How Airbnb Can Rise and Shine Again

Ehab Bandar
Apr 8, 2020 · 6 min read
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“It’s easy to solve a problem that everyone sees, but it’s hard to solve a problem that almost no one sees.”— Tony Fadell

For property hosts, Airbnb means the world. It’s often their primary marketing channel, their sole payment engine, their trust network, communication channel, and business portal. And yet, while hosts rely on Airbnb for their business, increasingly, the reverse is not true. Of late, hosts have taken a back seat as Airbnb ramped up its IPO bid — something they’ve been planning for since 2015 — while siding with guests whenever possible.

As a two-sided marketplace, Airbnb has a genuine dilemma. If they side too much with the host, guests will undoubtedly blame Airbnb the brand, not the host. But if they side with guests, unscrupulous hosts will take advantage. This came to a head with the recent decision to allow guests a full refund amid the COVID-19 pandemic, but only for a four-week period.

This annoyed both guests and hosts alike. It ticked off guests who had bookings past the April 15 cutoff date and severely hobbled hosts, who’s own cancelation policy was trumped unilaterally and without notice by Airbnb. This in turn lost them a ton of money, which has since been partially corrected, with their announcement to compensate 25% of what hosts would have earned.

Hosts already stood to lose a lot of future bookings because of COVID. But with the abrupt cancelations done wholesale, it became dire as it’s nearly impossible to replace near-term bookings especially amid a pandemic. Meanwhile, guests were able to cancel at no charge regardless of what country they were visiting, and theoretically could rebook elsewhere for a cheaper rate.

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All’s Not Lost

On the bright side, Airbnb’s current guest and user experience, especially the reviews and verification system, is still tops. It’s incredibly effective and accurate, and nearly impossible to game. It’s a big reason — other than the beautiful homes — for the platform’s rapid growth. However, the executive team (Brian Chesky and company) at Airbnb would be well served to return to their roots and focus on hosts over rapid growth.

It wasn’t long ago that Airbnb was a struggling startup. In 2009, when they couldn’t seem to get traction, they heeded Paul Graham’s advice and went out to New York to meet directly with their customers. Back then, customers for Airbnb meant primarily hosts, not guests. This focus led to a series of features targeting hosts, including the host guarantee to protect hosts and the photography program, offering hosts professional photography for increased bookings, which they continue to subsidize today. This focus on hosts dramatically changed their trajectory, and the guests followed by the millions.

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The Photography Program launched in 2010.

Recently, that balance in favor of hosts has shifted dramatically to focus on the guest experience at the expense of hosts. This has put hosts constantly on their heals, with overly simplistic customer tools that are hard to use, poor customer support, and a resolution center that puts an unfair burden on hosts compared to guests.

But the good news is that travel will come back. Social distancing will undoubtedly be replaced with social gatherings and life will be normal again. Until then, there are a few things Airbnb can do to improve their standing with hosts:

First, increase platform functionality, speed and utility. They can start with the host inbox and notification system, which are stubbornly slow and out of sync. Hosts experience a huge lag between when notifications are received and when you can realistically read them on the Airbnb app. And worse, messages take forever to load, hampering the ability of hosts to rapidly respond to guest inquiries. Below are the results of a recent performance test (via Lighthouse on Chrome) showing how fast (rather slow) the Inbox loads. It takes 17.8 seconds before you can do anything, with a performance rating of 33 out of 100.

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Second, make host tools more usable and powerful. For example, a host can adjust availability by blocking and making available certain dates on their Calendar, but can’t do the same thing on a section called “Availability.” It’s confusing and disorienting to use, even for power users.

Smart pricing is another feature sorely lacking smarts, favoring guests over hosts. Its weakness has spurred other companies to come up with their own market optimization services, such as BeyondPricing and Wheelhouse. These tools give hosts the flexibility to maximize their revenue, while minimizing the wear and tear on their property. Conversely, the current smart pricing feature lacks transparency and maximizes bookings, which may not always be what hosts want.

Third, when a visit goes well, everyone is happy. But when things happen (and they increasingly do), Airbnb is the sole arbiter via their resolution process, usually favoring the guest’s word over the hosts. Guests are innocent until proven guilty, while the burden of proof — through photos and documentation — begins to resemble a scene from a crime drama; something hard to squeeze in between back-to-back bookings.

Fourth, provide a way for hosts to have a direct relationship with customers. Airbnb makes it clear that they own the customer, not the hosts. And that’s the price hosts knowingly pay for by listing their home on Airbnb. But at minimum, offer hosts ways to market and promote their listing, through targeted promotions, coupons, or special offers that truly feel special. Instead of the convoluted way of having guests book first then receive a special offer from the host, give hosts a way to offer direct discounts to select customers for improved marketing and loyalty.

As an aside, there’s also the issue of inconsistent support for local-specific taxes. In most cases, Airbnb collects it upfront as part of the booking. But in those jurisdictions where they don’t, the host has to either absorb it as the price of doing business, or state it up front that they will have an additional charge POST-booking. A truly terrible experience, especially in the age of instant bookings (another tool favoring guests), where guests equate Airbnb with a hotel and all fees are clearly stated upfront.

Finally, making a property standout is increasingly limited, driven by a single hero shot appearing on search results and a catchy tag line. The cookie-cutter approach to listings, where they all look the same, takes away from the ‘experience’ side of where the travel market is going. Some hosts have resorted to creating their own sites, like this and this (and ours). These sites are more immersive and offer a unique canvas with which travelers can see and experience the property prior to booking, while getting a more authentic view of the host and what to expect.

Rise and Shine

Booking on Airbnb has always been something more than booking a place to stay. It’s a place where the host knows your name ala Cheers, where there’s a story behind the home, and a local guide you can call on for advice when traveling. It’s a place where you can rise and shine and remove some of that COVID-style social distancing that often happens when traveling to a new place. But to get there, Airbnb has to regain the trust they lost with hosts, and like their early days, focus on the success of hosts for their own growth.

And from their recent news, it seems they’ve gotten the message. It’s noteworthy that their first step after the crisis was to pause all marketing, which was primarily focused on guest acquisition and growth. It’s time now to focus on hosts again, who make Airbnb what is and will be tomorrow.

Final Thoughts

What do you think? Did Airbnb handle the COVID crisis well? Will Airbnb thrive or dive? And for the tech community more broadly, how does the IPO chase force startups to focus on the wrong things?

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