Airbnb – Evolving from Rooms to Experiences, Places and Meet Ups

Airbnb has changed the way people travel. Instead of booking expensive hotels, travelers can book accommodation from local homeowners directly through the Airbnb platform at an affordable price. In this two-sided marketplace, Airbnb provides revenue generating opportunities for residents and cost saving opportunities for travelers. Airbnb benefits by charging a fee to both the homeowner and traveler. While the concept is simple, its widespread adoption was not. Homeowners feared that travelers may damage their property, and travelers wanted an accommodation that was good value for their money (i.e. location, amenities, cleanliness, price, etc.). In its operating model, Airbnb provides value to the marketplace by providing mechanisms for trust: transparency of information (i.e. reviews of homes, reviews of customers, pictures), free homeowners’ insurance to cover unlikely damages and a seamless booking process.

Airbnb continues to connect the world through the internet. Just yesterday, Thursday, November 17th, the company shared a vision of creating an immersive experience for travelers by connecting them to locals through its online network. Airbnb’s three new products include “Experiences,” “Places” and “Meet Ups.” “Experiences” include activities local to a particular region. For example, in Los Angeles, you could surf with a local, learn pottery with a local or embark on a motorcycle trip through the desert with a local. Airbnb’s “Places” product offers the chance to attend local venues with a local guide. Its “Meet Ups” product allows travelers to meet other travelers in the same area. Furthermore, Airbnb integrates its products into a single itinerary, so Airbnb can be your single app to book and plan your vacation (after it installs airline options). Airbnb is the perfect candidate to test the new products they introduced. They are taking advantage of the trust in their core business while encouraging travelers to use their new products.

The question is—how can Airbnb continue to use the internet/digitization to draw travelers? What are the drawbacks?

Drawing Travelers

  • Algorithms to lead to Discovery – Airbnb should incorporate algorithms to suggest activities after a traveler books a location. Currently, travelers are unaware of all the travel possibilities. Small villages in Kenya? Surf spots in Indonesia? Ice climbing in Norway? These unique opportunities take travelers a lot of time to find through traditional online research tools (i.e. Tripadvisor, Lonely Planet, etc.).
  • Video Technology to Inspire – Airbnb should incorporate 360 videos and pictures in its Experiences. Travelers need to be motivated. Pictures and videos of exotic destinations inspire travelers. On Airbnb’s platform, they can offer more videos (such as 360) and pictures (HD) and better descriptions to inspire travelers to embark on an adventure.
  • Book – Lastly, travelers need to book online. This can be achieved by greater payment transparency.
  • GPS to facilitate traveler meet-ups. Airbnb could use GPS location for travelers to know approximate whereabouts of each other in their “Meet Up” function. This is a huge boon, because when travelers are on vacation, they are much freer in their behaviors than when they’re in their home towns. For example, people on cruises often have a “boyfriend” or “girlfriend” for the duration of a cruise. It’s like a summer camp fling. People are like this while traveling, and it could be a popular “meet-up” feature.
  • AR & VR in travel. Airbnb could test AR & VR in bringing the outdoor and destination travel experience directly to people. While this may cannibalize its core business, it’s also a competitive threat in the future as AR & VR technology improves. By addressing all facets of technology today, Airbnb could prevent itself from being disrupted by new entrants.

Drawbacks of Digitization

  • Reality – Videos & picture do not equal reality. Sensationalized ads for trips could heighten expectations, and reality may fail to reach them.

The digital world has brought positive changes to the way we travel, and Airbnb continues to improve the way people connect with one another in new destinations.

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11 thoughts on “Airbnb – Evolving from Rooms to Experiences, Places and Meet Ups

  1. Great post, ATN. I think there is another opportunity where Airbnb could leverage its technology, and that is to help reduce regulatory and legal challenges that are currently threatening its business model (see here for quick description on legal challenges –https://www.theguardian.com/travel/2014/jul/08/airbnb-legal-troubles-what-are-the-issues). Airbnb, much like Uber, could provide the prices of its competitors if legislation was enacted to outlaw the company. By providing these prices alongside its own at the time of booking, Airbnb may help create grassroots political support that could strengthen the company’s ability to influence policy makers.

  2. Thanks for the interesting post! For the VR/AR part, as I also wrote this in my real estate agency post, I would like to push one step forward on the idea here. Actually, Airbnb can not only display the destination or outdoor scenery to its customers, but also provide VR/AR to customers to experiences the look and feeling of houses before they make the reservation. Though currently AR/VR is still not yet prevalent in most cities, the price keeps going down and would eventually become very common in everyone’s house. Hence, how to leverage AR/VR technology to attract people to book rooms and decide destination would be very important to increase customer stickiness.

