Airbnb Is Growing. But Is What's Good for Airbnb Good for Every Host?

2 hours ago
5 min read

This is part 2 of our analysis of Airbnb's Q2 earnings announcement.

Airbnb had a very good second quarter.

Nights and Seats Booked increased 10% year over year, growth accelerated in mature markets including the United States, and second-quarter revenue reached $3.6 billion, up 17%.

There is good news for hosts in those numbers. But Airbnb's latest results also illustrate an important distinction for anyone running a short-term rental:

What's good for Airbnb's marketplace isn't automatically good for every Airbnb host.

From Reserve Now, Pay Later and changing host fees to hotel expansion and pricing recommendations, Airbnb is making changes designed to attract more travelers, increase bookings, and make the platform more competitive.

Many of those changes may benefit hosts, too. But hosts should look at each one through the lens of their own business.

Larger Homes Are Growing Particularly Fast

One of the more encouraging numbers in Airbnb's latest results is especially relevant to traditional short-term rentals.

Airbnb's new “bedroom nights” metric increased more than 12% year over year, faster than the 10% growth in overall Nights and Seats Booked. Entire homes with four or more bedrooms were the fastest-growing listing type.

That's significant because it suggests that travelers continue to see value in something hotels often have difficulty providing: a single property where families and groups can stay together.

Airbnb's overall growth also accelerated in established markets, including the United States, France, the United Kingdom, and Australia.

The core home-rental business is growing.

But some of the tools Airbnb is using to generate additional growth create more complicated tradeoffs for individual hosts.

Reserve Now, Pay Later: More Bookings, More Cancellations

Reserve Now, Pay Later is a good example.

The feature allows guests to reserve eligible stays without paying the full amount immediately. Adoption has been remarkably fast: more than 20% of Airbnb bookings in the second quarter used Reserve Now, Pay Later.

Making it easier for guests to commit to a trip can increase bookings. Airbnb has also acknowledged, however, that these reservations have a significantly higher cancellation rate.

From Airbnb's perspective, the calculation can still work. Across millions of transactions, additional bookings and greater conversion may outweigh the additional cancellations.

For an individual host, the calculation may be different.

A canceled reservation can leave an empty weekend that isn't easily refilled, particularly if another traveler might otherwise have booked those dates earlier.

That doesn't make Reserve Now, Pay Later a bad feature. It simply demonstrates why marketplace-level success and property-level success aren't always the same thing.

What Does the 15.5% Host Fee Mean for Your Business?

Airbnb is also continuing its transition toward a single host fee of 15.5%, rather than dividing its service fee between the host and guest.

About half of active listings had moved to the new structure by the second quarter, and Airbnb expects the broader supply base to transition by the end of the year.

Airbnb says the structure makes pricing more transparent and helps its prices compete more effectively with other travel platforms.

For hosts, however, the important question isn't simply whether the fee is charged to the host or the guest.

It's what happens to the total price the guest sees—and what the host ultimately receives.

A host may need to adjust rates to produce the same net revenue under a different fee structure. That makes it important to understand the math rather than automatically following a suggested price.

Airbnb wants a price that converts a shopper into a booking. A host needs a price that also makes the reservation worthwhile.

Those objectives frequently overlap. They aren't necessarily identical.

Hotels Are Becoming a Bigger Part of Airbnb

Airbnb's ambitions also extend well beyond vacation rentals.

The company has been adding thousands of boutique and independent hotels across more than 20 cities, and hotel nights are growing approximately three times as fast as Airbnb's homes business, although they still represent a relatively small share of total nights booked.

Airbnb has argued that hotels can introduce travelers to its platform who may later book homes. There is evidence for that: the company says a significant percentage of first-time guests who initially book a hotel subsequently return to Airbnb and book a home.

But Airbnb's hotel ambitions are expanding.

Rental Scale-Up notes that Airbnb is no longer discussing hotels primarily as a way to fill gaps in destinations where there aren't enough homes. The company intends to expand its hotel inventory more broadly.

That creates an interesting relationship for hosts.

Hotels can bring more travelers onto Airbnb.

They can also compete with Airbnb homes for those travelers once they arrive.

Both things can be true.

Airbnb Wants More Than the Accommodation

Hotels are only part of Airbnb's broader strategy.

The company is increasingly positioning itself as a place to purchase much more of a trip. Depending on the destination, Airbnb is expanding into Experiences, services, grocery delivery, airport transportation, car rentals, luggage storage, and other travel products.

The strategy is straightforward: attract the traveler earlier, keep the traveler inside Airbnb longer, and capture more of what the traveler spends.

A larger Airbnb travel ecosystem could benefit hosts if it brings more travelers to the platform and makes Airbnb a more useful place to plan a trip.

But it also changes what Airbnb is.

The platform increasingly isn't simply a marketplace connecting travelers with people who have homes to rent. It is becoming a much broader travel company with its own business priorities, competitors, and growth targets.

Hosts are important suppliers within that ecosystem, but they are running independent businesses of their own.

Airbnb's Recommendation Isn't Necessarily Your Best Decision

That distinction becomes increasingly important as Airbnb gives hosts more data and more recommendations.

The platform can suggest prices, discounts, minimum stays, calendar availability, advance-notice requirements, and other changes intended to make a listing more competitive.

Those recommendations can be extremely useful. Airbnb has access to marketplace information an individual host simply doesn't have.

But Airbnb's objective is to make its overall marketplace perform well.

An individual host may have different considerations: operating costs, cleaning expenses, neighborhood relationships, property wear and tear, staffing, local events, or simply a preference for fewer longer reservations rather than a larger number of shorter ones.

A host doesn't have to reject Airbnb's recommendations.

The better approach is to ask why the platform is making the recommendation and whether following it actually improves the individual business.

Two Questions Worth Asking

Airbnb's growth is good news for the short-term rental industry. More travelers using the platform, stronger demand for larger homes, and continued growth in the United States are all encouraging.

Airbnb also has every right to make decisions that strengthen its own business.

Hosts should simply remember that they are running businesses, too.

When Airbnb rolls out a new feature, pricing recommendation, fee structure, payment option, or business line, it may be useful to ask two separate questions:

Is this good for Airbnb?

And is this good for my property?

Sometimes the answer will clearly be yes to both.

Sometimes it won't.

Understanding the difference is becoming an increasingly important part of being a professional host.