How does Airbnb make money?
Airbnb’s marketplace model revolutionized the hospitality industry by turning everyday homes into bookable accommodations, and it continues to scale globally. That success has many marketplace founders asking: How does Airbnb make money, and what can other marketplace builders learn from its business model?
Hotels and offline channels once dominated the vacation rental market. Today, online marketplaces shape the industry by connecting travelers directly with hosts. In 2024, online and platform-based bookings made up nearly 73% of the market share, and the global short-term rental market was valued at over $130 billion.
Airbnb is the company most responsible for this shift. Its marketplace model revolutionized the hospitality industry by turning everyday homes into bookable accommodations, and it continues to scale globally. That success has many marketplace founders asking: How does Airbnb make money, and what can other marketplace builders learn from its business model?
Airbnb’s monetization strategy, product design, and approach to trust and regulation provide valuable lessons for anyone building a two-sided marketplace. Airbnb shows how a lean idea—airbeds on a living room floor—can grow into a multi-billion-dollar business by solving clear problems for both sides of the market.
Airbnb is a peer-to-peer rental marketplace that connects sellers (hosts) offering short-term accommodations with buyers (guests) looking for places to stay. It was founded in 2007 as a small startup and has since grown into a global hospitality leader operating in over 220 countries and regions.
The platform lets hosts list entire homes, private rooms, or unique properties, while guests can search, book, and pay securely through Airbnb’s website or mobile app. Hosts set availability and pricing, and Airbnb handles bookings, payments, and support. It supports multiple languages and payment methods, which enables its global reach.
Airbnb has also expanded beyond accommodations to let hosts run tours, classes, or events through its Experiences offering. This creates new revenue streams and helps guests explore destinations more authentically.
Over the past decade, Airbnb has disrupted the traditional hotel industry by lowering barriers to supply. Instead of investing in real estate, Airbnb scales its marketplace by letting individual hosts list properties they already own. Meanwhile, hotels often post listings on Airbnb as well, expanding the platform into a B2C marketplace as well as a peer-to-peer one.
And the results are obvious: Airbnb reached a valuation of over $100 billion in 2021 and generated more than $11 billion in annual revenue by 2024.
Airbnb has also become a proactive partner to local governments. It collects and remits tourism taxes in thousands of jurisdictions and works with regulators to implement rules that balance community needs with business growth. This regulatory collaboration highlights how online marketplaces can evolve from disruptors into cooperative stakeholders.
Airbnb connects property owners with travelers through a simple marketplace interface. The platform manages the entire transaction from search to payment, which opens up opportunities to collect revenue at multiple touchpoints.
The marketplace uses algorithms to match guests with the right properties. When someone searches for a place to stay, Airbnb shows results based on:
- How quickly a host responds
- How often the listing gets booked
- Guest preferences
- Overall review quality
This ranking system prioritizes listings that are most likely to convert. As a result, guests are happier and both the hosts and the platform benefit from more bookings.
Here’s a breakdown of Airbnb’s core functionality.
- Search by destination, dates, and filters: Guests begin their search by entering a destination and travel dates. Airbnb offers dozens of filters, from price range, number of bedrooms, and property type to amenities like pools, pet-friendliness, or EV chargers. These filters narrow down options quickly, especially in high-volume cities like Paris or New York.
- Verified listings with detailed profiles and high-quality photos: Listings include multiple photos, full descriptions, and a breakdown of amenities. Airbnb hosts are encouraged to complete their profiles, connect a government-issued ID, and maintain high photo quality. Airbnb also uses machine learning to rank listings based on review scores, completeness, and host responsiveness.
- “Instant Book” or “Request to Book” options: Some listings offer Instant Book, which lets guests confirm their booking immediately without waiting for host approval. Others use Request to Book, where hosts review and accept each reservation. Hosts decide which approach gives them the right mix of control and ease.
- Built-in checkout system: Airbnb handles payments directly. It offers major credit cards, PayPal, Apple Pay, and local payment options depending on the country. This reduces friction for guests and ensures trust by centralizing all transactions on the platform.
- Automatic and delayed payouts to hosts: After a successful guest check-in, Airbnb releases the payment to the host, typically within 24 hours. While the guest is charged at the time of booking, Airbnb holds the funds until check-in to help prevent fraud and protect both parties. This delay ensures hosts deliver what’s promised before receiving payment, which builds trust with guests. Hosts can choose from various payout methods (like bank transfer, PayPal, or Payoneer) and adjust how often they’re paid, whether it’s per booking, weekly, or monthly.
