When marketing manager Janicia Oh and her husband arrived in Dubrovnik for the first time in May, she had a driver who introduced them to the gorgeous city, as well as fresh bakes and juices waiting for her upon check-in.

What’s even more amazing is that when she returned to Singapore, she received a parcel containing the jeans she’d left behind in Dubrovnik, a box of chocolates and a handwritten note. No, she didn’t pay for a fancy five-star hotel with exceptional concierge service. These were simply what her Airbnb host, Gordana, did to make her feel welcome.

Welcome to the world of Airbnb. The San Francisco-based company has been changing the way we travel since it was created in August 2008. This vacation rental website — which provides travellers with lodging from private home owners (hosts) and allows you to rent out your house or a spare room — has become a global travel force to be reckoned with. In six short years, the founders of Airbnb have gone from trying to sell cereal boxes to keep their business afloat to running a company valued at an estimated US$10 billion (S$12.6 billion).

That cereal box story is no urban legend. One of Airbnb’s three founders, chief product officer Joe Gebbia, elaborated: “We were broke, living on credit cards and trying to raise funds; so Brian (Chesky, co-founder) and I created limited-edition Obama O and Cap’n McCain cereal boxes for the Democratic National Convention in 2008 which sold at US$40 apiece — and people bought it.”

“These cereal boxes also helped us convince Paul Graham (famed investor and venture capitalist) to come in with us. He said, ‘I still don’t believe in your idea but if you can get people to buy those cereal boxes, I think you’re going to get people to sleep in other people’s homes.’”

HOME SWEET HOMESTAYS

Graham’s hunch was right. More than 20 million guests have slept in other people’s homes thanks to Airbnb; and 10 million of those did so in this year alone. Those numbers are growing every day, as more travellers spread the word and stayed in the 800,000 listings spanning 190 countries. Many raved about the hospitality of their host; the value-for-money accomodation (which ranges from designer-cool apartments to treehouses, castles, boats and villas); and the uniquely local experience.

“We’re so successful because of our customers and business model,” said fellow co-founder and chief technical officer Nathan Blecharczyk. “We’re a new model for an industry that exists. That’s the power of an innovative idea.”

But Airbnb is hardly the only player in this market. Others such as Roomorama, HomeAway, FlipKey and One Fine Stay are also in the market. Even popular travel review website TripAdvisor has started offering direct bookings for vacation rentals (through FlipKey, which it invested in). Blecharczyk feels Airbnb’s competitive advantage lies in the “sheer number of properties”.

“Selection is important when everyone is so different,” he said. “People usually go to the best site with the widest variety. What we have done is to build up a massive inventory, especially in cities, where it’s usually the primary homes of hosts. These primary homes are a better representation of hosts’ personalities. I feel other websites can’t put out the same thing we offer.”

Gebbia added that Airbnb’s global network differentiates them from regional providers. Another important factor is the user experience. “We spent so much time thinking about design, reducing friction and difficulties for hosts and guests. Our No 1 mode of marketing for both sides is really through word of mouth,” he said.

Airbnb hosts praise how the company has changed their lives. Kepa Askenasy, for example, started renting out the cabanas in her Potrero Hill home on Airbnb in 2010 to earn extra income after she was injured in an accident and couldn’t work.

“I thought there was no harm trying since Airbnb’s office (then) wasn’t too far away and it was the founders themselves who were answering my queries because the team was so small then,” she said. Askenasy is now an Airbnb superhost with 806 glowing reviews and counting. (Her “stunning garden”, mentioned in almost every review, is every bit as amazing as they say, by the way.)

For other San Franciso hosts like Lenore Estrada, renting out her mother’s old apartment after she died helped her finance her all-organic pie business, Three Babes Bakeshop. “The rent I collect has definitely helped. There’s no cost to me in renting it out because I pass the cost of cleaning on to guests,” she explained.

Aside from an incident where she said a guest left mouldy food and chicken bones in the bed, most of her guests have been “really nice”.

THE FLIP SIDE

But not every savvy traveller is enamoured. Lonely Planet author and freelance travel editor, Shawn Low, used Airbnb twice and was lukewarm in his assessment. “Not all properties are equal and pictures aren’t necessarily accurate. How do you detect bad plumbing, for example?”

A home Low rented in Cairns in 2012 turned out to have cockroaches in the fridge and wasn’t very well-kept. While his hosts were friendly enough, they weren’t responsive to his requests.

“There were only two reviews on the site, so the review system wasn’t a good enough indicator,” he said, adding that his next Airbnb experience in Tokyo last year was middling at best as his host was a little impersonal.

“He gave me a booklet (of what’s around) and it felt like he was running a business as he has several other listings.”

Encounters such as Low’s were one reason Airbnb roped in hotelier Chip Conley as global head of hospitality and Strategy last year. Conley, who created legendary rock and roll Phoenix Hotel in San Francisco and was the CEO of United States boutique hotel group Joie de Vivre, said he wanted to establish basic hospitality standards for all guests.

“We have several initiatives such as training for our hosts, helping to match guests with the right hosts, delivering on expectations,” he explained. “We also formulated nine minimum standards such as cleanliness and the responsiveness of hosts.”

Airbnb isn’t just stopping there. The company is looking into improving every aspect of the travel experience. Its spanking new headquarters is abuzz with a purpose: Teams are working on pilot projects for business travellers; a last-minute booking service is being tested in San Francisco and Los Angeles; it is expanding its local neighbourhood section for every city; and it has even gone into the cleaning service to make lives easier for hosts.

Gebbia even thinks they’ve only begun: “Launching Airbnb is one of the hardest things we’ve done, but we’ve working even harder now to create a world-class product. A majority of people on the planet haven’t heard of us — there’s still a lot of work to do.”