Airbnb, Inc. (stock symbol: ABNB) is scheduled to go public tomorrow. The 50 million shares being sold have tentatively been priced in the range of $56.00 to $60.00 per share, giving the company a valuation of approximately $42 billion.
Airbnb is an online marketplace for rental properties (rooms, homes etc.) for its vacationing and business customers. The company's marketplace is accessible to its customers on its website or via a mobile app. Through the service, the customer can arrange lodging, primarily homestays, or tourism experiences or list their properties for rental. Airbnb does not own any of the listed properties; instead, it profits by receiving a commission for each booking. The company was founded in 2008. Airbnb is a shortened version of its original name, AirBedandBreakfast.com.
Airbnb is the poster child of the so-called sharing economy, and one of the most disruptive startups created in the last 20 years. Since its founding, the company, which operates in over 220 countries, has accumulated over four million hosts and generated over $110 billion in bookings.
Consider this:
The $42 billion valuation values the property owned by each host at $10,500.
Airbnb incurs no capital costs for those properties.
The cost of building a new hotel can range from $75,000 to $600,000 per room, depending on how many stars you want.
The national average range is $13,000,000 to $32,000,000, with most people spending around $22,100,000? on a 3-star hotel with 100 rooms. At the low end of the spectrum, it is possible to build a 2-story motel for $7,500,000, while at the high end, you can spend more than $60,000,000 on a luxury 5-star hotel.
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