Building a peer to peer marketplace like Airbnb can be incredibly lucrative.
Airbnb became a publicly traded company in December 2020, raising $3.5 billion in their initial public offering.
Even though Airbnb has been massively successful, it was not the first website of its kind and today the site has several competitors all vying for market share. These include sites such as Vrbo, Wimdu, Booking.com. There are also increasing number of new entrants, all looking to make their mark in the short term and vacation rentals space.
In this article, we are going to give you a step by step guide on how to build a website like Airbnb. However, before we get into to that, it’s important to understand what exactly is Airbnb.
What exactly is Airbnb
Airbnb is a type of online marketplace. More specifically, it is a location based, peer-to-peer, rental marketplace.
- Location based means that the customer must be in the same location as the listing in order to complete the transaction.
- Peer-to-peer (p2p) describes how Airbnb’s main users interact. On a p2p marketplace, the main users are private individuals and they can be the buyers, sellers or both the buyer and the seller.
- Rental marketplace describes the type of asset that is being sold on the marketplace. The end asset can be anything, from land, homes, studio space to furniture or taxis. A rental marketplace has different features compared to a product selling marketplace like Amazon or Ebay.
Now that we know what Airbnb is, let’s take a look at how to create a website like Airbnb.
The Airbnb method: How to build a website like Airbnb
The founding story of Airbnb is legendary. There is a lot we can learn from this story when thinking about how to build a website like Airbnb. In this section we set out the framework and the steps taken by the Airbnb founders to build their website:
Step 1. Find an idea for a marketplace like Airbnb
Airbnb was founded in 2007 by two roommates, Brian Chesky and Joe Gibbia. They had a problem which was, they were struggling to pay their high San Francisco rent.
The pair knew that there was a design conference coming to town and all of the hotels were fully booked. Joe saw an opportunity to solve their problem of high rent, by subletting their spare bedroom to conference attendees who couldn’t find alternative accommodation.
The founders had unknowingly identified a huge problem for property owners (providers) and renters. The property owners they had identified had underused space that they were struggling to pay for. The travellers they had identified were unable to find short term accommodation at an affordable rate.
There are plenty of general and niche rental marketplace ideas that remain undone. If you’re looking for an idea for a rental marketplace website like Airbnb, we recommend that you first look to identify an unmet need. Analyze Airbnb’s current offerings and look for areas that might not cater to specific types of demographics, preferences or types of travellers. For instance:
- Specialized accommodations: Look for specific types of accommodations that are in demand but not adequately served by Airbnb. This could include niche markets such as eco-friendly stays, pet-friendly accommodations, luxury villas, or unique themed properties.
- Experimental stays: Consider experiences that Airbnb may not fully tap into, such as wellness retreats, art-focused accommodations, or stays that offer specialized activities like cooking classes, meditation workshops, or outdoor adventures. PeerSpace is a great example of a company that used the same model as Airbnb, but applied to renting space for different types of activities.
- Geographical gaps: Explore regions or neighborhoods that are underrepresented on Airbnb. This could include rural areas, small towns, or destinations off the beaten path that may not have a strong Airbnb presence.
For more information on how to find a good idea, take a look at our article “how to come up with a great idea for a marketplace“.
Step 2. Validate your marketplace idea
Armed with a problem and a potential solution to that problem, Airbnb founders Brian and Joe decided to test out their idea by building a simple website. They built the website using a website builder and posted it up on the internet.
The website attracted three people to stay in Brian and Joe’s flat. The guests paid Brian and Joe $1000 and return the guests got a place to stay.
Although it might not sound like much, this was the first ever transaction that took place on Airbnb. The founders had effectively validated that there was a real problem for both property owners with high rents to pay and guests looking for short term accommodation.
Many people consider this version of the Airbnb website to be Airbnb’s minimum viable product. However, this is not the point we want to make here, rather, we want to stress the importance of idea validation.
Idea validation is a critical step to take when building a marketplace like Airbnb. It essentially involves finding target users and gathering evidence that proves there is genuine demand for your marketplace. The technology is just there to start a conversation and so it doesn’t need to be the full blown product.
For more information on how to validate your marketplace idea, read “How to validate your marketplace business idea“.
Step 3. Build out your minimum viable product
Having validated that there was problem faced by property owners (hosts) and travellers looking for short term rentals (guest), the founders, Brian and Joe, set out to build a more robust solution to that problem.
All they had at this point was a website that had attracted three guest to stay in their own home. So, the founders started looking for ways to improve this product.
To do this, the founders added Nathan Blecharczyk to their team. His role was as a technical co-founder and they worked with him to build out their minimum viable product (or online marketplace MVP). The founders released many versions of Airbnb from their early website, each time improving the user experience.
Airbnb is MVP is most interesting for a couple of reasons. First, their marketplace MVP was released in just one day – before the team even had a technical co-founder. Second, even after they hired a technical co-founder they released new versions of their system every few weeks with updated features. Below is a list of features that were not included in Airbnb’s MVP.
In order to emulate Airbnb’s approach is hard for two main reasons:
- First, it is vey hard to find a technical co-founder. Furthermore, even if you do find a good technical co-founder, there is no guarantee that they will be as committed as you to the project.
