How Does Airbnb Work – Top 4 Reasons for World Domination

In this post, I will cover how Airbnb works and why I think Airbnb will continue to dominate the hotel industry.

In a nutshell, Airbnb provides an online marketplace for guests to book a short-term rental with local hosts.

Users all over the world can post spaces available for rent; in turn, Airbnb allows customers to rent out those spaces, which could be available anywhere from a couple of days to a month.

The idea was born in 2007, Airbnb’s co-founders Brian Chesky and Joe Gebbia couldn’t afford rent for their San Francisco apartment. So, they created a website and offered to rent out space in their apartment.

10 years later, this simple idea is now worth over 31 billion dollars in valuation!

How Does Airbnb Work for Booking?

Airbnb’s requirements for guests include:

  • Full name
  • Email address
  • Confirmed phone number
  • Profile photo
  • Introductory message
  • Agreement to house rules
  • Payment information

Some hosts require extra requirements like asking guests to upload their identification.

It is important to note that Airbnb will never share your real email address with your host. A forwarding email address is provided on your behalf from Airbnb.

How Does Airbnb Work for Hosting?

Almost anyone can be a host! It’s free to sign up and list your space.

It’s free to sign up and easy to list your space. The listings available on the site are as diverse as the hosts who list them.

Some hosts start small and post airbeds in their apartments. Other hosts start by entire houses or rooms in bed-and-breakfasts.

I’ve seen hosts even offer tree houses in the woods, boats on the water, or enchanted castles. As you can see, the options are literally limitless.

A recent creative post that I saw was when a host offered up their backyard for hikers to camp in.

That is creative!

However, Airbnb is not available in Crimea, Iran, Sudan, Syria, and North Korea( probably a good idea).

Why Will Airbnb Continue to Dominate?

In my opinion, Airbnb is a much better way to travel because of these 4 reasons:

  1. Personalized experience: local hosts will provide a better-personalized experience and insights about their town or city to their respective guests.  Therefore, this knowledge transfer is way more meaningful than traditional hotel’s transactional concierge services.
  2. Authentic: local hosts give guests a sense of ease just like when you’re at home by offering their home.
  3. Cheaper for the guests, generally speaking. I’ll elaborate more on this later.
  4. Better booking experience: from my own research, Airbnb by far has the best user-experience for guests to book a rental unit. It is much easier to book on Airbnb than on some hotels’ own websites.

Have you ever wondered why Airbnb was able to beat out their short-term rental competitors? VRBO was the first to market to offer vacation rentals.

The answer is simple.

It is because Airbnb focused on consumer-centric behaviors and made sure that they provided a booking platform that is easy to use for all ages.

Is Airbnb Really Cheaper than Hotels?

The quick answer.


Now, let’s check out these price graphs on why it is cheaper to book on Airbnb. Priceonomics compared the average prices of hotels and Airbnbs in popular cities.

The top 10 most expensive cities for hotels:

The top 10 most expensive cities for Airbnb:

How does Airbnb work

Let’s take the two most popular destinations in America: New York City and San Francisco.

As you can see the average price for a hotel is $245 dollars vs. $180 for Airbnb.

$65 dollars is significant for a family of 4.

Let’s not also forget that Airbnb guests can use amenities that are not standard in a hotel: a kitchen.  This allows price-conscious families to save even more money by cooking their own meals!

(Update: In cities like SF, it’s cheaper to grab a hotel room.)

Your Homework

Check out your own booking experience on Hilton vs. Airbnb vs. VRBO.

Interest in learning how to build your rental arbitrage empire? You can subscribe to my blog and learn tips and insights on my process of creating a profitable 6-figure passive income business using other people’s home. I write on the regular and offer free tips and insights.

However, if you are completely new to this arena and want to know more in details about how does Airbnb work, you can always get info on the official Airbnb website.

1 Comment
  • Prathibha
    Posted at 10:37h, 10 December Reply

    I am planning to host in airbnb, I have huge villa in India, I am currently out of country. Would like know more about hosting in Airbnb.

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