Airbnb takes a unique approach toward lodging. Part of the “sharing economy,” Airbnb offers you someone’s home as a place to stay instead of a hotel. On Airbnb, you can find places to crash on your backpacking trip through Europe, or a spot to rent for a month during your internship in Los Angeles. It’s also a great way to explore a town you’re thinking about moving to, or finding an alternative to traditional hotel options in 2022 if you’re just around for a weekend. If you want to rent out extra space in your own home, you can host through Airbnb and make money for allowing a guest to stay the night.
This all sounds pretty simple, but there’s much more to Airbnb than you might imagine. What is Airbnb exactly? Here’s what you need to know about the popular home-sharing site before you book a stay or become a host.
Airbnb founders Joe Gebbia, Brian Chesky, and Nathan Blecharczyk developed the business in 2008. Initially, Gebbia and Chesky started off using their own place as a bed-and-breakfast to make a few extra bucks to pay rent. With a big design conference coming to the San Francisco area and a city full of sold-out hotels at the time, they saw a potential market for the idea and developed a website called airbedandbreakfast.com.
The startup experienced several ups and downs, and it went through at least three separate launches. Finally, with new funding Air Bed & Breakfast became Airbnb in 2009, and that was the company’s turning point. Airbnb went public in 2020 under ABNB.
Here’s how Airbnb works for guests
Airbnb does not own properties. It acts as an intermediary between those who want to rent out space and those who are looking for space to rent. Creating an account on Airbnb is free, and it is relatively simple. To do so, you enter your name, email address, birthday, and a password. Airbnb also asks that you agree to treat everyone equally, regardless of race, religion, sex, or other factors. Once you agree, your account is active. You also have the option to sign up through Facebook or Google.
Once you click on a listing, you can see a range of information about that listing, including the size of the space and its amenities, check-in, and pricing information, a detailed description of the space, house rules, safety features, and availability. You will also see reviews from other guests and information about the hosts. For instance, the hosts of a listing in Honolulu say they “love surfing, scuba diving, kite surfing, running, and hiking the beautiful nature trails on Oahu.”
If you like the listing, you can request to book it. The site prompts you to go through a few more steps, like entering in more of your information. Once you complete those steps, you can complete your request and pay for your room. After your first booking, the process is much quicker and easier.
Before your reservation is final, however, you must wait for approval from the host, unless your listing is an “instant book” listing, as those listings don’t require host approval.
For non-instant book listings, Airbnb also recommends that guests message hosts before booking to double-check availability. If you don’t hear back from the host in a timely manner, you can continue to message other hosts in the area until you find one you like. Under the host information section of each listing, you can see the host’s response rate and response time to get an idea of how quickly a host will respond to your message.
Airbnb also offers a higher “tier” of homes called Airbnb Plus, an elite selection of properties that stand out for their excellent ratings or because of something particularly special about (part of a local landmark, etc.). The average price for these is typically higher.
Airbnb hosts and guests do not exchange money in person. Guests pay for everything on the Airbnb site when they make their reservation, even having the option to split costs between friends, and hosts receive pay from Airbnb. Airbnb uses PayPal, direct deposit, and other payment methods.
Here’s how Airbnb works for hosts
Airbnb has different hosting options — you can rent out the extra space in your home, you can rent out your entire home, or you can host experiences in your area.
To rent out extra space in your home, you must first create a free Airbnb account. You’ll also want to look into any fees or restrictions the areas you live in may require. Then, click on “become a host” in the upper right corner of the page. After that, you’ll need to create a listing for the space. A listing is a lot like a profile page for the space you want to host; just like a social media profile, the nicer your page looks, the more attention it will draw. It’s a good idea to make your space look as nice as possible and take flattering pictures of the space with good lighting. How much should you charge? Airbnb helps you set the pricing by indicating the averages for your area.
You can also make money on Airbnb by hosting an experience. “Airbnb experiences are activities designed and led by inspiring locals. They go beyond typical tours or classes by immersing guests in a host’s unique world,” says the Airbnb site. If you want to host an experience, review Airbnb’s quality standards, which indicate requirements for experiences. Basically, the guest must be gaining access to something, participating in something, and offered an original perspective. After reviewing the quality standards, design an experience and submit it to Airbnb for approval. Once approved, you are ready to publish and host your experience.
Airbnb fees and room pricing
In addition to the cost of the room, Airbnb charges a guest service fee that typically maxes out at 14.2%. Hosts also pay a service fee of around 3%, which Airbnb adds to each transaction. Hosts who offer experiences are subject to a 20% service fee.
The price of a room on Airbnb depends on a variety of factors, including location, the quality of the listing, and the amenities. Prices are also subject to market inflation (something particularly notable in 2021) and may vary greatly depending on local demand. Currently, the lowest room prices are around $50, which is usually less expensive than a hotel, but these can be difficult to find depending on the area.
