Why Airbnb's Business Model Is So Successful

Airbnb (ABNB 0.97%) has only been a publicly traded company for about a year. While many initial public offering (IPO) stocks aren't worth the price of admission, there are some key factors that set Airbnb apart from the rest. In this segment of Backstage Pass, recorded on Nov. 15, Fool contributors Danny Vena, Jason Hall, and Rachel Warren discuss the top reasons why Airbnb continues to succeed even as the broader travel industry is still struggling amid the pandemic recovery. 

Danny Vena: This is one that I have been watching. For the reasons that you mentioned that the travel season, and will they or won't they, and how things are going to play out with COVID, but I'm curious to get the opinion of somebody who stays in these.

My wife and I, when we travel, mostly we'll stay in smaller hotels or even in bed and breakfasts. But the amenities of home that you talked about. I like the fact that somebody is going to come in, and clean our room, and make our bed, and scrub our toilet, and when we come back, we don't have to do anything.

Whereas if I'm staying in a house, I still have to make my bed. I don't want to.

Jason Hall: No, you don't, Danny.

Vena: [LAUGHTER]

Hall: You don't have to make.

Rachel Warren: You don't have to. It's not a requirement. [LAUGHTER]

Vena: What's the draw? For folks who maybe don't get it, what's the draw of staying in an Airbnb as opposed to staying in a hotel where you have things taken care of every day?

Warren: There's a few reasons and I can just speak from my own experience. I've lived in Airbnbs everywhere from Italy to Israel to Croatia so kind of all over, so a whole lot of different experiences. One thing is I have found it can actually be very cost-effective compared to the price one would pay staying in a hotel for months at a time. Obviously, some places you can get a great deal.

But there's often discounts that Airbnb offers for monthly stays. I don't know if it's like factored in by the host. I think it depends on the host, but essentially you can, a lot of times, get anywhere from 10% to sometimes 30% or more slashed off the rate if you're staying for a month and then like two months or longer so that's a huge draw.

But I will say some of the places I've lived, I have actually had like full cleaning services and stuff. It just completely depends on the host and the way they've set it up. The place that I was living in most recently, in Rome, I had a cleaning person that came in, and they did a great job. I didn't have to worry about that, [LAUGHTER] which was really nice.

But I think it's also like, for me personally, one of the reasons I've loved it, besides the comforts of home, is I've also met a lot of really interesting people that way. I've actually become really good friends with some of my hosts over the years.

So if you're maybe looking at Airbnb for a longer-term thing, that can be a great draw. But if you're even just looking for a shorter-term stay, you can potentially have that cleaning option. But also it's feels a little more homey than a hotel. I think that's a draw for people, and I think there's a lot of people doing long-term stays.

Hall: I can weigh in on this, too, because we do Airbnb a lot. Over the past seven or eight years, we've done a tremendously, and it's generally our default when we're traveling, and it's an option.

No. 1, substantially better privacy versus hotels.

Warren: Oh yeah.

Hall: It's not even close. Particularly if you have kids. Not just privacy from other people, it's privacy from your own family too [LAUGHTER] which can be really valuable.

Warren: Yes [laughs]. 

Hall: Having a kitchen, having laundry, washer/dryer, or things like that within the property, in a lot of cases, are great. Rachel, you talked about meeting people and that sort of thing. With Airbnb, you get to live where people live in these communities, not where tourists stay, and that is a massive difference in getting able to experience and enjoy a place. It is a massive difference. It also expands the places that you can go. [LAUGHTER]

There's just aren't a lot of choices and a lot of places when it comes to hotels. You might have a hotel that's 45 minutes or an hour from the place that you really want to be most of the time, or you can stay in an Airbnb that's in that area.

So proximity, being able to live in communities, privacy is a big one, and the other thing, too, is the cost-effective aspect of it. That's particularly if you want to say a little bit longer. It's just so much cheaper than a hotel.

Warren: I absolutely agree.