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Airbnb has changed the general approach to finding a place to stay.
The startup was born in 2008. Next year, 2009, they got their first $20,000 from the Y Combinator. Airbnb creators spent these investments to analyze the market and see the needed improvements.
Today, the startup has become a leading apartment rentals service on the global market: increasing the number of travelers and apartment listings and gathering a further $600.000 of investments.
But that doesn’t mean, however, that other similar services won’t be able to get their piece of cake in this niche.
The question stands – how to create a successful apartment rental service?
First of all, let’s learn a bit more about Airbnb.
What is Airbnb
Airbnb. is an American online marketplace that is based in San Francisco, California. The company offers its customers arrangements for home rentals and travel experiences.
Airbnb website was founded back in 2008 at a design conference in San Francisco. Back then, the founders of the project Brian Chesky and Joe Gebbia decided to rent out part of their apartment to conference visitors.
They created a simple site called airbedandbreakfast.com and added pictures of their property. Over the next few days, they hosted three guests who paid $80 each. This is how Airbnb’s story began.
The company’s story started with MVP, but today, its value is estimated at $31 bln. No surprises lots of startups try to repeat their success by building a website like Airbnb.
Specifics of the Airbnb marketplace
Airbnb is a website that is focused exclusively on connecting the owners of real estate (mainly private individuals) that lease their property to clients who need housing for a certain period of time.
The main distinction between online message boards, such as Craigslist, and the Airbnb startup is that the boards provide users with the information while services like Airbnb help solve the issue itself.
In the case of listings, users must find a suitable offer. But with the Airbnb platform, you choose from the existing lists. That’s why geolocation plays an important role here. Users mostly look for rental housing that is conveniently located.
When a person travels to another country, the first question is how to quickly and easily find a cheap apartment in the vicinity of a couple of blocks from the point of interest. And here comes Airbnb.
Reviews after transactions
The message boards aren’t responsible for the transactions between tenants and those who lease their property. Therefore, the tenants have to trust their money to a person they don’t know anything about.
On the sites similar to Airbnb, customers can leave feedback about the hosts whose apartment they rented. User feedback and rating, as you may know, affect the business dramatically. The higher the rating, the bigger number of customers will trust the property owner.
Delaying payments or holding funds
One more advantage and difference of such services is that they let you make payments via the Internet without having to leave the booking application or website. This feature is very convenient for tenants and it also protects the owners of the property ensuring the advanced security of the transactions. In addition, online payments allow the owner of the service to charge a commission and, thus, lead a successful business model.
Airbnb monetization model
The core revenue Airbnb receives from the guests’ and hosts’ booking fees. The fee size depends on the size of the reservation: the more expensive accommodation is, the higher is the fee. The guests are also required to pay a non-refundable service fee(usually about 15%).
Host & Guest Fees
Airbnb charges both kinds of users-host and tourists. Usually, Airbnb charges a 3% fee for every completed booking. For Airbnb Plus accommodations, a special classification on Airbnb, this fee may be higher. Guests pay the service fee as they book accommodation.
Users are also subject to a value-added tax that is assessed on the final sale of goods and services. This tax is paid additionally to Airbnb’s service fees in the European Union and in such countries as, Switzerland, Norway, Iceland, and South Africa.
The Business Model Canvas of Airbnb
Business Model Canvas graphically represents the whole concept and business model of the project. A traditional business model canvas represents such blocks of business, as:
- Value proposition
- Target Audience
- Customer relationship
- Cost Structure
- Revenue Streams
If you are going to build a marketplace like Airbnb it would be useful not only to analyze the features and their cost, but also the business aspects. Thus you could compare them with your idea and prioritize the development processes accordingly.
Airbnb’s infrastructure consists of the partners and resources of the company. Moreover, the company also uses different digital tools and third-party providers to provide the best user experience for the hosts and travelers.
- Hosts. People who use a rental marketplace to rent out their property.
- Investors. People who invest in the project to support and develop Airbnb’s business.
- Business travel partners. Airbnb collaborates with other platforms that organize business trips (Concur, Triplink).
- Listings. The major resource of Airbnb includes accommodations and events listings and brings revenue to the company.
- Technical resources. Technical resources needed to maintain the work of the Airbnb platform. These resources comprise platform architecture, machine learning algorithms, analytic tools, and hardware.
