How Airbnb measures listing lifetime value

https://medium.com/airbnb-engineering/how-airbnb-measures-listing-lifetime-value-a603bf05142c

by benocodes • 1 year ago

96 118 1 year ago

medium.com

epolanski• 1 year ago

Why do they publish blogposts on such a lame paywalled website though...

josefritzishere• 1 year ago

Seems pretty consistent with their revenue model.

tomhow• 1 year ago

Is this post paywalled for you?

Or is there just a signup/login banner that you can dismiss?

If there's a paywall we'll pin a workaround at the top.

SSLy• 1 year ago

My User Agent goes around the paywall easily.

JohnScolaro• 1 year ago

I was wondering that too!

Surely Airbnb - a company that runs a website - has the capability to put a text post on their own website. Then they'd own the content, and people looking for it could find it easier? It's not a revolutionary concept either, Facebook has one:

https://engineering.fb.com/

Wait, Airbnb already has one?

https://airbnb.io/

Genuinely confusing.

echelon• 1 year ago

Why

Distribution.

The reason for this blog post is "recruit engineers". Not every engineer is going to visit blog.airbnb.com, but presumably a lot of them are already on Medium.

They even close the article with,

We continue to solve interesting problems around LTV every day (and as more insights come up, we’ll keep sharing them on our blog). Can you see yourself making an impact here? If so, we encourage you to explore the open roles on our team.

These blogs are always about recruiting.

esafak• 1 year ago

I would have liked more discussion on handling uncertainty; how big is it, how well calibrated is it, how are they approaching variance reduction, how do they reduce the predictive distribution into decisions, etc. And no discussion of causal inference in the marketing section.

maxrmk4• 1 year ago

I feel like this is missing a really important factor: how likely are guests to use airbnb again after staying at a listing?

A listing could look great online and receive a lot of bookings (so high LTV), but ultimately drive users away from the platform.

A certain ad platform I worked on cared a lot about this - offensive ads could get you to quit the site altogether. You might want to count every ad as positive for the company since you make money, but some might actually be negative expected value! As a side note, I think this is a really undermeasured problem. There are many sites I won't use because the ads are so overwhelming or are often offensive.

MajimasEyepatch• 1 year ago

In the case of Airbnb, wouldn't that show up in the listing's reviews, requests for refunds, etc. and ultimately drive down the listing's LTV? Nobody leaves reviews on an ad, and I imagine that very few users report inappropriate ads, so you can only measure that indirectly. But if somebody books an Airbnb and has a bad experience, they are much more likely to give you direct feedback about it.

maxrmk4• 1 year ago

I think it could show up in those other places, but probably isn't fully captured?

Imagine an airbnb that's great for most guests but absolutely terrible for 1 in every 5, so bad that they quit airbnb. Maybe it's next to a music venue, so every once in a while it's very loud.

It's possible it could maintain a decent average star rating and LTV as described in the article but actually have negative (real) lifetime value for airbnb if the 1 in five that they lose would have spent a lot of money on the platform otherwise.

Nextgrid• 1 year ago

Bad reviews are often moderated away and refund requests are stonewalled (and few people know about chargebacks so that isn't factored in). It is easier for the platform to acquire guests than hosts, so the platform takes the side of hosts.

Edit: at least that was the situation a couple of years ago. A host below now reports that the situation has changed and they take the side of the guests; however, either way it's open to abuse no matter which side they take.

The issue is that in a marketplace where both sides can be dishonest, the only way to ensure quality is to do spot checks by trusted actors (aka company employees) where the penalties for failing such a check are dissuasive enough that it becomes more profitable to play by the rules.

