How Airbnb Revolutionised Travel (2024)

in.Parallel

8 min read

Feb 28, 2024

In 2008, while grabbling with financial pressures, San Francisco-based founders Joe Gebbia and Brian Chesky stumbled upon the idea of renting our their spare room to conference-goers when all hotels in the city were at full capacity. Their concept was refreshingly simple: offer lodging and throw in a complimentary breakfast as an incentive. This marked the birth of Airbnb (short for its original name AirBedandBreakfast.com), and alongside Nathan Blecharczyk (the third founder and coder) created a business plan that would introduce this concept into other major US cities.

What began as a modest start-up, Airbnb has grown into a global phenomenon and redefined travel. As a transformative force in travel and hospitality, it has revolutionized how people explore and find accommodations. Airbnb’s innovative platform connects travellers with unique lodging options while enabling homeowners to monetise vacant properties. Although this method had been pioneered by VRBO (Vacation Rentals by Owner) in 1995, Airbnb capitalized on the second mover advantage and strategically positioned itself for the evolving preferences in how people perceive and experience travel; the shift emphasising the desire for authentic, one-of-a-kind experiences and personalisation in their journeys.

Nearly two decades later, Airbnb is a household name, hosting over 4 million hosts and welcoming more than 1 billion guests worldwide, with an estimated value of over $90 billion. As summer holiday planning begins, let’s reflect on Airbnb’s journey from initial hurdles to becoming a powerhouse in accommodation.

Trust: The Key to Long-Term Business Success and Growth

At the heart of building a sustainable business lies the ability to both retain existing customers and attract new ones. The ultimate goal is to reduce the effort required for customer retention and acquisition over time. Trust plays a central role in achieving this goal. Building trust in business involves a steadfast commitment to consistently delivering a high-quality product or service. Providing a sought-after product with an unwavering focus on quality instils confidence in customers and fosters belief in the brand. This trust becomes the cornerstone of long-term success and growth; people who believe and advocate for a brand or service inadvertently become ambassadors that aid in the organic marketing and growth of any business. For Airbnb developing and maintaining trust is paramount and given the nature of its offerings, it was essential for its success to place trust at the forefront.

Airbnb’s Initial Challenges

When Chesky, Gebbia, and Blecharczyk first took their business idea to investment and equity firms, concerns about safety, fraud potential, and the unconventional nature of the concept were prevalent among investors, hindering their ability to envision success. From a host perspective, letting a stranger into your home throws up numerous questions about the safety of your property. What about damages? Who will compensate? Comparatively, for a renter, unease over profile verification, the honesty of a listings, and potentially unsafe host interactions are just some of the questions that undoubtedly arose and to this day require consistent attention. Airbnb’s key challenges can be generalized into the following:

Fortunately, Airbnb recognised these challenges early on and strategically leveraged trust to overcome these initial, paving the way for their growth and bringing them to where they are today.

Airbnb’s Strategy to Building Trust

I. Reviews:

According to a Harvard study titled “Status Quo Bias and Decision Making” (William Samuelson and Richard Zeckhauser, 1988), humans have a natural social bias: the more different someone is from them, the less we trust them. However, when reputation is considered, things change. Imagine your favourite celebrity — the one whose social media you avidly follow, whose style you admire, and whose opinions you value. Beyond the commonplace paid endorsem*nts (which we often overlook), if this celebrity personally endorses a product or brand, it undoubtedly captures your interest, making the product in question inherently more trustworthy to your consideration.

Reputation in the context of Airbnb measures how much the community of hosts and renters trust each other and the platform. It’s been noted that if a product or service has fewer than three reviews, nothing changes, but with more than 10, reputation begins to overcome doubt and our natural social bias of distrust. Understanding the significance of reputation, the Airbnb founders prioritised the importance of reviews from the company’s inception.

In 2009, after a $20k investment from Y Combinator, Airbnb used some of this funding to visit New York, their biggest market at the time. Chesky, Gebbia, Blecharczyk and their team went door to door visiting every host in the city to help them improve their property listings. They took photos, added features to increase rental popularity, and educated hosts on their responsibilities to effectively manage their properties. This visit allowed the newly joined hosts to feel connected and catered for, whilst allowing the team at Airbnb to get in person user feedback that informed product development. Airbnb encouraged the review system from the start, which helped mitigate the risk between the guest and host and build trust with the platform. Both hosts and renters could appraise or criticize a rental or individual, creating higher stakes for quality.

“Every review benefits the entire network, allowing hosts to assess the suitability of a guest before confirming their booking and guests to assess the trustworthiness and professionalism of a host before sending a booking enquiry. Reviews benefit Airbnb in another way: they highlight problems with listings which Airbnb may need to address, thus doubling up as a quality assurance instrument.” (Dolnicar and Reinhold, 2021)

Airbnb later introduced the “Superhost” title to recognize and reward excellent host behaviour. Superhosts receive privileges such increased visibility in Airbnb’s search results, dedicated customer support, exclusive benefits, and enhanced tools. This reputation system provides valuable customer insights across different markets, improving the product, localization, translation, and onboarding activities for guests and hosts.

