Many startups make the mistake of scaling too quickly, without getting the foundations right first - and despite its success, Airbnb is no different.
“Our system was designed for a much smaller company which grew like crazy,” its CEO Brian Chesky, who co-founded the home rental platform in 2008, recently admitted.
Indeed from the outside, the rental giant looks like it's thriving: It has just bounced back from the pandemic low of losing 80% of its business in eight weeks in 2020 to experiencing one of the most successful IPOs in history.
But it has been plagued by mounting complaints from its users—both hosts and holidaymakers alike—some of which were compiled in a particularly damaging report from The Bear Cave substack earlier this year.
At the core of the issue is that guests feel like they can get a better (and cheaper) experience at a hotel than in someone's spare room, yet hosts, of course, want to earn more money.
What’s more, despite the company being founded by designers, it hadn’t quite nailed its platform.
“We need to get our house in order,” Chesky said in a recent interview with Bloomberg. “We need to make sure the listings are great, we’re providing great customer service and we’re affordable. And I’ve told our team that we can get back to creating new and exciting things once we’ve fixed that foundation.”
It’s why over the last few years, the property marketplace’s chief and his 6,800-strong workforce have been retrospectively pushing out small fixes to work around the lack of foresight the team had before its meteoric rise to success.
“To use a precise metaphor, it’s kind of like we never fully built the foundation. Like, we had a house and it had four pillars when we needed to have 10,” Chesky said.
But retrofitting a house of Airbnb’s sheer scale is no easy feat. “The bigger you are, the more effort it takes to increase quality,” he added. “And that’s what we’ve been really focused on.”
A patch-up job
With over 50 small updates on Airbnb in May this year, followed by five more recently and further upgrades expected in November, Chesky described 2024 as “the year of perfecting our core service”.
By analyzing tens of millions of customer service complaints and around 15,000 social media posts, Airbnb was able to create a “hit list” of improvements that needed to be made on Airbnb, including more transparent pricing.
For example, historically Airbnb added cleaning fees and taxes onto the price once you get to the final checkout screen. It meant that hosts could list their property at a really competitive price to lure guests—and hide exhorbitant cleaning fees until the very last moment.
Now, the price of the space up for rent on the map will include all fees.
Moreover, Airbnb’s new listing verification system can identify and remove fake listings, and its search functionality has been improved with new filters for king-size beds and pet-friendly homes.
Even though Chesky acknowledged that many of these improvements have actually been patch-up jobs over deep cracks in Airbnb’s foundation, he’s optimistic that the makeover should fix some of the company’s lingering problems all the same.
“Hopefully by next travel season it’ll be a materially better service,” he said, looking ahead to next summer. “And then you’re gonna start to see many new things from Airbnb.”
Chesky’s advice for hosts
While much of Airbnb’s overhaul has been focused on the customer journey, Chesky did have some words of wisdom for hosts looking to make more money: Lower your prices.
“A lot of people were introduced to our service from a pricing standpoint,” he said. “The more affordable Airbnbs are, the more bookings we get.”
As one X user pointed out earlier this year, on the platform formerly known as Twitter, hotels don’t make you do chores and there’s a good chance there will be a bar on site.
here is the thing about hotels: they don’t
— b-boy bouiebaisse (@jbouie) April 5, 2023
make you do chores, the pricing is predictable, and there a good chance there will be a bar on site. https://t.co/NAf8vilmzc
This is something that profit-hungry hosts might be advised to keep in mind when charging guests a premium to make their own beds and take out the trash.
"We want prices to move and to be more competitive vis-à-vis a hotels—that is really important,” Chesky said, adding that he encourages hosts to look at the going rate for hotels in their area “so they have a sense of what travelers are getting on other platforms.”
“When our hosts provide better deals, they tend to make more money,” he added.
