Created in 2008 by two designers with no professional hospitality knowledge Airbnb has become a phenomenon valued at $30 billion USD and a relevant player in the accommodation industry. In this post, however, I want to look at how Airbnb over the past years has implemented the ingredients required for what I believe will be their next big step. A new feature which they will unveil at this years Airbnb Open Conference that will transform them from being an alternative accommodation company to becoming a travel company.
“If you look at disruption in the hospitality industry. There is a common lifecycle. It was typically started by pioneers. At first the industry ignored it, then ridiculed it and then fought it.”
Chip Conley, Airbnb Global Head of Hospitality & Strategy
Everything changed when Chip Conley joins Airbnb
In early 2013 Chip Conely got a call from Airbnb Co-Founder and CEO Brian Chesky. Conely founded the Joie de Vivre hotel brand consisting of 52 boutique hotels at the age of 26. The phone call started out in an interesting way as Conely was a self-proclaimed technophobe and did not know what exactly Airbnb was. Chesky explained it to him and asked him “to become the founder’s mentor and help the company from being a tech company to also a hospitality company.” Conley like the concept of democratizing hospitality and agreed to join. In September 2013 it was announced that Conley would join Airbnb as Head of Hospitality. Conley went to work right away and was instrumental in transforming Airbnb.
Step 1: Defining and delivering hospitality standard
When Conley joined, Airbnb did not have a definition of a minimal standard for what they expected from their hosts. Back then an experience at Airbnb was known to be a hit or miss game. Guests could have the best experience ever. Other guests would find themselves in an apartment which didn’t look anything like in the pictures or the description.
Conley went on to defining hospitality standards on which the hosts would be evaluated against. This was something very common in the hotel industry but very new to Airbnb.
Step 2: Revamping the review system and cleaning house
Conleys believed that the feedback loop between guests and hotels was inherently broken. “Maybe only 2 to 10 percent give us (hotels) feedback (…)” This was a strength of Airbnb. As the next step, Conleys and the Airbnb team set out to improve the rating system. The success is undisputable, as Conley states that today “70 to 75 percent of Airbnb hosts and guests review one another within 14 days”. This didn’t mean that the quality of reviews improved right away. But Airbnb was now in a much better position to understand how well hosts implemented Airbnb’s standards. As a direct consequence of this, they started to ban hosts that did not deliver the minimum level of quality they required. Something that might run counterintuitive to an internet company and platform which makes money off every transaction and should, therefore, look to maximize quality. This was a clear statement and commitment towards quality.
Step 3: The rise of Superhosts
With their standards determined, with the working measurement system (the guest reviews) in place and a quality control at the lower end (kicking out of bad hosts) Airbnb moved to improve the overall level of guest satisfaction. Just one year after Conley joined, Airbnb introduced the Superhost badge (actually it was launched in 2009 and put on hiatus because they lacked the minimum standards). The Superhost badge acts as a certification for hosts who consistently deliver on the standards set by Airbnb and reach a high number of 5-star ratings. Airbnb reworked their listing algorithm to show listings of Superhosts higher in the search results, which in turn would generate much higher bookings and revenue for the hosts. This resulted in “Airbnb guest satisfaction survey, based on a net promoter score used by the hotel industry, to be 50 percent higher than the hotel industry.”
Step 4: The Airbnb Open – Create a community of Superhosts
In 2014 Airbnb decided in to host the first Airbnb Open in San Francisco in November 2014. Reading through the invitation written by Chip Conley it becomes very clear that the goal of this event was to facilitate the learning between the Superhosts. 1’500 people showed up, ⅓ from outside the US. 2015 the Airbnb Open was held in Paris. Besides an expecting a much larger turnout 6’000 the interesting part in the invitation was the slight shift in focus of the conference to “gather in one place and connect”.
Airbnb’s “One more thing” moment
It seems as Airbnb will try to create their own “One more thing” moment, something Apple conferences were famous for when Steve Jobs was still alive. A lot is pointing towards Airbnb announcing their next feature this month at their Airbnb Open will take place in LA. If the rumors are correct Airbnb will announce that they will start offering customized guided experiences/trips to Airbnb clients at scale. Most likely named “Magical Trips”.
Airbnb first got my attention when in the very last part of an interview with the wallpaper magazine. Chesky noted “Right now, we’re the Airbnb for homes. But what if we were the Airbnb for trips? What would that look like?” This was an interesting idea and I thought about hosts creating their own trips which other people could join. During the Skift Forum, this September Conley hinted at a new feature which will be giving Airbnb guests “more and more opportunity to connect”. The newest Skift Podcast provided a background talk with Conley which provided additional insight. Conley is speaking how Airbnb in the future will be seen more as a travel company. A Skift editor then shared information about a sneak peek into some pilot tests Airbnb has done in Japan and the US.
Magical Trips would launch Airbnb into a different category
Thinking about Airbnb offering trips it feels like Airbnb has a lot already in place. They have:
- An effective distribution channel with a very successful and frequently used app and their website
- A payment gateway with credit cards of millions of users on file
- Data on their client’s psychographics, interests, hobbies through access to Facebook profiles
- As they are a data driven company they have the actual talent to generate insights on this data and offer clients the right trip based on those insights
- They have a huge client base looking to “travel like a local”, which is their value proposition
However, organizing trips at a large scale would require an army of local tour guides. They could cooperate with local guide companies but to get the scale and quality right would be a challenge and the trips would probably look like the boring tours we all know and dread. “No, I don’t want to see the London eye for the 3rd time!”
If only they had access to a large number people with proven hospitality skills, ideally with trusted 3rd party references… and this is where the Superhosts come in. Over the past years Airbnb identified and trained Superhosts and they connected with them in person on their Airbnb Open events. That Superhost has shown a talent for delivering outstanding guest experiences. Chances are this person is already a local hero. Airbnb, therefore, has everything they need to implement this new feature. The Superhost probably even provide them with ideas on tours. As examples of trips Airbnb has tested Skift mentions a ramen making class in Tokyo (Wink: Japan has the highest ratio of superhosts), hang out with life coaches in London or a take a graffiti tour in Miami.
These trips will provide additional revenues to the Superhosts increasing their loyalty to Airbnb and offer unique experiences to its guests. In addition, this will open up an additional revenue stream for Airbnb, raise their share of the traveler’s wallet and add to Airbnb’s value proposition. In fact, having a concierge which helps guests out with setting up trips, e.g. a trip to the London eye, is consistently named by hoteliers as one of the advantages of the incumbents over Airbnb.
Great people make the difference
Recognizing that Airbnb had a great concept but needed to deliver a better experience for its clients was a very accurate analysis of Chesky and his team. Identifying and convincing Conley seemed to be a stroke of genius. Under his leadership (Conley’s title has since changed to Head of Hospitality & Strategy) Airbnb has changed its perception to a viable alternative accommodation to hotels. Adding “Magical Trips” is a brilliant example of delivering on their value proposition while keeping the operations lean and leveraging their platform and network of hosts. This will not only take one argument against Airbnb away (I’m sure hoteliers will find others) but most likely will create great stories which people will be more interested in listening to back home. Definitely more interesting than that tour to the London Eye.