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Airbnb: The Popular Home Away From Home Service

A Product Evaluation Story

Background

Airbnb wants to be the one stop shop for booking vacation getaways from a
based model also knows as a
. This allows for fast and convenient getaways for travelers for various vacation reasons and even business travel.

Renters can rent a vacation home from Homeowners easily, and in general, for a much more affordable price for both vacation getaways and business travel when compared to popular digital travel agencies like
or

Product Evaluation

Before we dive into areas of improvements and possible solutions, it’ll be important to evaluate the product in various categories in order to get a sense of strengths and weaknesses:
Product Evaluation Scorecard
0
Customer
Meaningful Problem To Solve? Absolutely, disrupting the vacation industry from a peer-peer economic- based model is makes it appealing to any adult traveler
Product
Differentiators? Offers ‘Experiences’ both online and in-person to help expand upon the ‘Places to Stay’ area for which Airbnb is known for
Finances and Revenue
Total Funding: 1 billion
Market Share
Estimated Market Share of Vacation Rentals: ~20%
Competition
Booking.com: Recently released a ‘Homestays’ section
Partnerships
Local States & Government: Partners with states and local governments to help promote tourism recovery from the COIVD-19 pandemic
Improvement Areas
Transportation: Non-existent which is a key component for any vacation or business trip
Area
Customer
Criterion 1
Meaningful Problem To Solve?
Absolutely, disrupting the vacation industry from a peer-peer economic- based model is makes it appealing to any adult traveler
Criterion 2
Segmentable Market?
Yes, whether it be by demographic, age or traveling trends. 60% of bookings in 2020 were from millennials, just as an example. Most of the Renters on Airbnb, are young millennials that usually travel in pairs of 2-4 person groups.
Criterion 3
Customer Accessibility:
Any customer can easily sign-up as a renter and begin to search for their getaway. Furthermore, the homeowner signup process to induce an easy-to-setup peer-peer model can be done within minutes as well
Criterion 4
Customer Loyalty:
32 NPS via https://www.comparably.com/brands/airbnb#nps
Overall Score
Resources

Summary

Overall the takeaways from Airbnb are that it is a strong product and has an extremely large presence, as well as market share, of the vacation housing rental. Though there aren’t noticeable large problems within the business itself, there are some shorter-term strategies that could be applied, which we will dive into below.

Problem Areas

A Key Part of The Renter Journey That Needs to Be Addressed

As the infamous 2020 COVID-19 Pandemic comes to a close, one of the key areas that people around the world are starting to see a spike in, is travel. As the #1 home rental platform, Airbnb’s traffic and home rentals are beginning to rise again, which reintroduces a common
vision
that has yet to be solved for the business:

‘When going on vacation, Airbnb Renters shouldn’t have to worry about transportation, so that they can enjoy their vacation knowing that they have the means to explore.’

A common misconception is for someone to purchase a rental car, but if you closely look at the journey of renting a car it may seem easy, but in reality, can be a nightmare. Such issues can include:
Long lines
Rental Car unavailability
Limited features
Expensive/Inflated rates
Poor customer service
Additionally, as Airbnb sees heavy utilization into in-person
and its offerings, Renters may want to have travel accommodations to those events as well.

Considerations & Questions

Stakeholder Group
Item to Validate
1
XD/Prod
From a UX perspective, would introducing this experience introduce any friction to the current booking experience? User research will be needed to validate this is a problem to solve for and the right solution to address it for both renter and homeowner. Competitively, what to companies like Vacasa or VRBO do to address this potential problem/need?
2
Engineering
Can we leverage our existing homeowner experience to upload a homeowner’s car and details to reduce effort?
3
Legal
What legal implications (insurance, liability, ToS) do we have to account for? Is this even doable?
4
Data Science
How many Airbnb renters purchase experiences driving distance (> 1 mile) with their Airbnb home rental? Where do these purchases occur (city vs rural)?
5
Product Support
How many of our users ask for this some kind of transportation service as an improvement/enhancement request from both renters and homeowners?
There are no rows in this table

What Data is Available to Us? What Data Do We Need?

How many Airbnb Homeowners have a personal vehicle?
Where are the top rental car cities/states geographically, in relation to number of Airbnb Rentals?
How many Airbnb renters purchase Experiences that have a driving distance > 1 mile with their Airbnb home rental? Where do these purchases occur (city vs rural)?
What/Where are the largest number of Airbnbs that can only be accessed by car in relation to an airport?
Where are current car rental rates the highest?
What cities offer the most Uber or Lyft
Which cities is Uber struggling the most in comparison to Lyft
Who are our current casual, core, and power users?
What are the top buying/travel behaviors of our Renters and Homeowners?

