They do. It amazes me that guests do this especially when bookings are twelve months hence. But maybe it’s a way of budgeting - they have the money now so why not? Their next year’s vacation is guaranteed and paid for.
They absolutely do take payment out immediately when you book. And in my case, when I booked a house two months ago, took it out three times, since my bank flagged the charge and they kept trying to put it through. $2700 dollars on hold, for a holiday weekend, and without a confirmed booking. Luckily the host was very understanding and held it for me. But Airbnb took seven days and countless phone calls to release the $1800 hold on my checking account. I was infuriated. They gave me a $75 credit as a “sorry.”
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I should mention that the first time I tried to book, Airbnb “experienced an error” according to the emails I received from them, and told me to try to book again, which is why my bank flagged the future transactions. I called the bank and they said Airbnb wouldn’t accept the payment. ??? Yet they kept charging… Sigh…
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Please tell me what you mean when saying “diversify”.
Personally, I presently get more than 50 per cent of my rental income from Airbnb. But, it is just over 50 per cent. Which means, more than 40 per cent come from competing short term rental sites. This is what I mean when I talk of “diversify”.
Also, I started selling additional tourist services to guests, like local train tickets (making a small profit from that, too). So I am trying hard not to become too dependent on Airbnb.
As the old economist’s saying goes, “Don’t put all your eggs into one basket”.
I mean rent on another platform besides Airbnb.
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Considering they are taking approx 17.5% per rental, way more than HA, TA etc do, I would certainly hope they are profit-making. If not, I’m not sure where all the money is going.
They take 6-12% from guests and 3% from hosts. And they are not yet profitable. They generate revenue and they have cash flow but they are not yet making a profit. You would be surprised at how much money it takes to be profitable and how long it takes a business to become so.
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There are also some additional charges like 3% if the guest comes via google. For me the average they take is 17.5% (range 15-20%) - sample all of my first 20 bookings.
Admittedly their interface and website is way better than anything else around (for now)
Maybe someone can explain to me what their expenses are. I mean, they need to run servers (so hardware/machines and bandwidth costs), they seem to pay for advertising, and they have employees (sysadmins, software engineers, people to answer their phones, advertising people, legal people etc. etc.). What else? Any capital expenditure? I can’t think of anything. Has anyone looked at their financials?
They are burning cash trying to grow and fight legislation that will hurt it. They are privately held so unless they go public they don’t have to reveal their numbers. Here’s an article from late last year.
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Thanks for the articles, @Maggieroni. They’re interesting, particularly the first one.
Yes, I see. So nobody outside the company knows how they are spending their money?
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There are funded by venture capitalists, private equity investors so their investors know but not the general public.
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As a privately held company, they have to comply with financial laws, pay taxes, etc. but their finances are totally hidden from anybody except their investors.
It’s expensive to fund a startup and grow at the rate they have seen. And don’t forget that their primary competition–the hotel industry–has enormous financial resources. In places like SF, NYC, and Seattle, Airbnb has to spend millions of dollars to fight the millions of dollars the hotel industry is spending to curtail their business model. The conventional wisdom seems to be that tenants advocates and renter’s associations are behind the anti-Airbnb laws that have been springing up on ballots, but those groups have no money and are silently backed by the deep pockets of the hotel industry, which is really feeling the pain of short-term rentals. In reality, Airbnb actually has very little impact on rental markets…even in SF, where Airbnb is huge, the number of full-time Airbnb units is less than 1% of total rental stock.
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Hi @wjquigs,
Thanks for the analysis. However…
I don’t really see how this would work, though. How would the hotel industry back tenants associations?
Perhaps the anti-Airbnb people are afraid of the numbers of Airbnb units growing? Given that Airbnb rentals make much more money than conventional rentals, they would be an attractive business model to many landlords. Though it does have the downside of many hours spent on the computer (or on a phone) doing correspondence. And many hours changing sheets, cleaning, and washing.
I think it does in places like Hawaii. Most people wanting to rent a cheap place by the beach will be out of luck. Gone are the days when you can get a shack by the beach for $400 a month.
Why should we rent our places to high impact, long term renters when the STR are more lucrative and less hassle and trouble?
I think it has to have an impact in places where it is not regulated.
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I don’t really see how this would work, though. How would the hotel industry back tenants associations?
@faheem, big business and politics go hand in hand. Google the Koch brothers. Not saying they have anything to do with Airbnb, but I’m sure you’ll find examples of how these things work.
@faheem: I’m not saying the hotel industry is directly backing the tenants unions. It’s just that their interests are aligned (more restrictions on airbnb==more rental stock and more money for hotels because of supply and demand). So the hotel industry puts up the money for these “anti-airbnb” initiatives, and let’s the tenants unions be the public face of the argument. It would be a lot harder to convince the citizens of San Francisco to vote to give more money to the family that gave us Paris Hilton, than to vote for more rental units, and that’s how the hotel industry frames the debate.
@kona: I agree with you that airbnb might be having an impact on rental availability in some markets. And I don’t believe that airbnb-type services should be totally unregulated. But to get back to the original thread, I maintain that airbnb spends a lot of money fighting this regulation, because in some places (like SF), proposed regulations would make airbnb more or less completely illegal.
I’ve had them hold several payments. This especially happens with long term guests. I believe there is a bug on their end. One time I was just browsing my “future payments” and over $2k were in the past. I had to call and make a big stink about it after I was originally deferred to a host forum. Very irritating form of customer service. Now I only call. You can’t get anywhere emailing back and forth.
Hi @Chloe, @ wjquigs,
I’m not saying that the hotel industry isn’t involved in anti-Airbnb measures. I just isn’t obvious to me how they would be working with tenants associations. And I know who the Koch brothers are.
Ok, but again, I’m not seeing how the mechanics of this would work. And again, I’m not saying it doesn’t happen.