This is similar to how law enforcement is supposed to operate - the reason the penalty for theft (for example) is more than merely returning the stolen items is that since law enforcement can't observe everyone all at once, the penalty needs to be enough of a deterrent to make the bad behavior unprofitable overall, to discourage it even in cases where law enforcement isn't there to witness it and enforce said law.

lurk22• 1 year ago

I had this experience years ago. The first place I ever rented in had Wi-Fi that didn’t work and after about a week the water stopped working. I cancelled my booking through support and the owner called me 3 or 4 times on WhatsApp and then left me a bad review. The second place had a shower that didn’t drain and the washing machine flooded the apartment one evening. The third place had black mold growing out of the kitchen ceiling. I tried to get them to waive the cleaning fee over it, but the owner claimed he had told me about it already and refused to do anything. When I left, he told me he had written me a good review and expected one in return. I pointed out that he had done nothing to remedy the mold issue and then posted my own review, and found that in his review he had accused me of bringing prostitutes and drugs into the apartment (which I did not).

It was nominally cheaper to travel this way, but for my next trip I’ll be staying in hotels.

bombcar2• 1 year ago

This is how things like Airbnb (and ebay) die - the hosts and sellers know all the tricks and so the buyers just leave; it’s not worth the hassle.

munro• 1 year ago

No model is perfect, but some are useful. Their "baseline LTV" looks at the sum of listings on their platform (plus other features), then tries to forecast the next 365 days — so this should indirectly capture people coming and going. I think their cannibalization model is quite clever as well.

Going deeper with modeling users might yield some tighter estimates, but I imagine this gets estimates far closer than some simple accounting formula, and likely helpful for budgeting a year out — but it would have been nice to have seen some performance metrics.

mmasu• 1 year ago

I also think the cannibalization model is clever. The baseline model is however a bit underwhelming, as bookings can be misleading by themselves - you have cancellations, impressions, and so forth. For example if you only look at bookings in next 365 days, new listings will be penalized. But as you said no model is perfect :-)

avidiax• 1 year ago

A listing could look great online and receive a lot of bookings (so high LTV), but ultimately drive users away from the platform.

I am precisely this kind of churned customer. I have personally booked maybe 3 AirBNB stays, and stayed with family in them on other occasions. The units I pick are always well-reviewed.

But in the cities I've stayed in (LA, SF, Rome), the price is really no cheaper than a hotel, and the quality is extremely variable. You have to really carefully read those 5-star guest reviews to read between the lines.

And you feel pressured not to leave a negative review, as that would negatively impact your ability to book in the future, since the hosts (I have heard) can see your average review score.

My impression has been that AirBNB's customers are actually the hosts. You, the guest, are an expendable commodity. You will use AirBNB until you have a severe enough problem, and experience them siding with the host over you. Then you'll be churned permanently, and by force if you do a chargeback.

If I were going to disrupt AirBNB, I'd offer hosts a better percentage with the requirement that the experience is standardized and high-quality. There would be an in-unit noise & vibration sensor, reporting directly in the app. 24 hour check-in and check-out. A minimum set of amenities, minimum WiFi speed. The bedding would be standard. Cleaning fee standard. Every unit subject to a surprise multi-point inspection at least once per year. Essentially, make it no worse than an average hotel, and maybe some units as good or better than high end hotels.

secabeen6• 1 year ago

If I were going to disrupt AirBNB, I'd offer hosts a better percentage with the requirement that the experience is standardized and high-quality.

This is an interesting idea, but it puts the quality level way above what I want to pay for. Hotels are anti-septic and cold. I like staying in an apartment that feels like someone actually lives there. I don't mind a few dust-bunnies under the couch, nor a little dirt behind the toilet. It's even better when the kitchen is fully stocked, including a selection of non-perishable food (think cooking oil, salt, pepper, maybe a bag of ground coffee and a box of pasta.) Sure, the sheets and towels should be freshly laundered, but beyond that, I don't want much.

AirBNB allowed me to pay less to get a more human-feeling space. Hotels are like McDonalds, they are designed for the regular customer who wants to get that Hilton-feeling, regardless of if they are in Wichita or Cairo. I want to feel like I'm in Cairo, and if that means that I'm in a mud brick house with a single bathroom, no A/C, and no daily housekeeping that's great! AirBNB opened those worlds to us as travelers, in a way that hotel chains never did.

listenallyall2• 1 year ago

My impression has been that AirBNB's customers are actually the hosts

Yes for sure. Avg # of transactions per host dwarfs avg # of transactions per guest. Same with revenue. A frustrated host who pulls a unit (often, multiple units) off the platform is much more detrimental than an individual customer leaving the platform.

gruez• 1 year ago

And you feel pressured not to leave a negative review, as that would negatively impact your ability to book in the future, since the hosts (I have heard) can see your average review score.

