Airbnb business model?

[Laura2592]

I've been thinking about this with recent changes. Ages ago there was a Dublin host named Susan who did a deep dive into ABB booking algorithms among other things. Like many hosts she no longer posts here and I would be surprised if she hadn't left Airbnb. What she posited is that ABB only wants hosts to have about a 5 yr shelf life and that it's model depends on turn over for new hosts. Much like a restaurant, if the same table stays forever it takes away from your ability to seat more people and profit. Unlike a restaurant there's not a finite number of hosting situations...new houses are built, people sell and buy, open up rooms etc. Though the supply is not inexhaustible it's not anywhere near touching the bottom of the hosting pool yet.

As new hosts come in, stricter rules and higher fees are just the norm. Experienced hosts can pound sand or get onboard. This way ABB can keep inventory fresh and control more about what hosts do. 

Conspiracy theory? Or do you think this is the actual model?

[Jenny]

Hi Laura and all, 

Thank you for all your comments here, I appreciate how candid and open you’re being. 

We understand that there have been some platform changes over the past few months that not all of you agreed with or saw the value in. As you know, we’ve read and collected all of your concerns and suggestions and have been working closely with the product teams to make sure they are heard. 

Airbnb services both Hosts and guests all over the world, and gathers feedback from both via many channels, including the CC, local clubs, the feedback form, and many more. This is what informs all those changes, along with internal data, and our teams work on developing improvements for sometimes years. All of them only aim to improve the platform for all those who use it, whether new or seasoned Hosts or travellers. 

Finally, I’d like to remind and reassure you that all opinions and thoughts are welcome in the Community Centre, whether positive or negative. Account restrictions, however rare they are, are never due to criticism of Airbnb and if you have further questions or concerns about this please reach out to a member of our team. 

Thanks, 

Jenny

[Mark116]

@Jenny   The issue isn't so much that hosts disagreed with, or didnt' see the value in the new Summer Release, it is that many, many hosts businesses have been decimated as a result of the new search engine.  I mean, obviously, if my views are down to 2 per day, I am not going to 'agree' with this or see any 'value' in this change, because it means that I will no longer be able to rely on Airbnb for any income.  

I suspect there are a lot of hosts like us, who were mostly booked already for the summer and early fall before the new roll-out.  If nothing changes in the next 3 months, you will see more business migrate to other platforms.  There is no other option.  We won't stay rented at 2 views a day, and we are not interested in keeping the apartment set up for STR and not making any money.  We will switch to long term.

[David8879]

Same happening in Toronto, Canada

[Susan990]

Please provide your definition of the use of the term OTA. I looked it up and a dozen different definitions

from different industries popped up.

[Lorna170]

@Susan990   My use of OTA is shorthand for Online Travel Agency.   

[Ted307]

@Laura2592 

Just thought you might like an update, for the most recent quarter, ABNB hosts in the US numbers have increased by 50%. More hosts = lower rates.

[Laura2592]

@Ted307hmmmm. Methinks my theory has legs!

[Ted307]

@Laura2592 

More hosts competing with each other will lower the host's rates, but the total number of bookings will be higher, more fee income for ABNB. As you say, hosts can pound sand if they don't like it. Some with high fixed costs, like a mortgage they were using ABNB to pay, might go out of the hosting business. Those with lower costs will be able to stay on as hosts, making less. The new hosts are given priority in search, as they always have been.

[William1603]

Well said. AirBnB's model seeks more bookings at any cost, and there is no accommodation for host profitability.  Want to get 5 stars every time? Provide over the top service and amenities at a ridiculously dirt cheap price. The host loses money but AirBnB is happy. Raise your price and you'll get fewer 5 stars. There is a disconnect between the ratings and actual quality and value.

[Hal3292]

@Laura2592From my vantage point, it doesn't look like ABB has much of a strategy re: turning over the tables in a restaurant. If they add more hosts, they make more money, regardless of whether competition drives prices downward somewhat. It's not THEIR property sitting idle if a market becomes saturated, after all. And if someone in ABB leadership was thinking strategically, it seems there'd be evidence of ABB trying to stanch the flow of hosts (and lots of superhosts!) moving to other platforms because of ABB neglect or mistreatment. It's distressing to read of hosts having their listings turned off or other capricious acts taken against them. And even worse when they can't get through to a capable customer service rep to provide commonsense help. I've been lucky with ABB so far, but this forum has opened my eyes to what can happen.

[Ted307]

@Hal3292 @Laura2592 

I do not believe that ABNB has a problem if experienced super hosts leave the service. Lower prices will attract more users. The more users the more profit for ABNB. Us hosts are just like the drivers on Uber. We compete with each other on quality and price. At least Uber drivers do not compete on the price! They do compete on the quality of their cars, look at Uber Black.

ABNB has bragged about keeping costs low since the big drop caused by the Covid-19 pandemic. The customer service are the costs they are keeping low. The reps answering the calls we make are not trained, and not as many as pre-pandemic still. This is a feature and not a bug!

[Gwen386]

As a new host (since March), I think timing and reason for hosting are everything. For me, those two things were: (1) I started after the worst of the pandemic was over and (2) I don’t need the money to pay my mortgage. Since I am entertaining full retirement in less than 2 yrs, I’m using Airbnb to increase my nest egg. 

So when the Summer rollout came out, reservations slowed down before the Memorial Day weekend and I was surprised because I live in a beach town. So, I offered a slightly reduced rate for a 3-night rental with an add’l 10% off if reserved non-refundable. I got a reservation within 48 hours. 

And again, timing is everything. I live in Calvert County where the only nuclear power plant for all of MD is located. So prior to the winter season, the plant hires contractors from all over the US to prepare for outages. That’s when I started getting requests for long-term rentals. 

My goal is 5 years max to do airbnb. So my hope is that my time as a host will be a minimum of 90% positive. At the present, I am batting 100%. 

[Laura2592]

@Gwen386nice to see another Marylander lol!

We started out loving hosting. After about the 12th guest we started to seen large  potential problems. At 50 stays we really said "hmmm, this may not be as much of a long term strategy as we could have hoped." We started to review our level of effort and decide on a stop date. As I said in another post, we do have lifestyle perks we had to put on hold for the years we hosted.

Hosting has a lifecycle. New hosts are typically very enthusiastic, and over time this energy degrades. Its no small thing to invite total strangers into your space. I think you are very smart to give yourself an expiration date and use ABB as a method to increase savings. We are small time real estate investors, so we really prioritized the appreciation on the sale of the property and did well.  Hosting was worth doing overall in our specific property. It would not have done as well as a traditional rental. Would we do it again? Possibly, but probably not on ABB.

[Ted307]

@Laura2592 @Gwen386 

We are still pretty new hosts. We still like it, but not enough to lower our prices to be booked 100% of the time. We had a few weekends off this summer due to the latest "update". We are completely retired, but still like to be able to have a little to add to the nest egg. Our area is a popular weekend get-away from the heat in Phoenix. It has paid for the upgrades we made to our guest house, and improved the appreciation of our place, should we ever decide to sell. Arizona has pretty friendly rules for people who rent from their primary residence. The reason we like to use ABNB is how it simplifies collecting from our guests -- that has not changed with the Summer release.

[Susan990]

@Laura2592  What I still cannot understand is why ABNB  is seemingly not prioritizing the simple goal of making more money by booking more nights . We all know that views are down and occupancy rates have crashed. The search functions are not user friendly and host properties are misplaced in the platform or disappeared. Looking forward  to the next quarter earnings report.  Wondering if they are conducting any occupancy rate data analysis?