Category Archives: Airbnb

It is NOT a Sharing Economy

Oliver Blanchard wrote a great article about how the term “Sharing Economy” is incorrect. Here is an excerpt as it pertains to Uber sytle ride sharing,

Let me make something really clear: that whole “ride-sharing” thing? It isn’t ride-sharing at all. You aren’t sharing. You’re renting. You’re renting out the back seat of your car. You’re renting yourself as a driver. You’re renting your spare bedroom for the night. You’re renting your flat while you’re on vacation. There’s no sharing anywhere near the so-called “sharing economy.”

The same dynamics apply to AirBnB style room rentals.

Expedia Owned HomeAway Driving Customers Away?

In December 2015, Expedia bought HomeAway / VRBO for a reported $3.9 billion dollars. Its been just over a year now, and customers are growing in frustration according to a variety of sources, as they appear to be copying Airbnb’s commission model by applying guest and service fees.

Kim Bergstrom writes a great article explaining what is happening with VRBO, HomeAway, Airbnb, FlipKey, TripAdvisor and Expedia Service Fees.

GeekWire also has an excellent article explaining how VRBO/HomeAway now stacks up and competes against Airbnb. An excerpt sums it up well:

One of the biggest changes is the introduction of a traveler’s fee — also referred to as a “service fee.” Travelers who book through the HomeAway checkout process are now charged a fee that averages between 4 percent and 9 percent of the rental amount, not exceeding $499, the company says. Airbnb charges a similar fee.

How Much Does Airbnb Charge?

The exact commission rates both the rental owner and guest pays to Airbnb is becoming more nebulous, we will try to break it down here, for approximately what the rates are as of 2017:

Here are quotes taken from the Airbnb website pertaining to fees and commissions, and our opinion on what it means.

Guest Service Fee:

Many guests are unaware they are being charged a fee just to book a rental unit using Airbnb. This fee does not go to the rental owner/manager, it goes to Airbnb. If one had to guess at what the average rate is, given the information provided, I think it is reasonable to speculate it at 10%.

“To help cover the costs of running Airbnb, we charge guests a service fee every time a reservation is confirmed. The amount of this service fee varies and is based on a percentage of the reservation subtotal (before fees and taxes).”

“The exact amount of the service fee is displayed before guests confirm a booking. Guest service fees are typically 6-12% but can be higher or lower depending on the specifics of the reservation.”

Host Service Fee:

Not only does the guest pay a fee, but also, so does the host, the rental unit owner/manager. Here is what they say about the Airbnb Host Service Fee:

“To help cover the costs of processing guest payments, we charge hosts a service fee every time a reservation is completed. The amount of this service fee is calculated from the reservation subtotal (before fees and taxes).”.

They do not list a range for what this fee is, they simply say to visit your account transaction history, and check how much was actually taken out.

I did one booking using Airbnb, rented a room, and as a host, I was charged just over a 3% commission, it seems they rounded up to the nearest dollar.

A 3% fee is not bad, so why not just publish that they charge a 3% fee? We will speculate, that the more bookings a host gets using Airbnb, the more this fee will increase. Hosts are less likely to complain about higher fees the more they make. If anyone has information confirming or conflicting with this guess, please let us know?

Therefore, we will speculate this fee is averaged out to be around 5%. But wait, there’s more:

VAT Fee:

Certain cities, countries and regions will be charged VAT fee’s. Sometimes both the host and the guest are charged.

“Airbnb charges VAT on its service fees for customers from the Albania, European Union, Iceland, New Zealand, Norway, South Africa, and Switzerland. In Japan, JCT applies to the hosts and the guests. Airbnb is also required to collect VAT on its services fees from all users who contract with Airbnb China.”

We won’t speculate on this number, as it is too variable, and it does not appear that any of it goes towards Airbnb’s business. But my guess is, if they are charging a VAT fee, if it pertains to your country, then probably both the guest service and host service fee’s will go up to account for the extra transaction work.


We think a total fee of 15% per booking, paid by both guest and owner, is a pretty fair estimate of how much Airbnb charges. So essentially, if you book a 7 night stay at a rental costing $285 per night, you pay a total of $2000 for that stay… approximately $300 of that transaction will go to Airbnb.




Short Term Rentals Just Got Real

A recent San Francisco law scheduled to go into effect August 1st 2016 requires Airbnb to verify that its hosts have registered with the city before Airbnb is allowed to show ads for their homes online. Airbnb is now suing the city of San Francisco to try and stop this law from going into effect.

Airbnb and tech groups argue the new law violates the Communications Decency Act.

“This legislation ignores the reality that the system is not working and this new approach will harm thousands of everyday San Francisco residents who depend on Airbnb. It also violates federal law,” Airbnb said in a blog post announcing the suit. “This is an unprecedented step for Airbnb, and one we do not take lightly, but we believe it’s the best way to protect our community of hosts and guests.”

2012-11-04 17.29.23

Full story at Techcrunch.

Did Airbnb Plagiarize?

Shortly before the 2008 presidential election, Airbnb had a brilliant marketing campaign, pitting ficticious breakfast cereal “Obama O’s” against “Capt’n Mcains”, which they then turned into real cereals, at least for a limited time.

It seemed they lost the plot and gone completely sideways… breakfast cereals? Really?

But it was a phenomenally successful campaign, and we believe, it gave a great boost to their business in the early years and put them on the map.

However, while we may be 8 years late in reporting this… the jingle used for the Obama O’s cereal sure sounds awfully familiar, a bit too familiar.

Vacation Rental Founder’s Net Worth

Brian Chesky, co-founder of Airbnb is valued to be worth $3,300,000,000 according to Wikipedia. Joe Gebbia, the other co-founder is estimated to be worth $1,900,000,000. Airbnb was founded in late 2007.