- Brand. Airbnb’s brand has financial value and acts as a trust factor for company clients and business partners.
Airbnb’s success was a boost with an idea of short-term accommodation rental. Though any great idea is just a part of success, and you cannot create a decent project without activities that attract new and loyal users. At this point, Airbnb developed such activities as:
- Smooth and easy transactions.
- A global community that grows as the service extends to new countries.
- Experiences & Events that keep existing users interested and attract new participants.
- Extending the value proposition by adding new events and Airbnb-Plus apartments.
- Additional income
- Smooth and easy transactions
- Meeting new people
- Ability to accept verified guests
- Booking management
- Transparent ratings of guests
- More budget stays than hotels offer
- More variety of apartments to choose from
- Smooth and simple transactions
- Ability to try local experiences and meet new people
- Transparent ratings and reviews of hosts
Airbnb’s types of customers are:
- By type of accommodation: entire apartment, private room, shared room
- By location: countryside, city
- Travel type: business and vacation travelers
- Demographic: families with children, couples, retired people
- Income: looking for low-cost or premium home
- Digital advertising campaigns
- Content marketing
- Social media
- Free advertisement in travel blogs
- Additional opportunities for getting new income.
- Support in case of any issues.
- Support during all guest stays.
- Orientation on host success.
- Additional benefits for Super Hosts.
- Platform development & maintenance: work of developers, office, cost of hardware.
- Staff salaries: programmers and non-technical staff, support specialists, photographers
- Offices maintenance
- Transactions cost for the services of payment providers.
- Legal issues like lobbying & any legal proceedings.
- Customer support.
- Cooperation with various partners like other travel platforms or insurance companies.
- Marketing & Advertising.
Transaction fees from both parties
- Hosts – 3-5% from rental hosts, 20% from event hosts
- Guests – 5-15% from rental guests. Event guests pay no fee
10 core features of Airbnb and their cost
Starting an MVP, it is important to understand which features are primary and which are secondary. First of all, let’s start with an overview of the functions that should be obviously presented in such a service as Airbnb and similar ones.
Considering the fact that the service is used by the guests as well as by the hosts, there are a few types of key features.
Speaking about the features that are available for guests, it should be possible to:
- Search for a place to stay
- Look through listings
- Manage order requests
- View reservations and bookings details
- Leave reviews and ratings
- Manage payments
There are some specific functions that are available for hosts either, they should be able to:
- create their pages
- deal with the listings’ information
- communicate with guests
- create and send requests
- view reservations details
- leave reviews
- manage payout methods
These features and capabilities should be included in any similar to the Airbnb project as they allow creating an appropriate interface for each user.
Let’s just start with the core features:
- Profile Set-Up
- Search & Filtering Options
- Property Listing
- Apartment details
- Availability & Booking Management
- Booking & Wishlist
- Payment system
- Admin Dashboard
Developing this feature, you need to consider adding an ability for customers to create two types of profiles – for travelers and hosts. Generally, Sign Up/Sign In feature includes such options as:
- Sign In/Sign Up
- Social networks login
- Password recovery
When a new user signs-in to the service, Airbnb will require them to fill out their profiles. As a rule, customers will be asked to add their profile pictures and a short description more about themselves.
Then it is required to complete the verification by providing an ID document and confirming an email address and a phone number. Inside the account, the users can manage their bookings, exchange messages with the hosts, add and receive after the booking is completed.
In general, profile details are:
- Legal name
- Date of birth
- Email address
- Phone number
- Stripe account connection
Estimation: 20-30 hours
Airbnb profile details
Search & Filtering Options
To start the work with a platform, customers use a search tool where they can use a variety of search filters to find accommodation for the future trip: location, date, and number of travelers. Users can also specify whether the travelers are adults, children, or infants.
The users can also use advanced search options to filter the results out according to some specific requirements such as “pet-friendly accommodation”, “separate entrance”, “number of rooms/bathrooms/beds” or “heat system”. All booking options are displayed on a map along with the nearby sights.
Airbnb Search & Filters
Being a part of the general Airbnb search, the map also serves as a separate tool when a guest is looking for a particular location, or, for example, near the seacoast or closer to the city center.