Source?

I did a quick search and couldn't find anything to confirm this. Various airbnb screenshots geared towards hosts also don't show anything about guests' average rating.[1]

[1] https://www.airbnb.co.za/resources/hosting-homes/a/know-more...

BrenBarn2• 1 year ago

If I were going to disrupt AirBNB, I'd offer hosts a better percentage with the requirement that the experience is standardized and high-quality.

I've noticed more and more apartment rentals appearing on booking.com. I haven't used any of them but I wonder what the tradeoffs are. My impression is overall booking.com is more guest-friendly as their userbase has grown from people staying at hotels, who expect stuff like being able to cancel and complain about cleanliness.

renewiltord• 1 year ago

Many people try this. I think Sonder was most recent but they pivoted. Blueground will do corporate apartments short term. I think these aren’t effective against Airbnb customers tbh. It’s not a perfect platform but the others are not as good because availability is key.

scarface_744• 1 year ago

If you want standardized professional places to stay while you travel, why not just stay in a hotel? When I go to a hotel (and we travel a lot), I know I’m getting a standard level of service and if not - especially with a chain hotel like one franchised by Hyatt, Hilton, Marriott etc - I can complain to someone at corporate and get a refund and book somewhere else, usually it doesn’t even tags that. Just talk to the front desk. They don’t care if you get a refund - it’s not their money.

Airbnb “hosts” treat it like their “home” and are emotionally invested in what should be a business transaction.

This isn’t to mention how many hosts are running an illegal AirBnb.

mrweiner2• 1 year ago

My impression has been that AirBNB's customers are actually the hosts.

Fwiw, I listened to an interview with Brian a couple of years back where he said that, internally and strategically, they call hosts “partners” and guests “customers.” Which makes sense to me.

listenallyall2• 1 year ago

Good point and it affects far more than just Airbnb. I'm sure some companies internal ROI for app notifications is universally positive... but when you send me 10 app notifications a week for a product or service I only purchase occasionally, I'm uninstalling the app. Obviously I'm in the minority because the app still has millions of users but hopefully others have turned notifications off.

maxrmk4• 1 year ago

Yeah I think about this model weirdly often.

eastbound• 1 year ago

I basically uninstall all apps between two uses of them: Uber, AirBnb. Even the bank, I have a problem with the mandatory confirmation-on-phone for the yearly stock options plan I use. Wouldn’t want a thieve to see that app.

BrenBarn2• 1 year ago

An interesting distinction is between staying at a listing vs booking it. I booked an AirBnB in Texas for the eclipse last year. The booking was made months ahead of time. Minutes before I left for the airport, the host canceled with no communication and didn't respond to messages. I got a refund, but I wasn't able to leave a review because the stay hadn't begun.

I had only used AirBnB once or twice before and was leery of it, but after this experience I'm unlikely to use it again. The inability to review the host in such a situation is pretty much a dealbreaker. (Note that I want to review the host --- not the property, but the person who decided to cancel the booking at the last minute.)

Winsaucerer• 1 year ago

We had an experience not as bad as that, but cancelling on us a week or two before we were due to fly (and had booked everything else). They wanted US to cancel, but I saw no advantage to us in doing so. I assume it was to maintain some reputation on their side. We declined.

j4coh• 1 year ago

AirBnBs are as expensive as hotels now, except you have to clean it yourself and deal with an often insane host and their random rules. I am back to hotels and resorts all the time now, you at least know what you’re going to get.

scarface_744• 1 year ago

There are many sites I won't use because the ads are so overwhelming or are often offensive.