- Currency and tax handling: Airbnb supports dozens of currencies and automatically converts guest payments to the host’s preferred payout currency. In certain jurisdictions, Airbnb collects and remits taxes (like VAT or local occupancy tax) on behalf of hosts.
- Two-way blind reviews: After each stay, both guest and host have 14 days to leave a review. Neither can see the other’s feedback until both are submitted (or the window closes). This system encourages honest reviews and helps future users make informed decisions.
- ID verification and profile requirements: To book or host, users must provide basic identity information. In many cases, Airbnb asks for a government-issued ID and confirms profile photos. This verification is mandatory for listings in high-trust categories, like luxury properties, or countries such as Japan, France, Spain, and Italy, where hosts must register their guests’ identity with the local authorities.
- 24/7 customer support and dispute resolution: Airbnb’s support team is available around the clock via chat, phone, or email. If a guest arrives and finds a major issue, like a missing key amenity or inaccurate photos, Airbnb’s rebooking and refund policies kick in. Hosts are protected too: Airbnb offers Host Guarantee coverage and an AirCover insurance policy for damages or liability up to $3 million.
- Airbnb Experiences: Besides places to stay, Airbnb allows local hosts to offer experiences, from walking tours and cooking classes to hiking adventures and niche workshops. Guests can book these alongside their lodging for a more immersive travel experience.
- Seamless integration with accommodation bookings: When guests search for a place to stay, they see recommended Experiences in the same city and time frame. This upsell strategy creates new income opportunities for hosts and enriches the guest experience within the Airbnb ecosystem.
Airbnb has built a remarkably effective revenue model marketplace founders can learn from. The company captures value at multiple points in the transaction process while maintaining a balance that engages both hosts and guests. Let’s examine each revenue stream.
Airbnb charges guests a fee on top of their booking total that ranges from 0% to 14.2% of the subtotal. The exact amount depends on location, booking value, and stay duration. The fee is a commission collected from the demand side of the marketplace.
For instance, for a $1,000 weekly rental, guests might pay an additional $140 service fee. Airbnb uses a sliding scale—higher-priced bookings often receive lower percentage fees. This fee covers payment processing, customer support, and the technology powering the booking experience.
In some markets, particularly in the Asia-Pacific region, Airbnb uses a “host-only” fee structure instead. Guests see an all-in price with no separate service fees. This approach responds to regional preferences where travelers expect all-inclusive pricing and creates a cleaner user experience.
Most individual hosts pay Airbnb about 3% of each booking subtotal. This fee is a commission on the supply side to support Airbnb’s operations, including payment processing, marketing, and administrative costs. On a $1,000 weekly rental property, hosts typically receive $970 after Airbnb’s commission.
Airbnb offers professional property managers (who run multiple listings as a business) and hotels an alternative fee structure. It’s a “host-only” fee model, where hosts pay 14–16% of the booking total, while guests pay no additional fee.
This model is mandatory for hosts who use channel managers or property management software (PMS). However, many large-volume operators often choose this approach because it simplifies pricing for guests who are accustomed to all-inclusive hotel rates. This structure generates substantial revenue for Airbnb from professional accommodation providers.
Experience hosts pay a 20% fee on all bookings. This fee applies to the total price charged to guests and covers marketing, support, and platform usage. For example, when a guest pays $100 for a cooking class, the host receives $80.
Airbnb Experiences was launched in 2016 and now operates in thousands of cities. Activities include food tours, workshops, photography walks, and craft lessons. The higher commission rate compared to accommodations reflects the additional marketing and curation Airbnb provides.
Experiences is a smart expansion that leverages Airbnb’s existing user base without requiring physical inventory by monetizing the same travelers who book accommodations. This demonstrates how marketplace platforms can grow horizontally into related services—a strategy worth considering for your own marketplace.
Airbnb creates additional revenue through supplementary services. Hosts can pay for enhanced listing features, promotion opportunities, and specialized insurance products. While these add-ons contribute a smaller percentage to overall revenue, they generate incremental income from existing marketplace participants.
