What Does Airbnb Stand for? The Complete Beginner’s Guide

 

What does Airbnb stand for? “Airbnb” is a term that you will come across often if you’re planning a trip or looking into real estate investing.

But people often get confused by the term, and that confusion is understandable.

This is because the meaning of the term Airbnb and what it stands for today are two different things.

So, in this article, I’m going to answer the question “what does Airbnb stand for” by explaining the origins of the term and how it evolved to become the name of one of the largest tech companies in the real estate industry.

What Does Airbnb Stand for Exactly?

So, to answer the first question: what does Airbnb stand for?

The short answer is that it stands for Air Bed and Breakfast.

However, to understand the Airbnb meaning, you need to know how the term came to be.

The term “Airbnb” was invented in 2007 by Joe Gebbia and Brian Chesky, the founders of the company Airbnb.

During that year, when the two men were living in a San Francisco apartment, they had the idea to rent out a lounge room in their apartment to designers visiting the city to attend the International Design Conference.

At that time, all they could offer to their guests was a simple lounge room with a couple of air beds to sleep on and breakfast in the morning.

And that is how they came up with the term Airbnb.

So, the next time someone asks you “what does Airbnb stand for?”, you can tell them this cool story.

And this story gets even better.

How Airbnb Came to Be

This is the part of the story where the word Airbnb transitions into becoming a company.

After renting out the room for $80 per night, the two entrepreneurs built the first iteration of the website, which at that point was AirBedAndBreakfast.com.

The website allowed them to advertise their rental room, manage its bookings, and handle the payments.

Soon after, the website gained a lot of attention as other homeowners became able to use it for advertising their Airbnb-style rentals.

In 2009, the new startup received $7 million in venture funding, and the website was shortened to Airbnb.com.

In the following years, the website exploded in popularity and began to expand into other countries across the globe, and it established new headquarters in Sydney and Dublin.

So, what does Airbnb stand for nowadays?

Today, if you ask someone what is Airbnb, many people might not even know what Airbnb stands for.

To most, Airbnb is simply the name of an online platform that is worth around $31 billion and includes around 6 million properties listed for short-term renting in countries around the globe.

The platform that Joe and Brian had created became one of the top platforms used by travelers when they’re trying to find short-term accommodation during their travels.

Nowadays, however, the Airbnb platform offers more than just an air bed and breakfast.

The website allowed any homeowner to list their property for rent, regardless of the type of property.

This meant that, while it started with an airbed, it now also lists entire homes for short-term renting.

But this also means that Airbnb doesn’t own the properties that it lists on the platform, so how do they make money from it?

To answer that, let’s take a look at how Airbnb works.

How Does Airbnb Work?

Now that you know what does Airbnb stand for and how the company came to be, let’s talk about how it works.

As mentioned above, Airbnb doesn’t own the properties that are listed on its website.

Instead, Airbnb lets homeowners list their properties on the platform while it charges a percentage-based fee whenever a guest books the property and pays the host.

As you can imagine, with six million properties around the world and over 500 million bookings, Airbnb makes a lot of money.

But Airbnb also provides many services to users—both the hosts and the guests—to facilitate the process of short-term renting and help match guests with the right properties for them.

One of the biggest features of Airbnb is that guests can rate properties that they stay in, and these reviews are shared on the platform and can be a major factor in the property’s performance.

Good hosts can take advantage of this by improving their guest’s stay to encourage positive reviews, which will then result in more people wanting to rent the place due to it being rated positively.

At the same time, this feature discourages hosts who might try to mislead their guests or falsely advertise their properties.

Additionally, Airbnb acquired the company Luxury Retreats in 2017 and introduced Airbnb Plus in 2018.

What Is Airbnb Plus?

To put it simply, Airbnb Plus is a selection of homes that are known for their high quality and amazing hosts, who have received a large number of positive reviews and are known for paying great attention to detail.

The great thing about Airbnb Plus rentals is that they don’t only rely on guest reviews.

An in-person quality inspection is typically carried out by an Airbnb inspector to ensure the quality and design of the house.

Homes that are part of the Airbnb Plus selection will have the Plus badge on their listing page to indicate their status.

This service is especially useful when you want to rent out luxury Airbnb since the rental rates on such properties are usually high, which means guests will need assurance that the property they’re paying for is worth its cost.

Renting out luxury homes as vacation rentals on Airbnb has become one of the lucrative ways for making money in real estate.

This brings us to the next topic that I want to talk about—using Airbnb to start a real estate business and make money from it.

Starting an Airbnb Business

One of the oldest and most popular ways for making money in real estate is by renting out a house that you own.

Traditionally, homeowners would rent out their homes on a long-term basis—hence the name traditional rentals.

However, Airbnb gave popularity to a new type of renting that was usually only used by the hotel industry, and that is short-term renting.

Short-term rentals are properties that are rented out for short stays ranging from one night to a month.

Airbnb’s platform made it possible for any homeowner to take advantage of short-term renting as a source of extra income.

But some real estate investors looked at the opportunity and saw a goldmine.

The idea was that, while the performance of short-term rentals was very seasonal and volatile, they were showing more potential for profit than traditional rentals.

So, savvy investors began to purchase investment properties for the sole purpose of renting them out on Airbnb.

This, however, became so popular that it led many neighborhoods, cities, and hotels around the world to push against it.

This resulted in several cities and states around the world, placing varying restrictions on property owners and investors, and sometimes even banning Airbnb altogether.

Nowadays, if you want to operate an Airbnb rental, chances are you’re going to need a license to do so.