I hate to sound like the “Do people still watch TV? I haven’t owned a TV in 20 years.” Guy. But why are you seeing ads on the web? Don’t you use an ad blocker?

maxrmk4• 1 year ago

I used to use one but when I started working on ads it felt hypocritical. I want to support the sites that I use, especially those that don't paywall content. I don't work on ads anymore but have stuck with it.

kreyenborgi2• 1 year ago

Man I'm so sick of trying to find something on Airbnb only to discover by the time I order that the price has doubled.

Airbnb these last years went from feeling fresh and adventurous to scammy and dubious

ceejayoz• 1 year ago

Use the .com.au variant to find listings, as Australian law requires they list the full price, inclusive of tax and fees.

nickjantz• 1 year ago

Meh, they're just complaining because it's cool to whine about AirBNB online these days, US based AirBNB has had this feature for quite awhile now.

thundergolfer• 1 year ago

In New York the website recently updated to do this, presumably because they were forced to. They had a whole banner announcing it.

I'm Australian and moved to New York recently-ish. It was one of those classic anti-consumer disappointments one experiences moving to the states. Glad they fixed it.

kreyenborgi2• 1 year ago

That's one thing, annoying but possible to work with.

What I'm talking about is Dynamic Pricing. Had to look up what really happens: The host sets a rate-range, and Airbnb first gives the low price and then as you click around in the area they notice you're more interested so they increase it towards the high end of the price range (possibly also time of day and such signals?). Then I guess there's a slow cooldown.

Like how a good haggle is made to give you a friendly relationship with the seller, this seems specifically designed to make people hate Airbnb and swear to never use it again.

sabellito4• 1 year ago

Use booking.com, better in every way and customer support that won't stonewall you.

92834092323• 1 year ago

Booking.com is awful. Anyone can make a listing on Booking.com for places that don't exist. Airbnb at least makes an effort to verify the building is real.

hankchinaski• 1 year ago

Booking is a total scam fake photos fake listings fake reviews

AndyMcConachie• 1 year ago

People are getting downvoted for criticizing booking.com. They're a shit company and everyone who works in tech in The Netherlands knows it.

philipwhiuk3• 1 year ago

Worse is when your booking is confirmed but then cancelled a week before you go, at which point all the prices are much higher

sabellito4• 1 year ago

Insane that they allow that. Maybe it's an option the host can set on the listing?

Booking, as far as I know, straight up doesn't allow hosts to cancel. Recently, a host sent me a message begging me to cancel my booking because they really couldn't be there to receive me.

chris1993• 1 year ago

Airbnb hosts are penalised if they cancel - they get downrated - so it's not something that hosts generally want to do. Far better if they can persuade a guest to cancel

123pie123• 1 year ago

It was sometime ago (2018), but my host cancelled with 3hours to go

I will never use AirBnB again

aprilthird2021• 1 year ago

Honestly, ABNB was good till the enshittification became too much. A traditional hotel is almost always better except in a few unique circumstances.

huevosabio4• 1 year ago

Mega-tangent: As a host, I feel compelled to rant about Airbnb whenever they come up in a discussion.

The last 2 years they have _really_ moved to squeeze the hosts. The customer service has been demolished and they seem to have taken a stance of "the guest is always right". I've spent countless hours going through their customer service as a super host, so I know I have a decent amount of anecdata.

My suspicion is that they found themselves with more supply than demand, so they are "improving the guest experience" at the expense of the hosts. Since they are a quasi-monopoly (depends on the market) it makes sense for them to prune supply in exchange for better guest experience, a full market approach makes less sense since they make money in proportion to the total amount of money transacted (which as a monopoly it can optimize for in the way a free market can't).

But I think this will blowback sooner or later. The biggest value for an Airbnb guest is the review system that allows you to have some degree of certainty of what you are getting. The biggest value for a host is the massive global audience. But guests and hosts, pay a steep fee (17%!) for this. For well-reviewed, long-living stays (like mine :)), paying 17% is way too much to access this audience: the listing already has an online record that provides that quality assurance for the guest, and the host could spend that money on advertising.

