The Sharing Economy

Aug 30, 2022 By Triston Martin

A sharing economy can be described as a commercial or economic model, often a peer-to-peer economic model. This model permits sellers and buyers to manage their businesses more effectively by sharing their physical and human resources. This includes the shared consumption of services and goods that are owned by a shared owner and have value.

Shared economy companies don't directly provide people with services or goods; however, they earn their income by connecting sellers and buyers. This model is a great opportunity to continue growing revenue. The two companies, eBay and Craigslist, have utilized the peer-to-peer model for over 10 years. The newest companies, such as Uber, Lyft, and Airbnb, have developed their business models to fulfill a variety of needs of consumers.

Airbnb IPO

Airbnb has put out a prospectus to go public on November 16, 2020. The company was listed on Nasdaq with the ticker ABNB on December 10 of the same year. Airbnb set the price for the initial offering of shares at $68 per share, up from its initial plan, which was $40 to fifty dollars per share. This gives an estimated value of $47.3 billion on an adjusted basis. Airbnb increased its capitalization to #3.5 during its IPO, in addition to the $2.5 billion it was expecting.

Airbnb has seen its bookings drop and revenue drop in 2020, as the coronavirus virus wiped out world travel. Airbnb eliminated 25% of its workforce in May since reservations fell by 70% from the previous year. The company, however, Airbnb bounced back over the summer months and announced that reservations were down 30 percent from June to the same month in 2019. The increase in bookings was primarily driven by tourists looking for nearby rental properties to escape the hustle and bustle and benefit from work-from-home policies.

Collecting Service Fees

Airbnb has service charges that guests and hosts must pay when they offer to lodge and book a room on their platform. Most of the service charges fall on the hosts since they provide accommodation for guests. Hosts are required to accept an additional 3 percent fee each time the guest makes the booking. The 3% fee will cover the processing costs for guests paying to stay at the host's lodging facility through Airbnb. Airbnb website.

Collecting Value-Added Taxes

Alongside the cost of service charges that Airbnb also adds a value-added fee for guests that reside within Iceland, South Africa, Norway and Norway, the European Union, and Switzerland. Hosts will see these taxes added to their earnings once the booking has been completed as a separate fee for hosts who use Airbnb to provide accommodations.

Exchange Rates

When guests make payments for their reservations in a currency different from the currency of the location they're staying, they will be charged the exchange rate Airbnb determines. Airbnb benefits from these rates to ensure that currencies remain stable.

Future Growth Engine

Airbnb plans to develop from a peer-to-peer online travel marketplace to actual travel business. While they continue to acquire other hotel chains to expand their portfolio, they will be one step closer to getting there. As the company does not control the hotels through their websites (they belong to travel agents), and once they have opened hotels and other accommodations under their brand, Airbnb can grow into an established travel business with more opportunities to earn money. They have performed very well as a peer-to-peer marketplace before. The only thing to be determined is whether they decide to reform to be an independent travel business.

What Is It That Makes Airbnb's Business Model Distinct?

Travel is among the world's biggest industries, and how it is conducted has become more commoditized. The travel industry has grown by providing standard accommodation in crowded hotel areas and frequently visited tourist attractions and landmarks. The standardization of accommodations has limited the areas of the globe one can visit, and, as a consequence, many guests end up feeling like outsiders in the locations they visit.

Airbnb has made home-sharing possible internationally and established a new travel category. Guests of Airbnb can live in communities that locals populate, enjoy authentic experiences, experience life like locals, and interact with people there. Pay using an encrypted payment platform, and write reviews following their stay or experience. Airbnb offers a review system that allows guests and hosts to evaluate each other following an experience. Guest and hosts cannot see reviews until they both have posted reviews or until the timeframe to review has ended, a process designed to increase accuracy and objectivity.

Related Articles