But restrictions and regulations still make it possible to find places where you can start an Airbnb business and make a lot of money from it.

Just like investing in traditional rentals, the process of starting an Airbnb business begins with you finding an investment property that you can rent out for a profit.

This means that you will need to do a real estate market analysis, compare properties, and do the math, just like any other type of investment.

But before we jump into the specific steps of investing in an Airbnb rental property, let’s talk a little bit about the legality of Airbnb.

Airbnb Legality

When you’re trying to decide whether to start an Airbnb business, it’s important to first understand how the laws work in your city.

As I mentioned above, some cities pose laws and regulations that may restrict your ability to host paying guests for short-term stays.

In most cities, you are required to register for a permit or a license before you can list your property on Airbnb or accept guests.

But local governments vary in how they enforce these laws.

For this reason, the only way for you to know if starting an Airbnb business in your city is a viable option or not is to understand your city’s laws and regulations.

Luckily, Airbnb tries to accommodate such information on their website.

Although it may not include everything that you need to know, this Airbnb legal resources page can help you find the info that you need.

Airbnb Investment Strategy

Once you’ve made sure that you can operate a short-term rental in your city, it’s time to talk about how you can start your own Airbnb rental business.

Investing in Airbnb rentals has become a lucrative business that many real estate investors are interested in.

This might be because there are many different strategies that you can pull off with short-term renting.

For example, you can rent out the property on the weekends during a certain weekend, or you can instead use Airbnb monthly rentals.

Airbnb monthly rentals can host guests for up to 30 days, making them very similar to traditional rentals but offering more flexibility in terms of changing your rental rate as the market prices shift.

This strategy has become an alternative to traditional rentals for some investors, and it operates in a very similar manner.

Vacation rentals, on the other hand, are popular due to their flexibility and appeal since you can use the property as your vacation home when you’re not renting it out.

In general, the premise of the strategy is to buy properties with the main intention of listing them as short-term rentals and enjoying the Airbnb passive income that they generate.

And just like with traditional rentals, there are certain steps that you need to take:

Deciding on a Location

Of course, your first step includes finding a lucrative location where owning a short-term rental can be profitable.

This, of course, depends heavily on your investment criteria, such as:

• Whether you want to live in or near the property that you want to rent out
• The appeal of the location and its tourist attraction
• The seasonality of the location when it comes to Airbnb demand
• Your knowledge of future developments or projects that can affect the performance of short-term rentals
• The laws and regulations of the city you’re investing in

There are plenty of other things to take into consideration when trying to find a good location for investing in vacation rentals.

Once you have decided on a location, it’s time for you to see how short-term rentals are performing in that market and find properties for sale that have good projected returns.

To do that, you will need Airbnb comps based on data.

About Airbnb Comps

Airbnb comps refer to comparing the data of Airbnb properties in an area to help you identify properties that are performing above or below average.

For example, if you know you want to invest in a specific neighborhood, you can find out the average rental rate in that neighborhood by calculating it based on data that you can get from Airbnb.

You can use other values in your comparison, or filter out properties based on certain criteria such as:

• Their Airbnb reviews
• How long they have been listed
• Their past performance
• Size of the property
• Their type

Based on this comparison, you can get several useful conclusions.

For example, you can get to the conclusion that single-family homes have the highest demand, but beach houses generate the most rental income during a certain season.

This can help you decide on the best strategy to use and what you can expect from owning the type of property that you will end up buying.

Finding Investment Properties for Sale

Now that you know how much rental income you can generate from the type of property that you want to invest in, it’s time for you to find that investment property and buy it.

This is a gruesome step depending on the sources and tools that you have available.

While Airbnb’s data is useful for doing Airbnb comps and analyzing the market, it doesn’t offer any help when it comes to finding properties for sale.

However, other platforms, such as Mashvisor, can help.

When you’re looking for properties for sale, you will be gathering important data related to the types of properties that are listed as well as their prices.

Since you already have Airbnb comps for that market, you should be able to estimate the rental income that a type of property will have and match that with the average price of the same type of property.

Using this data, you can calculate the potential return on investment that you can expect from each property that is listed for sale using metrics such as cap rate or cash on cash return.

Now, all you need to do is to pick the ones that you think are most suitable for you, contact the owners, and close a deal.

Mashvisor – Best Airbnb Investment Tool

Mashvisor is an Airbnb analytics platform that was designed to help real estate investors find properties for sale based on their projected returns using metrics like the cap rate.

The platform includes many tools and features that can help investors:

• Find investment properties for sale
• Analyze rental markets
• Analyze properties for their projected returns
• Run Airbnb analysis

By gathering data from multiple sources including Airbnb and the MLS, Mashvisor does all of the analysis for you, eliminating the need to manually compare your properties on a spreadsheet and calculate their values.

Using Mashvisor will let you search through the database of any market in the US and get all the data analytics that you need in one place.

The tool includes several filters and other tools to help you narrow down your search and increase the accuracy of your calculations.

Additionally, Mashvisor’s Airbnb calculator will show you the projected cap rate of each property based on the market that it’s in, but it will also allow you to modify the values to get the most accurate results.

Bottom Line – What Does Airbnb Stand For?

In conclusion, we have learned that the answer to the question of what does Airbnb stand for is nothing but a story of the humble beginning of what is now one of the largest real estate companies around the globe.

So what does Airbnb stand for?

It stands for success.

And that is what many investors are finding as well when they invest in Airbnb rentals.

If you’re ready to begin your journey toward starting your own Airbnb business, then you’re already in the right place.

Sign up for Mashvisor and get a head start on your investment venture with the help of our amazing tools.