Merchant Innovation

Airbnb Modifies Its Pricing Model

It looks like Airbnb is planning a move to variable pricing.

The move comes as the hotel industry disrupting startup is facing competition from well-established travel players muscling in on its action. Expedia dropped $3.9 billion to grab rival firm HomeAway, while Priceline has moved into the vertical with Booking.com. It may not have Airbnb’s cache, but it has more than triple the number of non-hotel listings as Airbnb.

“The nature of the competition has changed,” says Nate Blecharczyk, Airbnb’s cofounder and chief technology officer.

“Our demand has grown slightly faster than our supply,” says Chip Conley, the company’s head of hospitality.

The number of listings on Airbnb has increased 75 percent over the past year and is heading ever closer to 2 million. How many requests for lodging it gets is not disclosed by Airbnb, but it did note that the number of potential guests did double over the summer.

Airbnb is also trying to get existing hosts to host more often with incentives like smart locks, which can let guests in when the host is not home. The new pricing plan is intended to boost revenues for both hosts and the company that connects them to renters. On the whole, Airbnb says that hosts who used variable pricing during a trial saw a 13 percent increase in revenues.

The new system adjusts room price to match up with demand. Hosts who use it can set a maximum and minimum price and then let an algorithm do the rest based on demand.

The firm is also dealing with regulatory attempts to limit it. San Francisco voters recently rejected a law that would have severely curbed how often residents could rent out their homes to short-term guests — but only narrowly. The company faces similar challenges in New York, where its listings have caught the interest of the attorney general.

“We are 100 percent committed to being constructive partners with regulatory agencies and policymakers,” a recent manifesto from the company pledging to work closely with cities reads. “Our community wants to pay their fair share.”

The statement was quickly rejected by critics, including the New York AG.

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PYMNTS STUDY: THE CROSS-BORDER MERCHANT FRICTION INDEX – JUNE 2020

The PYMNTS Cross-Border Merchant Friction Index analyzes the key friction points experienced by consumers browsing, shopping and paying for purchases on international eCommerce sites. PYMNTS examined the checkout processes of 266 B2B and B2C eCommerce sites across 12 industries and operating from locations across Europe and the United States to provide a comprehensive overview of their checkout offerings.

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