All the available accommodations will appear on the map when you zoom in the desired location. It is also possible to click the accommodation on the map to see the quick preview.
Estimation: 90-120 hours
Airbnb Map Search
This feature is required as far as property listing providers potential buyers with more information about the accommodation. Such data includes basic characteristics like the number of rooms, beds, bathrooms, facilities, clear photos, etc.
Estimation: 90-110 hours
Airbnb Property Listing
After clicking on the accommodation ad, the customers can see its detailed description that comprises the full list of amenities, available dates, location, other traveler reviews, pictures, and information about the host. entering the dates of the future trip and the guests’ quantity, a traveler can see the final price of the booking, including fees.
For security reasons, the exact address of the apartment is disclosed only after the booking confirmation.
Estimation: 12-24 hours
Airbnb apartment details
After finding a place to stay, tourists move to the booking. To book an apartment, the user should enter all the required details (dates, number of guests) and click the booking button.
Usually, the booking confirmation proceeds automatically for the guests with verified profiles. But in some cases, the guests should wait until the host to approve the booking. For example, if the guests didn’t pass the verification, they will need to send a booking request to the host. After the booking users can see all the bookings and manage them.
Besides the booking itself this feature usually includes observing all the bookings and managing them
Estimation: 30-40 hours
To confirm the booking, a guest needs to pay for it. Depending on the total price, bigger payments can be divided into two batches: the first one is charged right after the booking, and the second – in a couple of weeks before the trip. The guests are also required to pay the additional host and rental online rental marketplace fees and, in some countries, taxes.
In Sloboda Studio we prefer to use Stripe as a payment gateway for online marketplaces.
Thus when creating an Airbnb-like platform we would need to set up a Stripe payment (Create and configure Stripe account, configure sandbox env, configure Stripe env in the project), Connect Stripe account to profiles and enable automatic refunds due to cancellations.
Automatic payment to the Host
After the booking time has passed, part of the payment will be taken from the platform account to the Host account. Plus, users can see the Payment history. Airbnb also emails customers a receipt with all the payment details.
Estimation: about 80 hours
In order to keep the customer updated on news and promotions, the application sends notifications to the user’s account, mobile device, and email.
Generally, notifications options comprise:
- Notifications about new messages and bookings (email or SMS)
- Notifications about booked places
- Messages notifications
- Notification preferences
- Real-time notifications
Estimation: 80-110 hours
Airbnb Push Notifications
Admin panel allows you, as a business owner, to manage your platform, adding new features and handle various kinds of issues.
- Define types of tours that will be used on a platform
- See and manage all users
- See all the bookings
- Manage booking statuses
- See feedback and ratings of the Hosts, moderate them
Estimation: 80-90 hours
Pre-development & DevOps
The pre-development and DevOps stage comprises several actions needed to create a base for the future Airbnb-like project.
At this stage, the team works with general project settings, library connections, planning the features, connecting and implementation of the database, server setup, project deployment, and localization.
The pre-development stage includes such steps as:
- Project setup
- Project architecture
- Set up DataBase
- DataBase architecture implementation
- Project Deploy
- Server setup
Airbnb Tech Stack
In order to make the features listed above work, it is necessary to understand which tools and technologies can let you implement them. It is really important to choose the right technologies as they influence greatly not only the time of the functionality development but also its cost.
So, Airbnb stack of technologies may include:
- Frameworks — Ruby on Rails, React.js, Capybara, RSpec, PhantomJSSQL
- Webserver — Nginx
- Web application server — Puma
- Data storage — PostgreSQL
- Key-value storage — Redis
- Hosting — Amazon Web Services (AWS)
These technologies will be of great help while creating an MVP, as well as during its further development. You should remember that even Airbnb uses a number of various tools and technologies; they all are based on Ruby on Rails. It allows building an MVP really quickly, but still guarantees security and fast performance for your product.
Read more: Technology Stack for Building a Marketplace
Cost To Build A Website Like Airbnb
Starting an Airbnb like website, you should know the two significant points in its development. First of all, it is necessary to understand how much you will pay for the whole project, from the very beginning to the end. Then, calculate the cost of the website development alone.
The price depends on the team you choose-inhouse or outsource, the tools you use, the features you choose, and some other points.