- Since the time when Airbnb was first developed, renters attitudes have changed. Nowadays there is an expectation that there will already be certain features in place when you launch your marketplace. To help with this, you can use marketplace technology like Dittofi’s no code marketplace solution that includes all of the must have features for a rental marketplace website like Airbnb. A demo of our rental marketplace template is shown below.
For more information on how to build an online marketplace MVP, read “How to build an online marketplace MVP “.
Step 4. Onboard your early adopters
Getting your first users of a marketplace can be tricky. This is because, without hosts, there is nowhere for guests to stay and without guests there is incentive for hosts to sign up to the platform. This leads to a classic marketplace chicken and egg problem.
There are several strategies that marketplaces can use to solve the chicken and egg problem. A collection of these strategies are shown below.
These strategies depend on what type of marketplace you’re looking to build and what resources you have. In the case of Airbnb, they had no money and no one on their team that was technical (until Nathan joined the team). Therefore they decided to be their first Airbnb host i.e. they chose to rent out their apartment, thereby filling the supply side of their marketplace themselves.
Once Nathan joined the team, the Airbnb founders continued rent out their own apartment but, to get a better understanding of how to build their marketplace, they also decided to experiment with being guests.
By experiencing the guest side of the marketplace, the Airbnb founders were able to learn more about the needs of their guests.
To illustrate this point, Nathan tells a story about when his co-founder Brian first decided to try being a guest on Airbnb. This was in the days before online payments were an option. As such, Brian told the host that he would pay them cash when he arrived. However, Brian didn’t carry cash on him and this led to a tense encounter with the host who thought that Brian might never pay to stay at his Airbnb. As such the team realized that online payments were very important and prioritized online payments in their next release. This also allowed Airbnb to find their marketplace business model which in their case was the commission model
Using Dittofi’s visual development studio, there are then several ways that you can emulate the approach to build a website like Airbnb. For instance, you can quickly spin up a rental site like Airbnb and then experience what it is like to be a host and / or guest on your site. To do this, you might want to begin by uploading some of your own inventory onto your marketplace to rent.
Step 5. Learn and grow
Building a website like Airbnb is an ongoing process.
We’ve already seen how the founders of Airbnb took an iterative approach to building their rental marketplace. Starting with just a website, the Airbnb founding team incrementally added new features based on customer feedback.
This iterative approach is known as the lean startup method of developing technology. There are several different methods you can use to build technology such as waterfall, agile and lean. Essentially, agile and lean methods work in incremental release cycles where a version of the system will be released. After release customer feedback will be taken and this feedback will be prioritized in the next release. Release cycles in agile and lean methods are typically 2 – 4 weeks.
The difference between waterfall, agile and lean models are explained in the diagram below.
The best approach to build a website like Airbnb is either the agile or lean approach.
Note that the waterfall method is what development agencies tend to sell. This is because it is better for them to put you on a long term contract where they build lots of features. However, whilst your target customer and their pain points remain fixed, your product vision should be flexible and evolve based on customer feedback.
Lastly, as you grow, it’s important to track marketplace metrics. These will tell you how well your marketplace is growing. You should not try and implement every metric from the start as, setting up a full reporting suite is incredibly time consuming. Instead, you should focus on a couple of metrics that are easy to access actionable i.e. metrics that can help guide and validate your actions – for example Gross Merchandise Volume (GMV).
How much does it cost to build a website like Airbnb
The cost of building a full feature website like Airbnb will differ based on several factors such as if you use an experienced development agency or a less experienced agency or freelancer, if you choose to use marketplace technology, like Dittofi’s rental marketplace software and so on.
From our experience, we have found that coding a marketplace like Airbnb from scratch will cost anywhere from $50,000 – $250,000 investment.
A breakdown of the steps involved and the cost of development are shown below.
This is clearly very expensive and unattainable for most companies.
As such, Dittofi offers a suite of rental marketplace templates that you can quickly setup and customize without coding.
This can give you a high performance, entirely custom marketplace without writing any code in less than 10 hours and at a significantly lower cost. You can see the cost of building a website like Airbnb using Dittofi below.
In addition to the cost involved in building your website, you should also consider the marketing cost that you would expect to experience in year 1. This is shown below for a basic marketing strategy that combines paid and unpaid channels.
Conclusion: How do I create a marketplace like Airbnb
Building a website like Airbnb can appear to be a daunting experience. There are lots of steps that you need to take in order to achieve success. It also takes some time to achieve “success”. For instance, Airbnb first launched in 2008 but it didn’t start to gain widespread popularity until 2012, four years after Brian and Joe rented out their spare room.
However, don’t be dishearted, there are lots of tools that you can use to quickly and affordably create a marketplace like Airbnb. This will allow you to validate your initial idea and build your marketplace MVP at a super low cost, compared to traditional coding.
Ultimately creating a website like Airbnb should be a fun experience (albeit challenging). There is no better feeling than seeing hosts and guests transact on your marketplace. It is massively empowering to get to the point where you are no longer financial dependent on a 9 to 5 job in order to make income.
This is totally achievable. Just make sure that you focus on finding a real world problem that can be solved with a marketplace like Airbnb. Launch your marketplace fast and then stick closely to the iterative approach.
If you would like any help developing a website like Airbnb, book a call with one of our marketplace specialists and they will be able to help guide you through the process or sign up to Dittofi and jumpstart your marketplace development with our full stack marketplace templates.
And… in case we don’t speak… best of luck with your marketplace development!
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