Airbnb and the sharing economy: how exactly does it work?

The sharing economy has transformed the way we live, work, and travel, and Airbnb has been at the centre of this change. Since its launch in 2008, Airbnb has made it easy for people to rent out their homes, spare rooms, or even unique spaces like treehouses or yurts, creating new opportunities for both hosts and guests.

But how does Airbnb really fit into the sharing economy? At its core, the platform connects people who have extra space with those looking for a place to stay. It’s about making the most of underused resources while offering travellers an experience that’s a little different from your typical hotel. 

Let’s explore how Airbnb works and why it’s become such an essential part of the sharing economy.

What is a sharing economy?

The sharing economy might feel like a recent trend, but it’s actually been around for a while. It helps millions of people around the world earn money from their under-utilised products and resources. Do you have a car that you don't use often? — add it to Turo and earn an extra income per day. Looking to get rid of some old appliances, furniture or clothes? — consider selling it on Craigslist or Gumtree. If you have a vacation home or room in your house that's under-utilised — add it to Airbnb.

The evolution of the sharing economy

It started with platforms like eBay and Craigslist, where people could sell or trade goods they no longer needed. Then, in 2008, Airbnb came along and shook up the hospitality world. Suddenly, people were renting out their homes, and travellers were getting more personal, unique experiences.

Since then, the sharing economy has exploded. Today, you’ve got platforms like Uber for rides and Airtasker for odd jobs. It’s all about connecting people who have something with people who need it. And Airbnb? It’s gone from a niche idea to a global giant, changing how we think about travel and accommodation.

How does Airbnb fit into the sharing economy?

Airbnb is a platform that links homeowners and guests all over the world offering unique experiences and accommodation. Book a yurt in Greenland, a cave in Spain, a treehouse in the Australian Everglades, or an apartment in New York. Airbnb doesn't own the properties available for rent on their platform, they simply supply hosts and guests with the tools, guarantees and support they need to manage their homes and book accommodation. The platform has helped create millions of jobs in more than 220 countries where it operates. Cleaning services specialising in Airbnb cleaning, Airbnb management companies, tour operators, hosting services and maintenance services are just some of the many businesses benefiting from Airbnb.

How does Airbnb work for Guests?

For guests, Airbnb is all about choice and flexibility. Whether you want to stay in a city centre apartment, a countryside cottage, or a quirky spot like a treehouse or yurt, Airbnb has something to suit every type of traveller.

The booking process

Booking on Airbnb is pretty straightforward:

• Guests look for accommodation by location, property type, price, or even unique features like pet-friendly homes or hot tubs.
• They check out photos, read reviews, and compare prices to find the perfect place.
• Once they’re ready, guests can book and pay securely through Airbnb. The exact address is revealed after booking is confirmed.
• Guests can message the host through Airbnb’s platform to ask questions or arrange check-in details.

Safety and trust

Airbnb has built trust by offering features like reviews, verified profiles, and 24/7 customer support. Guests can see what others have said about a property and feel more confident about their choice. Plus, Airbnb’s flexibility and customer service mean that even if something goes wrong, there’s support available to help resolve it.

How does Airbnb work for Hosts?

For hosts, Airbnb provides a way to earn extra income by renting out their homes, spare rooms, or even holiday properties. Hosting can be as flexible as you like—whether it’s renting out a room occasionally or managing multiple properties.

Creating a listing

Setting up a listing on Airbnb is simple. Hosts provide details about the property, upload photos, and set a nightly rate. Airbnb even helps by suggesting prices based on the local market and other similar listings. Once live, the host can manage bookings, communicate with guests, and track their earnings.

Income and fees

Hosts earn money every time their property is booked. The platform allows hosts to set cleaning fees or charge for extra services, so they’re not out of pocket for upkeep. Airbnb charges hosts a small service fee—around 3%—deducted from the total booking amount. This fee covers things like payment processing and customer support.

Host protection insurance

Airbnb also includes Host Protection Insurance, which covers damages or injuries up to US$1 million. It’s an added layer of security that gives hosts peace of mind, knowing their property is protected in case anything goes wrong.

‍Airbnb’s impact on local economies

Airbnb isn’t just about connecting travellers with hosts—it’s also having a significant impact on local economies. The platform has created job opportunities and supported small businesses that might not have thrived otherwise.

Job creation and business opportunities

Beyond hosts, Airbnb has created demand for local services, such as cleaning companies, property management services, and even photographers to help listings stand out. Companies like Hometime are thriving by offering professional property management services to help hosts manage their bookings and keep their properties in top shape.

Empowering homeowners

For many people, Airbnb has turned underused space into an income stream. Whether it’s renting out a spare room or an entire property, homeowners have found a new way to earn extra income, particularly in tourist hotspots.

‍How does Airbnb make money?

Airbnb’s business model is pretty simple—it charges service fees to both hosts and guests. Here’s a breakdown of how it works.

Host fees

Hosts pay a 3% service fee, which is taken from the total booking amount. This includes the nightly rate, cleaning fees, and any extra guest fees. For premium listings, like Airbnb Plus, or stricter cancellation policies, the fees might be slightly higher.

Airbnb management service companies, like Hometime, pay a higher 15% service fee to Airbnb.

Guest fees

Guests also pay a service fee, usually around 14.2% of the booking subtotal. This fee is clearly displayed before they finalise the booking, covering things like customer support and the platform's operational costs.

Experiences and additional revenue streams

Airbnb has expanded its offering with Experiences, allowing hosts to sell unique activities alongside accommodation. Hosts offering Experiences pay a 20% service fee. It’s a great way for hosts to diversify their income while providing travellers with something unique.

‍The future of the sharing economy

The sharing economy is showing no signs of slowing down. In fact, it’s expected to keep growing, with platforms like Airbnb, Uber, and Turo continuing to lead the charge. A report by PwC estimates the sharing economy could grow to US$335 billion by 2025.

Sustainability and innovation

More people are embracing sustainable living and travel, which is helping drive the growth of the sharing economy. Airbnb plays a big part in this by encouraging the reuse of existing spaces instead of building new hotels or accommodation. It’s a more eco-friendly way to travel that fits with the shift towards more responsible consumption.

Hometime’s role in the future

Airbnb has made a huge change to the travel industry by connecting people with homes, spare rooms, and unique spaces all over the world. Whether you're a guest looking for something different or a host wanting to earn extra income, Airbnb makes it easy to get involved in the sharing economy.

And as the sharing economy grows, so too does the need for services that make hosting easier. Hometime is positioned to help hosts get the most out of Airbnb by offering property management services that handle everything from guest communication to cleaning. This allows hosts to maximise their income and enjoy the benefits of the sharing economy without the extra workload. Our services include:

• Property styling and photography
• Listing optimisation
• Cleaning services
• Revenue and booking management
• Guest management
• Property maintenance
• Access to Hometime's all-in-one property management software

With platforms like Hometime providing support, you can take advantage of all the opportunities Airbnb has to offer, without the stress of managing everything yourself. As the sharing economy continues to grow, Airbnb will remain a key player, helping people share, connect, and experience the world in new ways.