The AirCover for Hosts program serves dual purposes as both a revenue source and a trust builder. This protection includes $1 million in liability insurance and $1 million in damage protection. Basic coverage comes with hosting, but premium tiers and additional protections create service revenue while increasing host confidence.
Strategic partnerships also contribute to Airbnb’s revenue. The company connects with smart home technology providers, property management software firms, and cleaning services. These partnerships generate direct revenue through referral fees and strengthen the hosting experience.
Professional property managers access specialized tools through Airbnb’s Professional Hosting program. While most features come with the standard host fee, Airbnb offers premium tiers with enhanced capabilities for multi-property managers.
Professional Hosting includes bulk calendar management, team access controls, and unified messaging. These features help Airbnb attract and retain professional hosts who list multiple properties. Many large-scale hosts opt for the host-only fee structure mentioned earlier. This increases Airbnb’s per-booking revenue to 14–16% of the transaction total.
Airbnb also provides API access for property management systems to enable smooth integration with third-party software. This technical infrastructure supports boutique hotels and vacation rental companies that manage dozens or hundreds of properties. By serving these professional hosts, Airbnb secures high-quality inventory that leads to guest satisfaction and repeat bookings.
Airbnb uses three core growth strategies that marketplace founders can adapt for their own businesses. The company combines targeted marketing, data-driven pricing, and strategic expansion to increase both supply and demand on its platform.
Airbnb invests heavily in marketing that emphasizes real experiences rather than just accommodations. The company allocates a significant portion of its revenue to marketing efforts. This money funds digital ads and referral programs that efficiently bring in new users.
When travel restrictions limited tourism during the pandemic, Airbnb shifted its focus to promoting remote work stays and rural destinations. This “Live Anywhere” campaign increased rural bookings substantially. In 2021, Airbnb stays in rural areas grew 110% compared to 2019. The fast pivot shows how marketplaces can adapt their messaging to changing circumstances.
Partnerships with major events create visibility and supply in key markets. Airbnb’s Olympic sponsorship puts the company in front of global audiences and encourages hosts to list properties in host cities. Airbnb expects to house large numbers of visitors for major sporting events, generating substantial host earnings.
Airbnb uses data science to help hosts set optimal prices—a win-win that increases bookings and revenue for the platform. Their Smart Pricing tool looks at numerous factors, including seasonal demand, local events, and competitor rates, to suggest the best listing prices. Hosts who use these dynamic pricing strategy tools typically earn more on average than those with static pricing.
The platform also increases revenue through smart cross-selling. When guests book a place to stay, Airbnb suggests relevant Experiences nearby. This integration creates a complete travel package and gives Airbnb more opportunities to collect fees.
Tools for professional hosts include dashboards with analytics and optimization suggestions. These features help hosts improve their listing quality, response times, and pricing—all factors that lead to more bookings and more platform fees for Airbnb.
Airbnb expands beyond short-term rentals to capture more travel spending. Services like Airbnb for Work grew rapidly before the pandemic. This expansion taps into business travel budgets that are often larger than vacation spending.
According to the latest Airbnb Report on Travel & Living, long-term stays (28 days or longer) increased by 10% since 2019. This segment includes digital nomads, traveling professionals, and seasonal relocators—people who are less affected by economic downturns than vacation travelers.
Partnerships with tourism authorities create mutual benefits. Airbnb works with many destination marketing organizations to promote tourism that aligns with local regulations. These programs, like City Portal, often include data sharing, tax collection, and joint marketing that helps both sides.
Premium offerings like Airbnb Luxe target high-value travelers. These listings feature professionally designed, full-service luxury properties with amenities like private chefs, butlers, and trip designers. Luxe booking averages are much higher than the platform average, so they generate higher service fees. Features like “Amazing Pools” and “Design” categories help travelers find premium properties that have higher rates and larger platform fees.
Let’s examine what works and what doesn’t in Airbnb’s business model. These insights will help you apply similar principles to your own marketplace.
Pros
- Proven monetization model: Airbnb succeeds with a commission structure that takes 3–20% from each transaction without hampering growth. Commission is by far the most popular marketplace monetization strategy, and Airbnb’s success shows it’s for a good reason.
- Built-in trust mechanisms: Verified IDs, two-way reviews, and secure payments with delayed payouts reduce the friction of transacting with strangers. Meanwhile, AirCover offers up to $3 million to cover damage and liability costs, which adds peace of mind for hosts.
- Scalable supply model: Airbnb listings come from individuals, not property ownership. When Airbnb enters a city, new supply appears within days, compared to the years required to build hotels.
- Brand as an organic growth engine: Airbnb’s recognizable logo, consistent design, and focus on unique experiences set it apart from generic booking platforms. This strong brand directly translates to lower customer acquisition costs and higher retention rates than competitors.
Cons
- Regulatory hurdles: Cities like Barcelona, New York, and Amsterdam have strict short-term rental rules that limit inventory and increase compliance costs. These regulations often include added taxes, licensing, and stay limits that cut into inventory and margins.
- Impact on local housing: Airbnb has faced criticism for contributing to housing shortages and rising rents in popular cities. In some areas, landlords convert long-term rentals into short-term listings. A 2020 study found that a 1% increase in Airbnb listings led to a 0.018% rise in rents and a 0.026% rise in home prices across the United States.
- High operational overhead: Supporting both sides of the marketplace creates significant complexity and expense. Airbnb must mediate property damage claims, fraud, and refund disputes while maintaining 24/7 global customer service—all costly at scale.
- Price transparency tradeoffs: The split-fee model (where both buyers and sellers pay commission) creates problems with pricing clarity. Airbnb guests see a low nightly rate that jumps at checkout due to cleaning fees, service charges, and taxes. Airbnb is testing host-only fees to address this pain point.
Test your concept with minimal investment before scaling up. Airbnb started small by renting out air mattresses. In 2007, co-founders Brian Chesky and Joe Gebbia created a simple website called “Airbed & Breakfast” and offered floor space plus breakfast in their San Francisco apartment during the IDSA design conference when hotels were fully booked. This basic approach helped them confirm real demand without needing to build complex technology or raise significant capital.
Early validation shows whether people are willing to pay for your service. Many marketplace founders build elaborate platforms before confirming that market demand exists. Test core transactions with a simplified version of your marketplace idea first.
Airbnb splits fees between hosts (3–16%) and guests (0–14%). This shared structure lets Airbnb monetize transactions effectively and charge for the value it brings to both sides. At the same time, the structure gives Airbnb the flexibility to adapt fees by region or user type.
Charging both sides aligns incentives and allows for clear value exchange—guests get support and secure booking, and hosts get visibility and tools. As your brand gains trust, users become more accepting of platform fees.
Be clear about what users get in return. Transparent pricing builds confidence in your revenue model. As your marketplace matures, you can experiment with different fee structures to find the optimal balance for your specific market.
And remember: trust infrastructure matters from day one. Payment escrow, verified reviews, and insurance protection create the foundation for marketplace growth. Airbnb’s $1 million host guarantee removed a major concern for homeowners worried about damage. The review system also gives potential guests confidence when booking accommodations.
For rental marketplaces, secure payment handling creates confidence for both parties. Our guide on building trust in two-sided marketplaces explains how to implement these principles on your platform.
Airbnb didn’t try to conquer global travel from day one. It started with apartments and spare rooms in one city before gradually expanding to new locations and listing types.
Begin with a focused niche where you can connect deeply with early users. Airbnb initially targeted design conference attendees and urban travelers before expanding to vacation rentals, luxury properties, and rural destinations. This focused approach will help you balance supply and demand.
Once you establish product-market fit in your initial niche, expand into adjacent markets. Airbnb added Experiences, extended stays, and business travel only after mastering its core accommodation offering. Each expansion used the existing user base while opening new revenue streams.
Maintain flexibility to adapt when market conditions change. When COVID-19 disrupted travel patterns, Airbnb quickly shifted to rural destinations and long-term stays for remote workers. This adaptability allowed the company to continue growing despite industry-wide challenges.
Develop your brand early to stand out in a competitive market. Airbnb grew from a simple booking site into a cultural icon by investing in visual consistency and emotional storytelling. Its “Belong Anywhere” message resonates with travelers seeking more than just a place to stay.
Community engagement builds loyalty beyond transactions. Airbnb shares stories, travel tips, and user-generated content across social media, from this winter cabin in snowy Maine to the perfect summer vacation rental in Spain. These efforts deepen emotional connection and fuel organic growth.