Average daily rates on Airbnb in 2021 are a good example of how much location matters. For example, in the top 50 Airbnb cities, prices ranged from an average of $646 per night in Key West, Florida, to $200 per night in Bend, Oregon. Popular destinations will always cost significantly more on the service.
Airbnb safety and security
You may have heard reports of a guest destroying a host’s home, a host endangering a guest’s safety, or an Airbnb host watching a guest through a hidden camera. Airbnb has taken some actions to help promote safety and security for hosts and guests, such as having users provide identification, improving profile and review systems, and implementing a host guarantee that reimburses eligible hosts for damages up to $1 million. Airbnb may also conduct public records checks, such as sex offender registries, to see if a user has a past record.
- People under 25 may be banned from renting houses in their specific area: If someone is under 25 and has fewer than three positive reviews from past renting, they won’t be able to rent whole houses, period. Airbnb made this change to crack down on a trend of younger people renting Airbnbs for house parties. This situation was causing a lot of damage and, in some unfortunate incidents, even deaths, so Airbnb changes its policies. The company has also issued a broad ban on any parties at any location.
- Cleaning requirements and certification: In response to 2020 and COVID-19, Airbnb has instituted a new cleaning protocol that hosts can sign up for and earn certification in, to both stay safe and help guarantee a safer experience for guests. This includes waiting 24 hours to go into a room after a guest has checked out and cleaning all the surfaces with approved disinfectants. Those who can’t follow these rules can use a 72-hour blackout period between guests to help ensure safety.
- New rules specifically banning disruptive New Year’s Eve parties: These rules generally ban guests without a history of positive reviews from renting one-night Airbnbs on New Year’s.
Airbnb isn’t all underwater aquarium rooms. It has invited its share of controversy, and while Airbnb has been attempting to find ways to compromise with places that are yearning to see more regulation and order, it’s an ongoing process. Critics have accused Airbnb of exacerbating the housing crisis in certain locations, and lawsuits have been filed in some cases. Overall, the number of Airbnb listings has fallen in the past couple of years as the company has been forced to pull many from the market.
This has also led to another important phenomenon: City laws specifically banning or limiting Airbnb rentals to help keep local housing and rental prices under control. Dozens and dozens of cities around the world have passed these restrictions, with more on the way. In New York, renting a home as a holiday Airbnb is illegal. In Berlin, Airbnbs need approval from the Berlin Senate first. In San Francisco, hosts must register with the city and be full-time residents of the house. Santa Monica makes them sign up for a business license and actively live in the home while it is being rented. Honolulu and New Orleans simply don’t allow any rentals for less than 30 days, which tends to eliminate most Airbnb use. And so on.
Airbnb has also been accused of deleting negative reviews in the past. The company regularly updates its terms of service to deal with new issues and create new guidelines for hosts.
Should you use Airbnb?
One big benefit of using Airbnb is the lower cost, as you can legitimately find a cheap place to stay on the site. It’s also useful because you are able to access a lot of detailed information about where you’ll be staying before you book, and you can communicate with your host before your stay. If you are comparing Airbnb vs. a traditional hotel, some things to think about are:
- Privacy and access: Hotels are generally located centrally, but Airbnb allows you to pick cabins, cottages, and rooms off the beaten path. These offer more privacy and may be closer to the outdoors, allowing for a very different experience.
- Amenities: Hotels have a variety of guaranteed amenities and food options, but Airbnb rentals do not. Check the details to see if a rental offers Wi-Fi, coffee, and even electricity. If you want to make food while staying there, check for a kitchen as well. If you are visiting a particularly hot or cold area, check for heating and cooling, too.
- Check-ins: Hotel check-ins are universal, but Airbnb hosts can vary a lot in how they check people in.
- Cleaning: Airbnb hosts have a vested interest in keeping things clean, and may even offer cleaning services, but this can vary. Hotels, meanwhile, have strict cleaning schedules.
- Rewards programs: Hotels can offer rewards programs and discounts and may partner with larger companies. These aren’t options with Airbnbs.
- Pets: Pet hair can be an issue in Airbnbs, especially if you rent a room that’s part of a larger house. On the other hand, Airbnbs also make it easier to travel with your beloved pet.
Hosts should keep themselves well informed of the laws in their area. Renting a room in a home without a permit is a bit of a legal grey area in some places, and doing so is completely illegal in others. Hosts should always review local laws and obtain the necessary insurance coverage before renting out space in their properties. In addition to potential legal issues, there are also obvious safety concerns to worry about. When you book your stay, make sure you know what you’re getting yourself into by reading the terms and conditions (including the fine print) as well as the reviews.
Guests booking a stay in an Airbnb property should follow the company’s best practices for staying safe. It’s never a bad idea to let a trusted friend or family member know the details of your stay, too, just in case.