Solution Alignment

Key Features

Below, we will outline the high level experiences that we will want to introduce in a phased approach in terms of the ‘
Adding a Ride’
initiative. This will be done in phases over a 3-6 month time-boxed period. A key goal here is to maximize our
booking/service fee
with minimal development costs and amount of effort on our part in order to reduce/maximize the following:
Implementation and associated costs
Improve our reach and impact to renters
Improve our brand with homeowners and renters
Phase 1: Renters can rent a Homeowner's Vehicle for Places to Stay
0
Phase 2: Uber Integration for Experiences
0
Phase 3: Rental Care Integration for Places to Stay
0

Add a Ride Goals

Our goals within the first 3 months for Add a Ride are as follows:
Implement Phase 1 and start build on Phase 2/3 within the first 3 months
Implement Phase 2/3 between 3-6 months
An increase in Airbnb’s monthly MRR by 10%
A Higher NPS for the renter and the owner within 3 months of launch
An increase in the average passive income per homeowner by 5% within 5 months

Metrics for Success

Metric
What does it measure
Related OKR
1
Increase MRR by 10%
Airbnb’s Monthly Recurring Revenue. By increasing the standard fee rate for both the homeowner and renter by 1.5% we should see enough revenue to hit 10% mark.
Sales:
Objective:
Increase MRR for the Airbnb platform
Key Result:
Increase the MRR by 10% overall for the Airbnb platform for Q4
2
At least 20% of Airbnb Homeowners have added a personal vehicle
Feature adoption - we want to make sure the feature is adopted by homeowners, and in turn renters
Product:
Objective:
Add more value for homeowners to increase retention
Key Result:
Increase Homeowner Activation metric by 3%
3
There have been at least 1000 Add a Ride add-ons purchased by renters
Feature adoption - measures how many times add-ons were actually purchased in combination with an Airbnb
Product:
Objective:
Add more value for Renters to increase retention
Key Result:
Increase Renters Activation metric by 5%
4
Renter NPS increases by 15
Brand/Loyalty
Product:
Objective:
Increase Brand and Loyalty to Airbnb for Renters
Key Result:
Increase Renter NPS by 20 points by end of year
5
Homeowner NPS increases by 20
Brand/Loyalty
Product:
Objective:
Increase Brand and Loyalty to Airbnb for Homeowners
Key Result:
Increase Homeowner NPS by 20 points by end of year
6
Average increase in passive income for the owner
Brand/Loyalty
Product:
Objective:
Increase Brand and Loyalty to Airbnb for Homeowners
Key Result:
Increase Homeowner NPS by 20 points by end of year
7
Support calls around this feature are 10% below the current average
Quality/Support
Support Heroes:
Objective:
Reduce the average time to resolution for an open case
Key Result:
Increase the time to resolution for open cases by 10% by Q4
8
# of bugs deemed as severe/critical is below 10, within a month of launch after each major feature
Quality
Engineering:
Objective:
Reduce the amount of bugs for net new features introduced
Key Result:
Decrease the amount of development allocated of Critical Issues by 10% in Q4
There are no rows in this table

Key Flows




Epics Tied to OKRs
0
Launch Phase 1 for Add a Ride - Homeowner’s Vehicle
Increase MRR by 10%
Renter can rent vehicle
Closed Beta in select cities
Support Hero Training
GA Launch
1000 Homeowner vehicles have been rented
Updates to payment and confirmation screens
20% of Homeowners have added a vehicle
Homeowner can add a vehicle
Marketing to Homeowners about new feature
Airbnb NPS grows by 10 points
Implement Qualtrics Survey during Beta and GA launch
Launch Phase 2 for Add a Ride - Uber Integration
Launch Phase 3 for Add a Ride - Car Retnals
Apr 26
May 17
Jun 7
Jun 28
Jul 19
Aug 9
Aug 30
Sep 20
Renter can rent vehicle
Closed Beta in select cities
Support Hero Training
GA Launch
Marketing to Homeowners about new feature
Implement Qualtrics Survey during Beta and GA launch
Launch Phase 2 for Add a Ride - Uber Integration
7
Launch Phase 3 for Add a Ride - