Hosts are an indispensable part of Airbnb’s business model. They provide the spaces and experiences that travelers can enjoy and help set Airbnb apart from the competitors in the vacation rental industry.
According to the recently published IPO prospectus, Airbnb brings together a community of more than 4 million hosts, a magnitude unmatched by any player in the travel industry.
Still, the most appealing and unique thing about Airbnb’s host community is its diversity. In this article, we dive into Airbnb’s IPO prospectus to uncover little known details about this community and what makes it unique.
Who are Airbnb’s hosts?
Airbnb hosts, who come from more than 220 counties and regions worldwide, give Airbnb its distinguishable flair. Hosts come from all walks of life, too; from kindergarten teachers to engineers and managers. Even Brian Chesky, Airbnb’s CEO, occasionally welcomes travelers in his San Francisco home.
The company’s motto, “Belong Anywhere,” is on point with its value proposition, as travelers can enjoy authentic experiences and stays in more than 100.000 cities where Airbnb hosts are located.
Airbnb’s IPO prospectus gives away some interesting facts about Airbnb hosts. About 86% of the 4 million Airbnb hosts are based outside the United States, while roughly 560,000 operate in the United States (14%).
Women take the lead when it comes to hosting on Airbnb. In fact, over 55% of hosts are women.
Airbnb is truly a microcosm of places and adventures. Guests can select from 7.4 million listings of homes and experiences to spend precious moments. From the total number of listings, about 5.6 million are active listings. According to the vacation rental platform, to qualify as an active listing, the home or experience must be viewable on Airbnb and previously booked at least once. Having that in mind, the number of active listings may actually be a more precise indicator for Airbnb’s host community’s scope.
However, not all listings are equally effective in growing Airbnb’s business. In terms of their impact on the platform’s revenues, stays generate more than five times the income compared to online and in-person experiences combined.
In fact, hosts offering stays contribute to about 84% of Airbnb’s income, while experiences amount to about 16% of the platform’s turnover. Online experiences that were introduced amid the global coronavirus crisis help hosts build global followings.
In most cases, hosts turn to the short-term rental platform as a way to generate additional income. However, there are also those that have to host as their primary source of income. In both cases, hosts are former Airbnb guests that had a positive experience while staying through the platform.
In 2019, 79% of new hosts signed up to the platform directly, indicating the strength of Airbnb’s global brand awareness. Over the same period, the vacation rental unicorn also saw the most significant increase of new hosts on the platform since its launch.
Furthermore, since the pandemic’s start, more than 200,000 new hosts have welcomed their first guests in their homes. Out of all new hosts that joined the vacation rental platform since 2019, a little over 23% first started out as guests on Airbnb.
Individual vs. professional hosts
Airbnb hosts fall into two categories depending on how they utilize the short-term platform and their financial objectives.
For the most part, experiences including online experiences are offered by individual hosts. Spaces, on the other hand, are offered by both individual and professional hosts. The biggest differences between the two types of hosts mainly come down to the type of spaces they offer and the means through which they do so.
Individual hosts are individual entrepreneurs who list their primary or vacation homes and private rooms.
They activate and manage their spaces directly through Airbnb which is the main differentiating characteristic when compared to professional hosts, which rely on hosting tools to list on Airbnb. Airbnb considers individual hosts those who onboard and activate their spaces through the List Your Space flow, which takes the hosts through the process of creating a listing. Since the beginning of 2020, 72% of the nights booked on Airbnb were with individual hosts.
Professional hosts use channel managers or Airbnb Professional Hosting Tools to manage and rent their spaces. Compared to individual hosts who rent individual rooms or their entire primary homes, professional hosts differ when it comes to the type of properties they rent.
Professional hosts typically rent hostel and boutique hotel rooms, traditional bed and breakfasts, hostels, or serviced apartments. With this in mind, professional hosts are property managers quite similar to traditional hospitality operators. Often they are serviced apartment providers, property management companies, and similar players from the hospitality businesses.
Key differences between individual and professional hosts
Prevalence of individual and professional hosts on Airbnb
Airbnb was built with the aim of enabling regular people to share their spaces. The platform has largely kept in line with that vision, although it has received some criticism over the years about illegal running on the platform. The latest numbers published in the IPO prospectus suggest that individual hosts dominate the platform. Since the beginning of 2020, 90% of all Airbnb hosts have been individual hosts or about 3,600,000 hosts.
