Personal Finance

Why Is Airbnb So Cheap

By David Krug David Krug is the CEO & President of Bankovia. He's a lifelong expat who has lived in the Philippines, Mexico, Thailand, and Colombia. When he's not reading about cryptocurrencies, he's researching the latest personal finance software. 7 minute read

It’s hard to believe that you can spend $67 per night at a luxurious Italian villa. Is $75 a night too much to spend for a hotel room near the Eiffel Tower in Paris? For about $150 a night, why not spend the night on a houseboat in Amsterdam?

You could assume that the lodgings are less than stellar at these costs. There is always the chance, though, that you’ll be staying in a tiny room or garret apartment that’s immaculate, beautifully designed, really plush, and incredibly clean.

Those who travel on a tight budget would find this scenario implausible. In any case, if you’re looking to spend less than $75 a night in Paris, you’ll likely have to stay in a hostel and put up with a snoring roommate or bedbugs. Airbnb has made it possible to stay in some of a city’s best neighborhoods without breaking the bank.

What Is Airbnb?

Airbnb is a website that puts guests in touch with local hosts who are willing to rent out a room or their entire home to visitors for a short period of time (a night, a week, or even a month). Airbnb is a lodging service that offers cheap room rates. You’ll often be staying in homes that are as nice as or nicer than those you might book elsewhere for the same price. 

Not all homes and rooms are “affordable,” of course; some cost as much as a hotel. In contrast to a standard hotel room, though, you’ll have a more interesting location to stay.

In Airbnb, you have access to all the comforts of home, including a kitchen to prepare your own meals, a laundry room to do your own laundry, and a host who can provide you with helpful recommendations and insights to make you feel less like a tourist and more at home in the area.

Many people who rent out their houses do it in order to make new social connections and financial gains. Many Airbnb hosts rent out their whole houses, while the majority rent out a spare bedroom. This might be the owner’s permanent dwelling, or it could be a vacation home. You can’t assume anything about whether the homeowners will be there or not if they have renters in the house.

Treehouses, houseboats, and island cottages can be rented in addition to more conventional properties in towns and suburbs.

How Does Airbnb Work?

Let’s say you’ve planned a vacation to San Francisco and you’re looking for a hotel right in the downtown area. You visited Expedia and know that a night in a downtown hotel costs between $165 and $250. Ouch.

So you decide to check out what Airbnb has to offer and fill out a profile. The service connects you with a host who will provide you with a Nob Hill accommodation for $59 per night. Just two blocks from the city’s most popular attractions, this place is all you could have asked for in an Airbnb. The flat appears tidy, cozy, and welcoming in the photos. In fact, from the balcony, you have a clear view of the iconic Golden Gate Bridge. You read the evaluations written by previous guests and find that they all had nothing but praise for the flat and the owners’ willingness to make them feel at home.

You reach out to the host using Airbnb’s messaging system and begin conversing. The apartment and the two of you are a perfect match, so you decide to reserve a room through the website. You may easily reach your apartment in the city by taking the BART train from the airport. Good advice on where to dine and sightsee may be found in the apartment’s welcome packet.

You stay for a week, during which time you save money by preparing breakfast and lunch at the flat, as well as doing your own washing. You get to have a fantastic vacation for far less than the cost of a hotel stay.


Guests of Airbnb properties not only get to save money, but also have the unique option to receive individualized service. Location, especially in the heart of major cities, is a major selling point for many vacationers who stay in private houses. One of the numerous advantages of using Airbnb is that it allows you to:

  1. Spending less. A brief search on the site will reveal that using Airbnb to reserve a home or apartment is typically cheaper than using a hotel (although not always). Airbnb rentals can be as expensive as a hotel, but you have the added benefit of staying in a private apartment or room in a person’s house rather than an impersonal hotel. Many Airbnb rentals have a kitchen, allowing guests to prepare their own meals, and a washing room, so they may save money while on the road.
  2. Better ease. Hotels that lack personality and practicality are no substitute for the comforts of home. In most hotels, you’ll have to pay to do laundry, and you won’t find any cooking facilities. Airbnb houses often offer greater comfort and friendliness than hotels do. When you stay with a host, you are staying in their actual residence. You may kick back on the sofa, build a fire, prepare a hearty meal, and enjoy a bottle of wine on the back patio.
  3. Direct encounter. It is possible to stay with the proprietors of a house or apartment. Sometimes it’s only you in the house or flat. In any case, most hosts will be able to provide you with helpful insights on their city. In fact, many visitors say their hosts treated them to a night out, showing them the city’s hidden gems. When you stay with a local, you get a true taste of the city from someone who lives there. Furthermore, you may meet a new best friend for the rest of your life.
  4. Choices Expanded. Over the past three years, more than 70,000 people have used Airbnb to rent out their houses or flats. Airbnb offers rooms available all across the world, from Johannesburg, South Africa, to Mobile, Alabama. In fact, you may rent a whole island in Fiji if you so choose.


There are a few drawbacks to utilizing Airbnb to reserve a room or a whole property. The low costs and five-star settings of many Airbnb accommodations are frequently mentioned, even in evaluations of hosts and residences that are less than stellar. A few of Airbnb’s drawbacks are:

  1. Communal Area. It’s not uncommon to share a home or apartment with a complete stranger. That makes some folks uneasy. It’s possible to find lodgings where the hosts won’t be present if you’re worried about your safety on a solo trip. It is recommended to examine reviews written by previous guests before deciding on a certain property.
  2. Concerning the Law, Some Questions. Apartment short-term leases are prohibited by local legislation in several communities. Check the local legislation of the city you want to visit online.
  3. Problems with Feeling Safe. Unfortunately, your Airbnb host is definitely in over their head if something happens to your possessions while you’re staying with them. It is possible, but not guaranteed, that your host has sufficient liability insurance to pay for medical bills in the event that you or your party sustain injuries while on the property. You can rest assured that your things will be protected no matter where you may be, thanks to the off-premises coverage included in your homeowner’s insurance policy. In the case of an accident, you should be compensated if the host has liability insurance. To be clear, though, no assurances can be made. The chances of anything going wrong are low, but the Airbnb hosts aren’t professionals and may not be able to help much if something does happen. Unfortunately, your hosts may not be able to assist you in an urgent situation, but Airbnb can. There is a $50,000 guarantee and a 24-hour helpline available on the site. Viewing the tenant’s online Dashboard, which should have their verified contact information (phone numbers, addresses, etc.) and social media accounts, may also help you feel secure about renting from them.
  4. The people that use Airbnb aren’t paid to do it. What happens if your WiFi connection drops, your AC stops blowing cold air, your sink springs a leak, or your toilet flushes itself in the middle of the night? These problems rank right up there with the risk of physical harm and the loss of valuables. To a large extent, Airbnb hosts do not have on-call maintenance staff. The odds are high that any problems you have during your stay will not be resolved before you check out.
  5. Apartments Found on Airbnb Are Not Hotels. Airbnb doesn’t have the same room upgrade or room change policies as hotels, so if you’re unhappy with your lodgings for whatever reason, you’re stuck with them. Extra costs charged upon arrival, crowded homes, low ceilings, WiFi only accessible in apartment clubhouses, and windows without shades, resulting in early morning wake-up calls are just some of the complaints that guests have voiced about Airbnb properties and hosts. There’s also the potential awkwardness of addressing a concern with the lodgings directly with the owners, especially if they are also staying at the residence.

Bottom Line

Many people have tried out Airbnb, and their stays were positive ones. Rates are something that need to be examined carefully. Airbnb rentals are often available per individual rather than per couple or group. So, the listing may state $40 per night, but that price would only cover the first guest. A meal for two might cost as much as $80. Look around thoroughly before reserving a room.

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