So that's what many of us are doing, moving to PMS + paid advertising / SEO to diversify on distribution channels. I think there's an opportunity for capturing that semi-pro host market and bundling them in a similar offering that 1) doesn't squeeze them, 2) offers a proper PMS software, and 3) charges a flat fee instead of a variable rate.

barbazoo• 1 year ago

paying 17% is way too much

Have you considered increasing the cleaning fee to recoup some of that money? /s

jeofken• 1 year ago

PMS as in Pantone Matching System or Premenstrual Syndrome?

AirBNB can be equally frustrating for users as well. Recently ended up at night in a new city in northern Japan where the host told me the listing was at a different address, where I found nothing, and got only radio silence from the host. Every hotel room in town was occupied that night. Airbnb support, seemingly in far away India, told me to try contacting the host, and that was that.

Also recently stayed at a place with a dog that shat inside due to the owner not taking them out; due to politeness no one had complained in the reviews.

Also Airbnb lists one price but when booking it always ends up being way more with more fees added.

I’m using hotels.com with a filter for “has kitchen” these days, which was the only reason I used Airbnb in the first place

appreciatorBus4• 1 year ago

PMS - Property Management System, aka what actual hotels use to manage room inventory, bookings, etc.

IMO most of the things that people like about AirBnB vs hotels is downstream of the failed experiment of urban planning. If we want hotel operators willing to "spend" floorspace on kitchens and other niceties, then legal floorspace can't be scarce or special, but most of the current planning regime is oriented around enforcing limits on floorspace. Ditto for having options of places to stay that aren't tourist traps or commercial areas.

huevosabio4• 1 year ago

PMS as property managements software :).

And yes, I use Airbnb as a guest as well, but I gauge the risk of having a bad host into the decision making.

We also get all type of horror stories from guests that had a bad experience and found themselves trying to find a last minute place to stay.

The problem is that the Airbnb app heavily disincentivizes "professionalization". They have a small cartel of PMS providers that can actually hit their API. I can't build my own systems on top of their API, I have to go through a middle man or use the their crappy app.

Their app is so incredibly obtuse that it puzzles me how people shower Airbnb as a "great product design company". It's a beautiful app sure, but incredibly clunky. It's like a call center phone menu made into an art piece.

mtlynch• 1 year ago

So that's what many of us are doing, moving to PMS + paid advertising / SEO

For those of us not in this space, what does PMS mean?

lurk22• 1 year ago

Property Management Systems (PMS) or Hotel Operating System (HOS), under business, terms may be used in real estate, manufacturing, logistics, intellectual property, government, or hospitality accommodation management. They are computerized systems that facilitate the management of properties, personal property, equipment, including maintenance, legalities and personnel all through a single piece of software.

gsempe• 1 year ago

PMS as Property Management System

92834092323• 1 year ago

I would love to not use Airbnb as a consumer but there is no real alternative here. I hear a lot of people say that Airbnb is just as expensive as hotels but I just don't see it. I'm looking at traveling and a hotel in the area is $900 to $1200 while Airbnbs are $500 to $800.

carlosjobim2• 1 year ago

You are yourself in the business of squeezing, so any company that will be willing to deal with you will have the aim to squeeze you.

gregorymichael• 1 year ago

AirBnB and Uber both have a dynamic where the host/driver has often taken out a loan and modified their lifestyle to depend on this income, which makes them the easier party to squeeze.

bickfordb• 1 year ago

I have a smalltime Airbnb and I feel the same. Their only value is in their marketing distribution and they take 30%+. Their hosting tools could be worse but are not particularly great. Usually things work fine, but they have zero / hostile customer service on the host side on the random exceptional occurence. Hopefully more marketplaces show up

hintklb6• 1 year ago

Surprised to hear this because I had a very weird experience on my last stay. (and it will always be last as I will never stay at an Airbnb again).

Airbnb sided with the Host for some fabricated damages because the host was mad we told them the place was unclean. They put the burden of proof on us to prove we didn't destroy one of the sinks. Absolutely ridiculous.