Number of listings by host type
Out of the 3.6 million individual hosts, 79% had just a single listing on Airbnb’s platform. On average, all of the individual hosts have 1.3 listings on the platform.
Nights booked by host type
Despite the fact that 90% of all Airbnb hosts are individual hosts, it seems that they do not capture an equal share of bookings. Since the start of 2020, 72% of nights booked were with individual hosts, leaving 18% booked with professional hosts and there are few reasons for this. Namely, it is very likely that given the surge in family and long-term stays during the pandemic, professional hosts offering entire spaces had an advantage over individual hosts offering private rooms and shared apartments.
Guest satisfaction and reviews
Overall, the data published in Airbnb’s IPO prospectus suggests that even though a fair amount of travelers stayed in spaces listed by professional hosts (28% of all bookings), guests were happier staying in spaces listed by individual hosts. Of the reviews they received in 2019, 83% of ratings for individual hosts were 5-star. On the other hand, professional hosts received a smaller proportion of top reviews. In fact, about two thirds, or 75% of stays with professional hosts were rated 5-stars.
How Airbnb targets individual and professional hosts?
Hosts have different motivations to share their spaces and provide experiences to travelers. Broadly speaking, though, these can fall into three categories. Hosts flock to the platform either in search of supplemental income, to connect travelers to their communities, or to share their skills and passions.
Airbnb attracts new individual hosts mostly through organic channels. These are mainly through the power of Airbnb’s brand recognition and word of mouth. Airbnb’s approach is centered on communicating and describing the benefits of hosting to existing and potential individual hosts.
At the same time, Airbnb is actively seeking out to add hospitality businesses such as property management companies, serviced apartment providers, and boutique hotels to join the vacation rental platform.
Airbnb wants to add these types of professional hosts because they expand the types of listings (spaces) available to travelers. While individual hosts are more likely to list private rooms and shared apartments, professional hosts are more likely to offer entire places such as serviced apartments and entire family houses.
The short-term rental platform attracts professional hosts by offering integrated tools and powerful analytics that can help them optimize their listings and maximize earnings. Such tools include scheduling, merchandising, integrated payments, community support, host protection programs, pricing recommendations, and reviews.
Focus on individual hosts
Airbnb’s message throughout the pandemic has been that they want to put individual hosts at the core of the company’s community. This position is reiterated in the IPO prospectus as well. The vacation rental company clearly states that Airbnb has been built with the aim to specifically serve individual hosts who list their spaces.
This sentiment has been particularly pronounced as the Covid-19 pandemic set about actions by the company that angered hosts. This as well as previous criticism has impelled the short-term unicorn to realign the organizational priorities to further increase our focus on individual hosts and brand marketing.
Over the last year, Brian Chesky has repeatedly said that hosts are at the core of Airbnb and together with Airbnb’s Global Head of Hosting Catherine Powell have reiterated that they want to see hosts in the center of its community.
Airbnb stocks aimed at hosts
This has certainly been reflected in the IPO development, as the short-term rental company wants to include hosts in its success by offering a portion of its shares to the people who rent spaces on its platform through a directed share program.
Airbnb offered a limited number of shares available at the IPO price for hosts via a directed share program. Eligible hosts in the US were invited to complete a registration form in order to qualify. However, with the number of hosts interested in shares exceeding the quota of the directed shares program, Airbnb had to prioritize the eligible hosts based on their tenure with the platform, as determined by the year they first hosted on Airbnb.
Airbnb Host-Endowment fund
Brian Chesky recently announced that the company intends to create the Airbnb Host Endowment. The aim of the Host Endowment fund is to provide support for the host community.
Airbnb plans to start the endowment with 9.2 million shares, distributed at the time of the Airbnb IPO, but it will only begin investing the money from the endowment into the host community when the fund’s value exceeds $1 billion.
The fund money is slated for host education, development, and financial aid. Airbnb says that it wants hosts to share in their success, but many have seen the action as a bid to rebuild trust after Chesky’s decisions amid the pandemic backfired with the host community.