You don’t need a large budget to build community—early efforts like host meetups, educational resources, and support groups can foster advocacy and retention.
Effective onboarding reduces friction and sets quality expectations. Airbnb guides new hosts through listing creation and emphasizes high-quality photos, detailed descriptions, and responsive communication.
Create separate onboarding flows for each user group. Hosts need guidance on pricing, photography, and listing optimization. Meanwhile, guests benefit from search filters, saved favorites, and payment options. Tailored onboarding increases activation rates for both sides of your marketplace.
Removing friction boosts conversions. Features like “Instant Book” and synced calendars help avoid delays and double bookings. Progressive verification helps maintain trust standards without overwhelming new users.
Airbnb’s rise from air mattresses at a design conference to a global travel platform offers plenty of lessons for marketplace founders. Its success shows how powerful the marketplace model can be when applied with focus and care.
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As your platform grows, you can add custom features with code or work with one of our Expert developers. Whether you’re launching vacation rentals, co-working spaces, or hosted experiences, Sharetribe scales with your vision.
You can also test out different revenue models—charging hosts, guests, or both, just like Airbnb. Add transaction fees, service charges, or subscriptions without touching the backend.
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Here are straightforward answers to common questions about Airbnb’s revenue model.
Airbnb uses two main fee structures that change based on location and host type. The split-fee model charges guests 5–14.2% of the booking subtotal while hosts pay 3%. As reservation totals increase, the guest fee percentage decreases, creating better value for higher-priced bookings.
The host-only fee model works differently. Hosts pay 14–16% of the total booking amount, and guests see no separate service fee. Professional hosts and hotels often prefer this structure because it shows guests all-inclusive prices upfront. This model is standard in Asia-Pacific markets where consumers expect transparent pricing.
Cleaning fees remain separate from service fees. Hosts set these optional charges themselves, and Airbnb doesn’t take a commission from them. The platform does collect its service fee percentage from taxes when local laws require it.
The dual-fee approach splits costs between marketplace participants while funding specific services for each group. Guests receive payment processing, support, and dispute resolution. Hosts get listing visibility, marketing reach, and screening tools.
This model follows marketplace economics principles: charge more to the side that gains the most from each transaction. For short stays, guests typically receive more value than hosts, which explains their higher fee percentage. For longer bookings, the guest fee drops significantly, reflecting the increased value hosts get from extended occupancy.
Charging both sides creates balanced incentives that prevent either group from controlling platform policies. This approach also gives Airbnb flexibility to adjust fees based on competition or regulatory changes in specific markets, as shown by their shift to host-only fees in Asia-Pacific regions.
Airbnb charges Experience hosts a 20% service fee on each booking, notably higher than accommodation fees. This premium reflects the extra curation, quality control, and marketing support for these activities.
Hosts set their own prices, with minimums starting at $10 per person. Airbnb handles all payment processing, insurance coverage, and customer communication. The platform promotes Experiences through several channels: dedicated search features, emails to travelers with confirmed bookings, and personalized recommendations.
This revenue stream leverages existing users without requiring new customer acquisition costs. A significant portion of Experience bookings come from guests who have already booked accommodations for their trip, which shows how effective cross-selling is within Airbnb’s ecosystem.
Airbnb doesn’t run third-party advertising on its platform. The company avoids banner ads and sponsored content from external brands to maintain a clean user experience and focus on core transactions.
The platform does offer internal promotion opportunities for hosts. Airbnb’s search algorithm considers multiple factors, including listing quality, booking history, and cancellation rates. Hosts improve their visibility through quick responses, updated calendars, and competitive pricing—metrics that benefit Airbnb’s conversion rates.
Airbnb has built several supplementary revenue streams beyond basic booking fees. Airbnb Luxe offers high-end properties with personalized service and dedicated trip designers. These luxury stays have significantly higher price points, which means larger service fees per transaction for Airbnb.
Airbnb for Work targets business travelers and corporate clients with specialized features like centralized billing, expense tracking, and duty of care tools. While Airbnb doesn’t charge extra fees for this program, it attracts higher-value bookings that increase overall transaction volume.
Insurance products create another revenue source. Basic AirCover protection comes standard with every booking, but hosts can buy additional coverage through Airbnb’s insurance partners. These policies generate referral fees while addressing host concerns about property damage or liability.
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