How Airbnb measures listing lifetime value
medium.com
medium.com
A listing could look great online and receive a lot of bookings (so high LTV), but ultimately drive users away from the platform.
A certain ad platform I worked on cared a lot about this - offensive ads could get you to quit the site altogether. You might want to count every ad as positive for the company since you make money, but some might actually be negative expected value! As a side note, I think this is a really undermeasured problem. There are many sites I won't use because the ads are so overwhelming or are often offensive.
Imagine an airbnb that's great for most guests but absolutely terrible for 1 in every 5, so bad that they quit airbnb. Maybe it's next to a music venue, so every once in a while it's very loud.
It's possible it could maintain a decent average star rating and LTV as described in the article but actually have negative (real) lifetime value for airbnb if the 1 in five that they lose would have spent a lot of money on the platform otherwise.
Edit: at least that was the situation a couple of years ago. A host below now reports that the situation has changed and they take the side of the guests; however, either way it's open to abuse no matter which side they take.
The issue is that in a marketplace where both sides can be dishonest, the only way to ensure quality is to do spot checks by trusted actors (aka company employees) where the penalties for failing such a check are dissuasive enough that it becomes more profitable to play by the rules.
This is similar to how law enforcement is supposed to operate - the reason the penalty for theft (for example) is more than merely returning the stolen items is that since law enforcement can't observe everyone all at once, the penalty needs to be enough of a deterrent to make the bad behavior unprofitable overall, to discourage it even in cases where law enforcement isn't there to witness it and enforce said law.
It was nominally cheaper to travel this way, but for my next trip I’ll be staying in hotels.
Going deeper with modeling users might yield some tighter estimates, but I imagine this gets estimates far closer than some simple accounting formula, and likely helpful for budgeting a year out — but it would have been nice to have seen some performance metrics.
I am precisely this kind of churned customer. I have personally booked maybe 3 AirBNB stays, and stayed with family in them on other occasions. The units I pick are always well-reviewed.
But in the cities I've stayed in (LA, SF, Rome), the price is really no cheaper than a hotel, and the quality is extremely variable. You have to really carefully read those 5-star guest reviews to read between the lines.
And you feel pressured not to leave a negative review, as that would negatively impact your ability to book in the future, since the hosts (I have heard) can see your average review score.
My impression has been that AirBNB's customers are actually the hosts. You, the guest, are an expendable commodity. You will use AirBNB until you have a severe enough problem, and experience them siding with the host over you. Then you'll be churned permanently, and by force if you do a chargeback.
If I were going to disrupt AirBNB, I'd offer hosts a better percentage with the requirement that the experience is standardized and high-quality. There would be an in-unit noise & vibration sensor, reporting directly in the app. 24 hour check-in and check-out. A minimum set of amenities, minimum WiFi speed. The bedding would be standard. Cleaning fee standard. Every unit subject to a surprise multi-point inspection at least once per year. Essentially, make it no worse than an average hotel, and maybe some units as good or better than high end hotels.
This is an interesting idea, but it puts the quality level way above what I want to pay for. Hotels are anti-septic and cold. I like staying in an apartment that feels like someone actually lives there. I don't mind a few dust-bunnies under the couch, nor a little dirt behind the toilet. It's even better when the kitchen is fully stocked, including a selection of non-perishable food (think cooking oil, salt, pepper, maybe a bag of ground coffee and a box of pasta.) Sure, the sheets and towels should be freshly laundered, but beyond that, I don't want much.
AirBNB allowed me to pay less to get a more human-feeling space. Hotels are like McDonalds, they are designed for the regular customer who wants to get that Hilton-feeling, regardless of if they are in Wichita or Cairo. I want to feel like I'm in Cairo, and if that means that I'm in a mud brick house with a single bathroom, no A/C, and no daily housekeeping that's great! AirBNB opened those worlds to us as travelers, in a way that hotel chains never did.
You don't feel that someone lives there because nobody actually lives there. It's like a long term rental apartment that in best case scenario someone is using as a savings/investment vehicle but on short term. "Worst case" it's part of an apart-hotel.
