convenient, and come stocked with household amenities. Ever since the company launched in 2008, around 2.9 million hosts have signed up on the platform as of 2020. The platform sees a surge in the number of users every month with 14000 new hosts joining Airbnb every month. It took the company about 8 years before it reached break-even in the second half of 2018, and started posting a profit.
Secondly, Airbnb bundled its IPO with a strong offering to its users. It set aside an endowment fund of $9.2 million nonvoting shares. The company intends to nurture a vibrant community of hosts through the Host Endowment Fund. Airbnb hosts can avail benefits in the form of grants and programs through the fund.
Airbnb business model – Encapsulated
Airbnb works on the power of contribution from the community and serves two verticals of customers – the hosts and the travelers. Hosts can list their private properties on the platform which can then be booked by travelers from all over the world. The users can scroll through and find information and reviews on the hosts and amenities provided and make a choice.
Airbnb works on a commission-based model and charges a service fee from both hosts and guests. Although the fee depends on various factors like the property size and amenities provided, guests usually have to pay a fee under 14.2%. On the other hand, hosts pay about 3% of the commission on every successful transaction.
Airbnb provides an efficient platform for small-time property owners who are looking to rent out bed and breakfast properties. The company does not own places listed on the app and merely acts as a bridge between homeowners and travelers who are looking for comfortable accommodation wherever they are.
How can you start your rental marketplace like Airbnb?
The founders of Airbnb launched the marketplace with a unique proposition, which also became the reason for its eventual success. This is why it’s imperative to choose the right model for your rental business. To start a rental marketplace like Airbnb, you need to think from a travel entrepreneur’s point of view to identify an existing problem within your customer segment. For example, one of the most crucial pain points of a traveler is safety in the time of a pandemic. Is the accommodation safe and sanitized for a carefree stay? It’s questions like these that can help you build the initial idea of your rental marketplace. Take a look at how Airbnb attracted its first customers here.
Once you have answered the “Why?”, you can think about going into the technology required for it. Take a look at some features you will need in your rental marketplace –
- Maps and location search for easy browsing and filtering of properties.
- Profiles of hosts and listings with information about the accommodation offered clearly stated.
- A robust review and rating system for users to go through before making a reservation.
- Secured payment system for safe payments and refunds.
You can choose to get your platform custom-built through a web development platform. This can be quite pricey and time-consuming as you are building everything from scratch.
Alternatively, you can go for a readymade marketplace builder that can get you started in minutes. For instance, Tiger Rental marketplace builder requires no prior tech knowledge or the need to code to launch a marketplace like Airbnb.
Start your rental marketplace with Tiger today
Remember the features we mentioned you will need in your Airbnb-like platform? Tiger has to offer all and more.
Quick & reasonable – Building a marketplace may burn a hole in your pocket if you do it from the ground up. Meanwhile can kickstart it for you in no time. If you’re wondering about the cost involved in starting a rental marketplace, here’s our detailed guide on it.
One integrated solution – For both you and your users! Tiger offers customer-end apps and host-end platforms under one umbrella, fine-tuned to your use case.
Advanced Search – Users can easily search, filter, and select the properties they like. They can bookmark them too!
Robust reviews management – Peer-to-peer marketplaces like Airbnb thrive on the community’s word. Your users can rate and review the properties they stay in.
Secured payments – With 500+ integrations, your users can sit back and be assured their money is in safe hands.
Multi-lingual support – Your target customer segment is bound to have travelers from all across the globe. And your rental marketplace will be there to welcome them in their language.
These are just some of the features that will come in handy to you when you build your online rental business. Tiger offers a lot more than what we’ve listed here. Sign up for our 14-day trial today and build your Airbnb today!
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