Brian H. Sharples, founder of HomeAway and VRBO doesn’t have a billion dollar net worth, its more in the $30,000,000 range, but he does pull down a cool $6,000,000 a year in salary and bonus’s by some estimates, was founded in February 2005.

Jeffrey Hock, CEO of, the leading free vacation rental platform founded in 2004, congratulates the late-coming vacation rental platform founders for their success.

That said, since Free-Rentals is not a publically traded company, Mr. Jeffrey Hock is under no obligation to disclose his net worth.

Yet, one brave investigative journalist managed to obtain a photograph Mr. Hock’s walk-in-closet while lost in the South wing of his mansion looking for a bathroom. This picture is the only known indication of the Free-Rentals founders net worth. Godspeed Mr. Hock.


Airbnb Revenues Exceed All Major Hotels

Now that Airbnb raised $100 million in new funding, and its valuation at twenty five and a half billion dollars, Marriott International has countered by purchasing Starwood Hotels for $12.2 Billon USD. The Priceline Group made its move by claiming to have listed 21 million rooms for rent.

According to Skift:

“Airbnb’s reported third quarter room nights sold (23.8 million), gross bookings ($2.2 billion), market cap ($25.5 billion) and revenue ($340 million) with major online travel agencies as well as TripAdvisor and HomeAway.

Airbnb’s $340 million in third quarter revenue has left HomeAway, which is being acquired by Expedia Inc. for $3.9 billion, far behind at $130.7 million in revenue. As with comparing Airbnb to hotel chains, gauging Airbnb (largely urban rentals of primary residences) against HomeAway (mostly vacation home rentals in resort areas) is choppy, at best.

Still, despite its projected 2015 operating losses, Airbnb’s revenue picture and traction is clearly on the upswing.”

Company Valuation/Market Cap Q3 Revenue
Marriott International $18.59B $3.6B
Hilton Worldwide $23.2B $2.9B
Accor Hotels $10.2B $1.58B
Wyndham $8.9B $1.56B
Starwood Hotels $12.4B $1.4B
Hyatt Hotels $6.9B $1.B
Airbnb $25.5B $340M
Choice Hotels $2.9B $241.5M

Source: Wall Street Journal, public documents

Value of .01% Stake in Airbnb?

MoneySo, just thinking out loud here, what is the value of a .01% stake in Airbnb? What a great question to ponder, let’s do the math.

According to the Wall Street Journal and CNN, Airbnb currently today July 11, 2015, has a valuation of $25 Billion USD.

So let me get out my calculator while I calculate .01% stake of $25 Billion dollars, wait, that won’t work, my calculator won’t fit in that many zeros.

Computer calculator puts it as follows: $25,000,000,000 X .0001 = $2,500,000.

A cool $2.5 Million USD. That would be nice eh?

While Free-Rentals is hardly Airbnb (yet), we were in this holiday rental industry years before they arrived to the scene. We are now seeking founding partners to help us gain a half million rental unit listing momentum, and we are giving out 0.01% blocks of stock equity in Free-Rentals to our members who help us make that happen.

Married Couple Retires to Airbnb

afarAfar Magazine does a Q&A session with a married couple that decided to spend their retirement by bouncing around from one Airbnb home to the next. They have already rented 55 Airbnb rooms in over 30 countries, and are continuing their journey.

“Turns out it was! So we got rid of most of our stuff, rented out our Seattle house, reduced our monthly expenses, and bought two one-way tickets to Paris. And we’ve been traveling ever since.”

Afar Magazine also provides a list of tips and techniques for maximizing travel when you hit retirement age.

Airbnb Regulation Movement in San Francisco

Photo by Gabrielle Lurie - sf.airbnb -Coalition members call for city officials to immediately begin efforts to collect more than $25 million in past due taxes owed by Airbnb at a press conference on Monday, November 24, 2014, at the global headquarters of Airbnb in San Francisco.

Photo by Gabrielle Lurie – sf.airbnb -Coalition members call for city officials to immediately begin efforts to collect more than $25 million in past due taxes owed by Airbnb at a press conference on Monday, November 24, 2014, at the global headquarters of Airbnb in San Francisco.

And so it begins, another movement is underway in San Francisco to regulate Airbnb’s short term accommodations sharing program. A coalition of affordable housing activists and local home owners are battling an Airbnb backed group called “San Francisco for Everyone” over a ballot initiative aimed at curbing Airbnb’s growth of room sharing within the city.

According to TechCrunch:

Backers of the ballot initiative say the existing regulation passed last fall doesn’t go far enough, and neither will changes proposed by Mayor Ed Lee and Supervisor Mark Farrell. The initiative proposes a law with a 75-day limit on hosting, quarterly data reports from platforms and an ability to go to civil court if the planning department does not react to complaints in time. Last week, Lee ordered the creation of a new enforcement office just as the city also sent violation letters to 15 hosts for allegedly turning 73 housing units into full-time short-term rentals. Lee and Farrell are trying to strengthen a short-term rental laws passed last year by putting a 120-day limit on the number of nights a host can rent out their home.

According to the San Francisco Examiner:

Supervisor David Campos wants a 60-day cap on the number of stays a host can book per year. Mayor Ed Lee and Supervisor Mark Farrell want a 120-day cap.But that’s hardly the end of the debate. Campos argues the only way to enforce a cap of any size, is to require hosting platforms like Airbnb to only allow listings on their sites with a valid city registration number — or face penalties. And he wants those websites to provide quarterly booking data.

Regardless how the standoff shifts, it seems two factors are a stake; how many days maximum can home sharing be allowed? And how is this measured and enforced? We will continue to monitor this story closely as it unfolds.