We had to fight it for 3+ hours on the phone and message and start a chargeback and only then did support drop the fabricated charge.

And to top all of this, Airbnb deleted our bad review from that place (but left the review of the host).

So, never, absolutely never again. Too bad because I was spending 2k+$ on Airbnb before that incident and only got great reviews from other hosts.

doctorpangloss• 1 year ago

This isn't an LTV model, it's a regression model. Is it even good? Doesn't seem so.

Maybe their folks need to punch "LTV" into Google Scholar.

And also, is it even actionable?

For example, suppose we run a marketing campaign that provides hosts with tips on how to successfully improve their listings

Right guys. “Marketing-induced incremental LTV” indeed.

mrweiner2• 1 year ago

Yeah I thought the same thing. LTV defined as value over the next 365 days…so…not LTV at all?

cityzen• 1 year ago

Stopped reading at, “At Airbnb, we always strive to provide our community with the best experience.”

game_the0ry• 1 year ago

I wonder if you could use the same methodology to value potential investments in short term rentals.

iambateman2• 1 year ago

Airbnb’s original promise was magical, thrilling, interesting - get to stay in unusual places that are full of charm and possibility.

But that promise was broken for me when Commaleta played back the video of her front door camera and counted that we had 10 people walk in her door, not eight. She proceeded to accuse us of throwing a party, when we absolutely did not, and tried to charge us $1000 extra dollars.

At that point, I decided that Airbnb’s hosts were too much of a wildcard in most travel situations.

By the way, the story above is from 10 years ago and I will never forget her name for the rest of my life…she turned what should’ve been a relaxing, beautiful week into a miserable arbitration process. It’s hard for ABNB to succeed long term when one experience like that can ruin everything.

gameshot911• 1 year ago

Were 10 people in fact staying when the listing max was 8?

iambateman2• 1 year ago

No, a couple friends who lived in town stopped by for an hour.

mrgoldenbrown• 1 year ago

Many hosts consider anyone entering the unit , even just for lunch or dinner, to count against the listing "max", and accuse you of having a party. and some are quite big brotherish about monitoring.

hintklb6• 1 year ago

had the same experience with a wildcard host that went absolutely full lying during our stay just because we told her that the place was not really clean.

She went full damage on us as a revenge. Trying to charge us 2000$ for fabricated damage. Airbnb Support tried to stand on her side asking us if we "had proof we didn't do it". I was on holiday. I didn't think about taking every single object in high definition picture.

We had to spend 3+ hours on the phone and by message to have Airbnb "drop" that 2000$ charge.

Never again. Not worth the time. Airbnb is great when it goes well. But you have too many bad hosts that ruin it for everyone. And when it goes bad it goes really bad.

vasco• 1 year ago

A deep dive on the framework that lets us identify the most valuable listings for our guests.

An opening article lie! For our hosts would be much more appropriate. Why does a guest care about how many nights a place is going to sell in the next few months?

This assumes value for guests is how much money the property they stay at makes, when it obviously isn't that.

hintklb6• 1 year ago

My advice to everyone is to never book an Airbnb if you value your time and sanity.

After a couple OK stays I had an absolutely horrible experience. The place was super dirty and the shower was clogged. The hosts tried to play nice and made us stay even though they didn't do the cleaning (Our fault I guess but when you are tired and already there you just want to move on and forget about the incident).

After the stay they became dishonest and lied to Support, tried to make us pay more. Support sided with the Host and even deleted our bad review of the place.

And the final nail in the coffin is that by deleting our bad review the host was able to get to Superhost status.

That stay destroyed our holidays. We then had to spend multiple hours on the phone and by message with support to defend ourselves. Ultimately they manage to leave a misleading review for us that we couldn't delete and Airbnb deleted our review of them.

It was already overpriced but once you account for the time lost when something goes wrong there is absolutely no point to book an Airbnb ever again.

Stay with professional in hotels. Your future you will thank you.

How Airbnb measures listing lifetime value

Related Stories