When I travel as part of a large group(i.e. more than 3 people) a short term apartment is great because we need a big affordable space (i.e. someone may sleep on the couch and we don't want the hotel "greetings & house keeping" experience) but nevertheless I don't want or expect a dirty place in any way, shape or form be it in Cairo or somewhere else. I'm pretty sure there are people living in less than sanitary conditions all over the world including Western Europe and the U.S. That doesn't mean I have interest in experiencing that kind of "living/sleeping".
All that being said I've stopped using Airbnb years ago. It seems a broken system. For short term rentals/apartments Booking.com is the only sane choice(IMHO).
If that the only thing AirBNB offered, I would have much less interest.
> I'm pretty sure there are people living in less than sanitary conditions all over the world including Western Europe and the U.S. That doesn't mean I have interest in experiencing that kind of "living/sleeping".
Thankfully, AirBNB doesn't have to be all things to all people. As long as there are enough people like me to keep them afloat, they can provide a product that I am happy with, and you can stay at hotels that are immaculately clean.
I do hate the way that many AirBNB hosts have made hosting a business, and would fully support a limit on the number of listings per host. People renting out a space in their house, or a vacation rental in a vacation destination that they also stay in too is fine. People buying 3 or more apartments to rent them out (taking them off the long-term rental market) is terrible, and should be prohibited.
Not that I would ever use a third party booking site like hotels.com either…
I want the place I stay at to be run professionally and it to be I give them money and they give me a clean place to stay without having to worry about my ratings, discrimination, etc.
Especially in another country where I don’t know the language and after taking a long flight. I wouldn’t want to take the chance on an AirBnb.
Because of what I described above! In summary:
* Desire to have an experience and living environment I can't get at home.
* Desire to have living space beyond 2 beds and a bathroom crammed into the smallest available space.
* Indifference to dirt or wear and tear.
Thankfully, no one is saying that AirBNB should replace name brand hotels, in the same way that no one thinks that every hotel should be a Motel 6. AirBNB/VRBO is just another segment of the industry, and those people who want to stay in an AirBNB can, just as people who want a Hilton can without affecting those people who want to stay in the Ritz-Carlton. This is the beauty of the market!
Stop staying at chain hotels. There are plenty of hotels out there that are what you're looking for, and have an actual business to engage with in case of issues instead of some anonymous lister on AirBNB.
That has not been my experience. It is very hard to find a robust selection of hotels in a major city that has a living room and kitchen. Even when you do, in a part of the city you want to stay in, they are often tiny kitchens, with limited kitchen equipment, and where the cabinets are completely cleared of every food item after every guest. These places also have very antiseptic, uncomfortable furnishings. They are night and day different from staying in most AirBNBs.
Yes for sure. Avg # of transactions per host dwarfs avg # of transactions per guest. Same with revenue. A frustrated host who pulls a unit (often, multiple units) off the platform is much more detrimental than an individual customer leaving the platform.
Hence I expect the host LTV to be a couple of orders of magnitude greater to that of guests.
Source?
I did a quick search and couldn't find anything to confirm this. Various airbnb screenshots geared towards hosts also don't show anything about guests' average rating.[1]
[1] https://www.airbnb.co.za/resources/hosting-homes/a/know-more...
I've noticed more and more apartment rentals appearing on booking.com. I haven't used any of them but I wonder what the tradeoffs are. My impression is overall booking.com is more guest-friendly as their userbase has grown from people staying at hotels, who expect stuff like being able to cancel and complain about cleanliness.
I remember one specific incident when a hotel had purposefully put me in a noisy room (I saw a sheet on the reception desk labelling it as ‘ruidosas’ which means noisy in Spanish). I took a video of it against the receptionists will and ensured I got the logo of the hotel in as well. When I reported to booking they essentially told me to jog on.
On the contrary, anytime I’ve had an issue with Airbnb they have sided with me and provided a refund/assisted me with finding better accommodation.