Now, we offer you to find out how much money you would probably need to start your own project. Here we are going to sum up all the costs.
≅30 hours for project planning
≅30 hours for rest API implementation
≅10 hours for database modeling
≅20 hours for implementation of services and libs.
All that would cost you about $2500-3000. The listed points are the most important but it is clear that there are a number of other significant features that should be included on the website.
Cost of the core features
To calculate the cost of your future Airbnb-like website, start with the estimation of all your desired features:
- Sign-in/Sign-up: 45-90 hours
- Profile Setup: 20-30 hours
- Search & Filtering Options: 90-120 hours
- Property Listing: 90-110 hours
- Apartment details: 12-24 hours
- Booking System: 30-40 hours
- Payment system: about 80 hours
- Notifications: 80-110 hours
- Admin Dashboard: 80-90 hours
Choosing the team that will be developing your website, pay attention to its location as prices differ greatly due to the geographical position of an IT company or team. To find out the prices for the website development in various countries, you can look through the table below.
As it is shown in the table, among all listed regions India is the cheapest one. If you decide to choose an Indian company, pay much attention to their portfolio and user reviews as there are a number of low-quality companies. Check twice and make sure that the company has a good reputation and is really capable of making your project work.
In fact, European developers, especially from the Eastern part of Europe, are known for the perfect mixture of experience, quality, and moderate pricing.
American and Australian developers are also great professionals but their prices are the highest among all the regions. Mainly, it is related to the geographical position and has nothing in common with the quality of work.
NB: Remember that besides development such a project will require additional costs for project management and Quality Assurance.
The overall cost
Thus we can see that the overall cost of your product would gradually depend on the location of your programmers.
2 ways to build an Airbnb-like marketplace
When you start building your first Airbnb-like marketplace, you are usually choosing between custom development and ready-made solutions. We decided to compare these two variants and their cost estimation.
During the custom marketplace development, you can add any desired features.
But at the start, we’d recommend choosing the type of custom development. First of all, consider that you can choose between three types of custom development:
- In-house development
- Freelance development
- Outsource development
In-house development pros & cons:
- Clear estimation
- Higher costs
- Additional expenses for office, labour and taxes
- Need to have a tech background to control the team
Freelance development pros & cons:
- Lower prices
- Narrow expertise
- Flexible schedule
- High risks
- Lack of control
Outsource development pros & cons:
- Costs saving
- Better expertise
- Long-term collaboration perspectives
- Lack of live communication
- Hard to find experts
If you want a fast and simple solution, consider using an open-source marketplace construction platform. Such platforms as Sharetribe will help you make almost an Airbnb clone that will be a customized solution for a budget cost.
However, you have to remember that it is impossible to customize these templates, and their abilities will be limited to the initial functionality. Additionally, such platforms are not scalable and are not powerful enough to handle high loads.
Sharetribe offers such features as:
- Renting places
- User management
- Listing management
- Location search
- Booking & scheduling
- Online payment
- Booking calendar
- Multiple languages
HOME FIT OUT
Home Fit Out is a Canada-based digital platform that offers cutting-edge furniture solutions.
The customers are able to order a preliminary designed room. Such a room includes all the designs and furniture. After the order is set, the company delivers the furniture. And sets everything as it was designed online, once the order was sent.
TikkTalk is an open digital marketplace for interpretation services. It works over a video conference in customers’ browsers.
Our team created a Minimum Viable Product. MVP allowed showcasing the most important features to the first customers and investors.
After this, the startup customers were able to:
- create and book new assignments
- choose interpreters
- check current assignments
- choose favorite interpreters
- check statistics
- use assignment calendar
Airbnb changed the market of the property rental market and definitely got a big share of this market. But still this market offers a big number of opportunities for young entrepreneurs especially for niche Airbnb-like platforms.
In this article we showed you the very rough estimates for features of Airbnb. Besides, you need to keep in mind that all these estimates relate to the development of the first version of your MVP. Such an Airbnb platform as you see it today cost the company hundreds of thousand dollars.
On thу other hand, it should not stop you as everything big starts with little. Besides, you can alway go for offshore development and save at least a half of the development budget and still get a scalable platform.
At Sloboda Studio we have been developing marketplaces for 7 years and would be happy to share our experience and estimate the cost of your Airbnb-like idea.