  3. Thanks for sharing. I think Airbnb has in fact changed the way people travel. Like most collaborative consumption models their greatest challenge and success has been establishing trust on both sides of the marketplace. The question I have about their sustainability is not so much regulation, but how they maintain this trust and tackle customer service issues that can be extremely damaging to the brand. We’ve seen them have traveler and home-owner problems in the past, but I wonder if there is a breaking point where consumers no longer become comfortable allowing strangers into their home.

  4. Thank you for sharing ATN. The provides a lot of perspective on the business. Personally, Airbnb has created a massive impact in my life. However, adding to what Andrew mentioned, another challenge of sustainability and growth is expanding especially in countries where culturally such a rental model of inviting strangers in one’s home may not be acceptable. Sure, the technology may allow it to be possible, but the cultural hurdle, and especially immediate push back of the model in case of a mishap may prevent growth.

  5. One of the points of friction of the AirBnB process was handing off keys. Previously, hosts would meet the guests and hand them the keys and take the opportunity to go over some rules. However, AirBnB has started to make it easier for to operate their properties remotely. I have included the link for August Lock below. I have seen many AirBnB hosts use August Smart Lock in order to grant virtual keys to guests and track when they are coming and going from the property. This makes the transactions more seamless as guests simply use their phones as keys.

    http://august.com/products/august-smart-lock/

  6. I had no idea AirBnB was launching these initiatives, I’ll have to check them out! I think these new platforms can be expanded slightly to include an already key stakeholder in AirBnB: hosts. Many times in my travels, I have stayed at an AirBnB where the host was present or staying nearby. These more active hosts seem to be extremely proud of their city, often have some time on their hands because they are retired or have flexible schedules, and really relish the interaction with tourists. Perhaps AirBnB should open an additional category of products in which customers stay the night, but as part of their stay, the host becomes a kind of part-time tour guide who can arrange day trips or partial-day tours. AirBnB could generate additional fees from offering this type of “full-service” experience and not have to build significant amounts of new infrastructure to get it up and running.

  7. Interesting post Andrew! The sharing economy of AirBnB, Uber, etc. should drive a lot of efficiency in our economy as capital assets (i.e. cars, homes) are better utilized and middle-men are cut out. Online reviews at AirBnB, Yelp, TripAdvisor, etc. also hold businesses much more accountable, with benefits accruing to the consumer.

  8. Great post ATN! I totally agree with your suggestion on content discovery. One app which has been doing content discovery very well through a combinaison of machine learning and social recommendation is Houzz, the European architecture app – see: https://techcrunch.com/tag/houzz/). In a world where more and more places are accessible Airbnb could use data to recommend us what place to visit next based on our past behavior on the site (places we travelled, type of flats we booked etc.).

  9. Perhaps another algorithm that AirBnB could develop to add to its assault on the vacation industry is one that takes inputs from the variety of locations its guest users travel to, in addition to the new offerings the firm developed, and suggests completely new vacation locations as a result of the inputs it receives. Perhaps a user who booked a beer garden tour through AirBnB on their recent vacation to Munich and stay in a beautiful downtown AirBnB flat is indicative of someone who is into beer culture. Machine learning techniques could be used to parse through the entire network of AirBnB guests, find commonalities, and develop suggestions for that user based on the totality data. Currently, there is no single company that possesses the entirety of data about the vacations people take. Airlines see the travel destination. Hotel companies see the exact location where you stayed. Companies like Viator and TripAdvisor know the tours you take. If AirBnB could morph itself into the company that delivers all of these products in a package deal, the amount of data it would possess would be ripe for use to create the best possible vacation experience for its customers.

  10. Very interesting post ATN. Despite using AirBnb myself just this past week to book a house for a bachelor party, I was completely unaware of the three new initiatives that the company was launching. While I find these new initiatives to be interesting, I worry that the company is starting to move too far away from its core value proposition. It feels like these new initiatives are pushing the company towards traditional social activities that could be accessed through a local travel agency. Therefore, I struggle to see if these new products really expand AirBnb’s competitive advantage. Instead of focusing on new products, I think AirBnb should continue to improve its core product offering while improving on-going key issues such as customer discrimination.

  11. Very timely post given Airbnb recent announcement on expanding their offerings. I think that Airbnb’s desire to become a wholistic travel and experience company (rather than just accommodations) will be achieved by their new ventures. I also really like the suggestions that you provide for Airbnb on how it can continue to use digitization to impact the travel experience. One other potential drawback that I see is concerns with privacy. For the same reason it took consumers a while to adopt Airbnb, I wonder if consumers are ready to begin sharing their locations via GPS with people they just met.

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