This isn’t a ‘you book more with us thing’, either. I have substantially more bookings on booking due to the prevalence in Asia but they literally could not care less
I've shifted 100% away from AirBnb and to Booking and am still able to book whole apartments/houses. It used to be AirBnb=houses/apts, Booking=hotels. Now Booking covers both, is usually cheaper (especially considering the cleaning fees AirBnb listings usually charge), and has good customer support (in my experience).
Airbnb “hosts” treat it like their “home” and are emotionally invested in what should be a business transaction.
This isn’t to mention how many hosts are running an illegal AirBnb.
Fwiw, I listened to an interview with Brian a couple of years back where he said that, internally and strategically, they call hosts “partners” and guests “customers.” Which makes sense to me.
I haven't booked an Airbnb in years, whether it be due to having hotel points to redeem or someone else in my party booking on their account or just the price differences in that specific city I am going to. I'm not averse to the service but my account is basically dormant
I had only used AirBnB once or twice before and was leery of it, but after this experience I'm unlikely to use it again. The inability to review the host in such a situation is pretty much a dealbreaker. (Note that I want to review the host --- not the property, but the person who decided to cancel the booking at the last minute.)
I hate to sound like the “Do people still watch TV? I haven’t owned a TV in 20 years.” Guy. But why are you seeing ads on the web? Don’t you use an ad blocker?
But that promise was broken for me when Commaleta played back the video of her front door camera and counted that we had 10 people walk in her door, not eight. She proceeded to accuse us of throwing a party, when we absolutely did not, and tried to charge us $1000 extra dollars.
At that point, I decided that Airbnb’s hosts were too much of a wildcard in most travel situations.
By the way, the story above is from 10 years ago and I will never forget her name for the rest of my life…she turned what should’ve been a relaxing, beautiful week into a miserable arbitration process. It’s hard for ABNB to succeed long term when one experience like that can ruin everything.
The host retaliated because we had the audacity to tell her that the place was unclean when we checked in. She claimed 2000$ of fabricated damage and as you Airbnb sided with the host initially.
It's only because I lost 3 hours of my time with support and took a thousands of screenshot from our Messages that I got them to drop that charge.
I also issued a Chargeback with my credit card for the dirty place.
But yeah, this is done for me as well. I had 20+ stays but I will never , absolutely never use them again. My time is worth something and this Airbnb destroyed our holiday and took way too much of my time to handle.
She went full damage on us as a revenge. Trying to charge us 2000$ for fabricated damage. Airbnb Support tried to stand on her side asking us if we "had proof we didn't do it". I was on holiday. I didn't think about taking every single object in high definition picture.
We had to spend 3+ hours on the phone and by message to have Airbnb "drop" that 2000$ charge.
Never again. Not worth the time. Airbnb is great when it goes well. But you have too many bad hosts that ruin it for everyone. And when it goes bad it goes really bad.
An opening article lie! For our hosts would be much more appropriate. Why does a guest care about how many nights a place is going to sell in the next few months?
This assumes value for guests is how much money the property they stay at makes, when it obviously isn't that.
Airbnb these last years went from feeling fresh and adventurous to scammy and dubious
I'm Australian and moved to New York recently-ish. It was one of those classic anti-consumer disappointments one experiences moving to the states. Glad they fixed it.
What I'm talking about is Dynamic Pricing. Had to look up what really happens: The host sets a rate-range, and Airbnb first gives the low price and then as you click around in the area they notice you're more interested so they increase it towards the high end of the price range (possibly also time of day and such signals?). Then I guess there's a slow cooldown.
Like how a good haggle is made to give you a friendly relationship with the seller, this seems specifically designed to make people hate Airbnb and swear to never use it again.
Maybe don't book places with fewer than 5 reviews? Same goes to airbnb or any platform that allows for anyone to publish a listing.
On the other hand had one severe issue with a booking on airbnb and they essentially told me to go fuck myself.
