Seeing extended family during the last 2 years has been difficult and like many people, we decided a summer holiday is essential for some much needed time together. With an extended family of 16 it’s going to be fun. We searched high and low for a villa abroad, and did what most people do - we looked at Airbnb. Excited with the place we’d chosen and ready to get the wallets out, we were met with the £7500 cost for the week. My sister managed to make us hold off, and when she came back to us with the same villa for £1000 less, well we were all a little confused. Behold; the Airbnb ‘service fee’.
Why is this a problem for Airbnb? Because it wasn’t me who did this research. It wasn’t someone with 20 years in the tourism industry and knowledge of relevant sites and hacks. It was someone intelligent, yes, but time-poor and travel knowledge lacking. Fundamentally, she knew there was a better price to be found, and she’s not the only one. There’s a generation of travellers who are beginning to do the same. There are two reasons Airbnb needs to change.
A Precarious Business Model
Airbnb should benefit two camps of people: customers and hosts. Yet, it continues to do just the opposite as customers lose out on £1000 for the same holiday, and hosts are £1k more expensive than they were even aware of. The only winner is Airbnb. A precarious business model. Some may argue that the intuitive and efficient interface Airbnb has created is a real advantage to the way customers discover properties. Does that mean £1000 is appropriate for a better search experience? Clearly, not to those who are willing to do a little more digging. Dark horses with a similar interface like Vrbo now provide an equally effective interface and user experience, diluting Airbnbs unique selling point.
Why did it go wrong?
Airbnb deserves their praise. They single-handedly created a marketplace of incredible value to both customers and hosts, in which consumers can find appropriate and cheap accommodation, and anyone with a property can become a host by turning themselves into a holiday rental. There’s every chance Airbnb never intentionally adopted this high priced commercial position; they just haven’t adapted to their expansion yet.When we go back to the beginning, Airbnb took a percentage that benefited the transaction. A 15% take on £50 or £60 is relatively small, meaning they were born as a high percentage, high volume model. But when they grew and incorporated high-value properties, their high transaction percentages no longer fit an established marketplace. They never adjusted.
A 15% booking fee in a firmly established marketplace is a bitter pill to swallow for all site users and will cause a backlash. Both consumers and hosts will begin searching for more economical platforms and booking direct where possible.
Two choices
It’s not just Airbnb that will fall into this trap. Placing commercial models that apply to a new marketplace, to an established one where the marketplace has matured, will cause a revolt. Both competitors and customers will look elsewhere, and the boycott begins. The way I see it, Airbnb has two choices. First, reduce fees for established markets, and show that you can offer your unique service at fair value. Or adapt. Give a reason to pay your higher fees and break new ground in the same way you did, to begin with.
Addendum
Alas, our booking fell through. It wasn’t either site’s fault in the end as the host changed their requirements, c’est la vie, but we did find another villa on Airbnb for a similar price. Did we use them to book? Of course not. We found it £1k cheaper on Vrbo. See you in the summer, Catalunya.