II. Controlled Processes and Support:

The platform, available both in-app and on the website Airbnb.com, was designed to ensure the Airbnb team was actively involved throughout the booking process. From payment to messaging and reviews, all transactions and communication were routed through the company, affording a level of control and enhanced risk mitigation. Messages underwent vetting, with potentially suspicious, negative, or harmful content flagged for review, safeguarding communication for both parties. Additionally, Airbnb implemented structured data features on the platform with limited customisation options, such as standardised message lengths between renters and hosts as well as guided prompts, to promote consistency in communication.

In the event of issues, Airbnb ensures that both hosts and renters feel supported. In 2011, Airbnb began offering insurance for hosts called Host Guarantee, which protected the host’s property from damage caused by Airbnb guests. That programme was adjusted in 2021 following the pandemic, as Airbnb realized the necessity of extending coverage to guests as well. Rebranded as AirCover, the coverage provides hosts with a $3 million damage protection guarantee. Meanwhile, guests are eligible for a full or partial refund if they encounter a serious issue with their accommodations that the host cannot resolve and Airbnb cannot secure a comparable alternative for their stay.

Airbnb also mandates full verification of all guests and hosts, requiring a submission of phone numbers, official documents, links to social media profiles, and proof of residence. This enhances security in dealings and communication prior to physical meetings.

For additional support, Airbnb introduced its Safety Center in 2019, offering hosts and guests a 24/7 urgent support line staffed by highly trained safety and crisis specialists. Furthermore, in 2022, it launched the Trust & Safety Advisory Coalition (TSAC), which partners with external experts to develop proactive solutions aimed at ensuring the safety of the Airbnb community.

III. Social connection:

Community is a central core value for Airbnb and its users. In 2014, the company repositioned with a new mission statement: to make people around the world feel like they could belong anywhere.

“You see, a house is just a space, but a home is where you belong, and what makes this global community so special is that for the very first time, you can belong anywhere”. –Brian Chesky, Co-Founder

Acknowledging the impersonal and mass-produced nature of travel experiences, Airbnb latched on to the idea that they were building social connections between hosts and guests. They were tapping into the “universal human yearning to belong — the desire to feel welcomed, and respected, and appreciated for who you are, no matter where you might be.” (Brian Chesky 2014) The company rebranded with its Bélo, a symbol resembling a heart, location pin, and the “A” in Airbnb. Since then, multiple marketing campaigns have underscored the importance of belonging to a community and connecting with like-minded individuals.

The company actively promotes social connections among users. It encourages hosts to form meet-up groups and organizes larger summit events known as “Airbnb Open” annually. The platform also allows users to link their Airbnb to their social media accounts like Facebook to discover shared connections and connect if they wish to. For guests, initiatives have been introduced to enhance their social experience, such as the “Host Passport,” which has been designed to let guests know who their host is before booking. They’ll discover details such as the host’s name, number of years hosting, host’s rating, and number of guest reviews. Additional information such as location, hobbies, pet’s names interesting facts, and what sets their place apart are also included in the host’s profile.

These innovations come in response to the years of Covid-induced isolation, with the platform recognizing that users are actively seeking ways to connect with others and have genuine experiences. Moreover, the company and experienced hosts offer support to newcomers through resources such as articles, Q&A platforms, and tips to enhance their listings and create exceptional experiences. Airbnb’s website features a community center where users can participate in ‘Host Forums’ for advice and support, as well as engage with other members through the ‘Community Café’ and ‘Host Circle’. Through these initiatives, Airbnb fosters a supportive environment for users to converse and connect with people from around the world.

Final Takeaway

Airbnb’s journey from a startup to a global phenomenon was propelled by a steadfast commitment to establishing trust. Overcoming initial scepticism, Airbnb implemented trust-building strategies such as user reviews, controlled processes, safety and support initiatives, and a focus on social connections. These elements instilled confidence amongst users, reshaping the travel industry and fostering a sense of belonging within a global community of travellers and hosts. Trust has remained the cornerstone of Airbnb’s extraordinary success, nurturing loyalty, and fuelling growth in the sharing economy.

References:

Wired, Welcome to The ‘Airbnb for Everything’ Age

Airbnb, Sustainable Competitive Advantage — Business Strategy and The Key Success Factors

SubStack, Scaled and Failed #17 — Airbnb and Wimdu

The University of Queensland, The evolution of Airbnb’s business model

Airbnb, Experience Hosting Resources

The Branding Journal, Airbnb’s consistent rebrand focuses on the sense of belonging to a community

Lattice, How defining values and culture helped Airbnb achieve worldwide success

The evolution of Airbnbs’s business model

Belong Anywhere, Brian Chesky