I've used booking.com around the world and I can't recall any serious problem. When dealing with an issue, AirBnB error flow often sucks and booking is mostly fine.
When AirBnB works out great, you can find some real magic, but when it fails it really sucks.
I've found booking.com is usually more hotel-like and professional (e.g. contactable and reliable).
I still use both but I'm careful to choose depending on perceived risks.
Disclosure: long booking.com
Last I heard they're also a company that actually hires juniors there.
Booking, as far as I know, straight up doesn't allow hosts to cancel. Recently, a host sent me a message begging me to cancel my booking because they really couldn't be there to receive me.
I will never use AirBnB again
The last 2 years they have _really_ moved to squeeze the hosts. The customer service has been demolished and they seem to have taken a stance of "the guest is always right". I've spent countless hours going through their customer service as a super host, so I know I have a decent amount of anecdata.
My suspicion is that they found themselves with more supply than demand, so they are "improving the guest experience" at the expense of the hosts. Since they are a quasi-monopoly (depends on the market) it makes sense for them to prune supply in exchange for better guest experience, a full market approach makes less sense since they make money in proportion to the total amount of money transacted (which as a monopoly it can optimize for in the way a free market can't).
But I think this will blowback sooner or later. The biggest value for an Airbnb guest is the review system that allows you to have some degree of certainty of what you are getting. The biggest value for a host is the massive global audience. But guests and hosts, pay a steep fee (17%!) for this. For well-reviewed, long-living stays (like mine :)), paying 17% is way too much to access this audience: the listing already has an online record that provides that quality assurance for the guest, and the host could spend that money on advertising.
So that's what many of us are doing, moving to PMS + paid advertising / SEO to diversify on distribution channels. I think there's an opportunity for capturing that semi-pro host market and bundling them in a similar offering that 1) doesn't squeeze them, 2) offers a proper PMS software, and 3) charges a flat fee instead of a variable rate.
Have you considered increasing the cleaning fee to recoup some of that money? /s
AirBNB can be equally frustrating for users as well. Recently ended up at night in a new city in northern Japan where the host told me the listing was at a different address, where I found nothing, and got only radio silence from the host. Every hotel room in town was occupied that night. Airbnb support, seemingly in far away India, told me to try contacting the host, and that was that.
Also recently stayed at a place with a dog that shat inside due to the owner not taking them out; due to politeness no one had complained in the reviews.
Also Airbnb lists one price but when booking it always ends up being way more with more fees added.
I’m using hotels.com with a filter for “has kitchen” these days, which was the only reason I used Airbnb in the first place
IMO most of the things that people like about AirBnB vs hotels is downstream of the failed experiment of urban planning. If we want hotel operators willing to "spend" floorspace on kitchens and other niceties, then legal floorspace can't be scarce or special, but most of the current planning regime is oriented around enforcing limits on floorspace. Ditto for having options of places to stay that aren't tourist traps or commercial areas.
Where I'm staying at the moment is a "serviced apartment" and does have a couple burners but that's unusual and I mostly stay here because I like the location in London.
You see this in vacation destinations like Hawaii and Ski towns; there is a significant fraction of accommodations that are Condos, because you need a place to hang. AirBNB brought that to urban areas by sub-letting apartments, when hotel operators only provided maximally-dense sleeping-focused options; multi-bedroom hotel rooms with living rooms and kitchens largely did not exist in major city centers.
There are also some hotels with kitchens. Usually they have 'Suites' in their name. I stay at one most holiday seasons, we go and visit my folks and want to have a place where my family can cook without taking over my parents' kitchen.
I've stayed places with vrbo, which is pretty similar to airbnb, but older. It's most convenient IMHO if you want more than two bedrooms for a group with shared space, or you're going somewhere without many hotels.
These are okay, but they still have the antiseptic, overly-clean feeling of a space optimized for housekeeping. They will usually have a small couch or two, and maybe a table for 4. I have never seen one with a full dining room with table for 6; a fully stocked kitchen that includes non-perishable food staples, or any outdoor space. These things are common in AirBNB rentals, often at the same or similar price to nearby hotels.
