What Airbnb Does

Airbnb is a marketplace that connects people who have spare rooms or whole properties with travelers looking for short-term lodging. The company does not own any of the properties listed on its platform—instead, it acts as the middleman. Property owners (called hosts) list their spaces, set their own prices and rules, and decide when guests can book. Travelers search for places that fit their budget and location, book directly through the Airbnb app or website, and pay Airbnb, which then sends most of that money to the host after taking a commission.

Airbnb handles the logistics of the transaction: it processes payments, holds the money temporarily to protect both sides, provides a messaging system between host and guest, and offers a resolution process if something goes wrong. The company also sets baseline rules—like requiring hosts to follow local laws and guests to respect the property—but does not manage the day-to-day relationship between the two parties.

Key Takeaways

  • Airbnb connects property owners with travelers; the company takes a percentage of each booking but does not own the properties or manage them directly.
  • Hosts set their own nightly rates, house rules, cancellation policies, and availability calendar; guests search, book, and pay through the Airbnb platform.
  • Airbnb holds payment from guests temporarily and releases it to hosts after check-in, protecting both sides if a dispute arises.
  • The platform provides messaging between host and guest, but the host is responsible for cleaning, maintenance, and guest communication during the stay.
  • Airbnb requires hosts to follow local rental laws and zoning rules, which vary by city and can restrict how often a property can be rented or whether short-term rentals are permitted at all.

How Hosts List and Manage Properties

A host creates an account, uploads photos of the property, writes a description, and sets a nightly price. They then choose what type of space they are renting—an entire home, a private room, or a shared room—and decide on house rules (no smoking, no parties, quiet hours, pet policy, and so on). The host also sets a cancellation policy: strict (guests lose money if they cancel within a certain window), moderate (partial refund), or flexible (full refund up to a certain point).

Once the listing is live, guests can book available dates. The host receives a notification, and in most cases the booking is confirmed automatically if the host has turned on when ready booking. If when ready booking is off, the host can review each request and accept or decline. During the guest's stay, the host is responsible for communication, checking the guest in (either in person or by providing a key code or lockbox), and ensuring the space is clean and functional. After checkout, the host can leave a review of the guest, and the guest can leave a review of the host and property.

How Guests Book and Pay

A guest searches for a location and dates on Airbnb, filters by price, property type, and amenities, and clicks on listings to see photos, the full description, house rules, and reviews from previous guests. The listing shows the nightly rate, any additional fees (cleaning fee, service fee, taxes), and the total cost for the stay. The guest then clicks "Book" and pays through the platform using a credit card, debit card, or other payment method.

Airbnb does not when ready send the full payment to the host. Instead, the company holds the money until the guest checks in. This protects the guest: if the property is not as described or is unavailable, the guest can report it before the host receives payment and request a refund. Once the guest checks in without raising a problem, Airbnb releases the payment to the host (minus Airbnb's commission and any applicable taxes). The guest can then leave a review of the property and host.

Fees and How Airbnb Makes Money

Airbnb charges two main fees: a guest service fee (typically 14 to 16 percent of the nightly rate) and a host service fee (typically 3 percent). The guest service fee is added to the total cost shown at checkout. The host service fee is deducted from the payout the host receives. Hosts also may be charged a fee if they use Airbnb's optional services, such as professional cleaning coordination or damage protection.

In addition to service fees, Airbnb collects and remits taxes on behalf of hosts in many jurisdictions. The amount varies by location—some cities tax short-term rentals at a higher rate than hotels, while others have no tax on short-term stays. Airbnb shows the tax amount at checkout so the guest knows the full price before booking.

Rules Hosts and Guests Must Follow

Airbnb requires hosts to follow all local laws and zoning regulations. In many cities, short-term rentals are restricted or prohibited in residential zones, or hosts must register with the city and follow occupancy limits. Some cities cap the number of days per year a property can be rented, or require the host to live in the property. Hosts who violate local rules risk having their listing removed and their account suspended.

Guests must follow the host's house rules and treat the property with respect. Airbnb's terms prohibit parties, smoking indoors (unless the host allows it), and damage to the property. If a guest violates house rules or damages the property, the host can report it and request compensation through Airbnb's resolution process. Guests who repeatedly violate rules or receive poor reviews may have their account suspended.

What Happens If There Is a Problem

If a guest arrives and the property is not as described—missing amenities, cleanliness issues, or safety concerns—they can contact Airbnb within 24 hours of check-in. Airbnb's support team reviews the complaint and may offer a partial refund, a rebooking at another property, or a full refund depending on the severity. If the guest and host cannot agree on a resolution, Airbnb makes a final decision.

If a guest damages the property, the host can file a claim through Airbnb's Host Damage Protection program. The host must provide photos and documentation of the damage and its cost to repair. Airbnb then contacts the guest and either negotiates a settlement or denies the claim if it does not believe the guest was responsible. Hosts can also purchase optional damage protection insurance through Airbnb to cover larger claims.

Local Laws and Restrictions

Short-term rental laws vary widely by city and country. In some places, like New York City, short-term rentals of entire homes are heavily restricted or banned unless the host is present. In others, like Austin, Texas, there are caps on the number of days per year a property can be rented. Some cities require hosts to register, pay a license fee, or carry liability insurance. A few cities have banned Airbnb entirely.

Before listing a property or booking a stay, it is important to check your local city or county website for short-term rental rules. Hosts who ignore local laws risk fines, eviction, or legal action from neighbors or the city. Guests who book in areas where short-term rentals are illegal may find their reservation canceled without refund if the city takes action against the property.

Frequently Asked Questions

Do I need to pay taxes on Airbnb income if I am a host?

Yes. Airbnb income is taxable income in most countries. In the United States, Airbnb sends hosts a 1099-NEC form if they earned more than $20,000 and had more than 200 transactions in a year, but hosts are responsible for reporting all income regardless of whether they receive a form. Check with a tax professional about deductions you may be able to claim, such as mortgage interest, property taxes, utilities, and repairs.

What if a guest cancels their booking?

The refund depends on the host's cancellation policy. A strict policy may refund only 50 percent of the nightly rate if canceled within 7 days of check-in. A moderate policy typically refunds 75 percent if canceled 5 to 7 days before, and 50 percent if canceled closer to the date. A flexible policy refunds the full amount if canceled up to 24 hours before check-in. Airbnb deducts its service fees from any refund.

Can I book an Airbnb without a credit card?

Airbnb requires a payment method on file to complete a booking. Most guests use a credit or debit card, but Airbnb also accepts PayPal and other digital payment methods depending on your country. You cannot book with cash or bank transfer directly through the platform.

What if my host cancels after I have booked?

If a host cancels within 30 days of your check-in date, Airbnb will rebook you in a comparable property at no extra cost, or issue a full refund plus a credit toward a future booking. If no comparable property is available, you receive a full refund and a service credit. Hosts who cancel frequently may have their account suspended.

Is Airbnb insurance included in the booking?

Airbnb provides Host Damage Protection, which covers up to $3 million in host liability and guest damage claims, but this is not the same as homeowners or renters insurance. Hosts should check whether their homeowners or landlord insurance covers short-term rentals, as many policies do not. Guests should purchase travel insurance separately if they want coverage for trip cancellation or medical emergencies.