Assume AirBnB assesses a flat rate fee as a percentage of nightly rate.

Revenue = (n0*r0 + n1* r1+ n2*r2+ … nK*rK)*A where

n0 = number of nights rented for property 0

r0 = nightly rate for property 0

and n0*r0 = annual earnings for property 0

A = the cut that Airbnb takes

u = mean nightly rate across all properties

n = mean occupancy rate across all properties

K = total number of properties

365 = number of nights a year

Revenue = K*u*n*365*A

Assume 110 million US households and an average US HH size of ~3. Assume 1% of US HH are Airbnb for a total of (K) 1.1 million AirBnbs.

Pricing distribution is right tailed, with a long right tail. Assume 80% of AirBnbs will cost between $100 and $500/ night and avg around (u) $175/night.

Assume (n) 40% occupancy rate, since many properties are likely almost always empty and less but also many are almost always full.

Assume A = .1 , and AirBnB takes a  10% cut per night

R = 1.1e6*175*.4*.1*365 = $2.8 Billion