AirBNB and VRBO absolutely opened a new market of accommodations compared to what was available before. These options may or may not be for the previous commenters, but it's silly to state universally that you can or should stay in a hotel instead. It's like saying "I love to ride my bike", and the reply being "you know you could ride a scooter to your destination, or drive a car."
Rather since the rules limiting hotel size, locations, quantity etc have nothing to do with safety and everything to do with class, exclusivity, and segregation, we can jettison them confidently without worrying that we are being too lax about anything important :)
And yes, I use Airbnb as a guest as well, but I gauge the risk of having a bad host into the decision making.
We also get all type of horror stories from guests that had a bad experience and found themselves trying to find a last minute place to stay.
The problem is that the Airbnb app heavily disincentivizes "professionalization". They have a small cartel of PMS providers that can actually hit their API. I can't build my own systems on top of their API, I have to go through a middle man or use the their crappy app.
Their app is so incredibly obtuse that it puzzles me how people shower Airbnb as a "great product design company". It's a beautiful app sure, but incredibly clunky. It's like a call center phone menu made into an art piece.
They basically operate a pretty simple website. Most of their busines is about arbitrating issues when they come. This has nothing to do with tech.
I would bet that United Airlines or American Airlines website handles way more queries than Airbnb.
But for some reason they managed to market themselves as a "design driven" "Tech company".
The key distinction between say United Airlines and gig tech companies is that the latter will aggressively avoid owning physical assets and use tech to be a streamlined middle man in a market that actually requires a lot of operations.
They are a tech company, but in the sense that they get their edge from software not that they sell it.
For those of us not in this space, what does PMS mean?
Airbnb sided with the Host for some fabricated damages because the host was mad we told them the place was unclean. They put the burden of proof on us to prove we didn't destroy one of the sinks. Absolutely ridiculous.
We had to fight it for 3+ hours on the phone and message and start a chargeback and only then did support drop the fabricated charge.
And to top all of this, Airbnb deleted our bad review from that place (but left the review of the host).
So, never, absolutely never again. Too bad because I was spending 2k+$ on Airbnb before that incident and only got great reviews from other hosts.
Maybe their folks need to punch "LTV" into Google Scholar.
And also, is it even actionable?
> For example, suppose we run a marketing campaign that provides hosts with tips on how to successfully improve their listings
Right guys. “Marketing-induced incremental LTV” indeed.
After a couple OK stays I had an absolutely horrible experience. The place was super dirty and the shower was clogged. The hosts tried to play nice and made us stay even though they didn't do the cleaning (Our fault I guess but when you are tired and already there you just want to move on and forget about the incident).
After the stay they became dishonest and lied to Support, tried to make us pay more. Support sided with the Host and even deleted our bad review of the place.
And the final nail in the coffin is that by deleting our bad review the host was able to get to Superhost status.
That stay destroyed our holidays. We then had to spend multiple hours on the phone and by message with support to defend ourselves. Ultimately they manage to leave a misleading review for us that we couldn't delete and Airbnb deleted our review of them.
It was already overpriced but once you account for the time lost when something goes wrong there is absolutely no point to book an Airbnb ever again.
Stay with professional in hotels. Your future you will thank you.
Or is there just a signup/login banner that you can dismiss?
If there's a paywall we'll pin a workaround at the top.
Surely Airbnb - a company that runs a website - has the capability to put a text post on their own website. Then they'd own the content, and people looking for it could find it easier? It's not a revolutionary concept either, Facebook has one:
Wait, Airbnb already has one?
Genuinely confusing.
Distribution.
The reason for this blog post is "recruit engineers". Not every engineer is going to visit blog.airbnb.com, but presumably a lot of them are already on Medium.
They even close the article with,
> We continue to solve interesting problems around LTV every day (and as more insights come up, we’ll keep sharing them on our blog). Can you see yourself making an impact here? If so, we encourage you to explore the open roles on our team.
These blogs are always about recruiting.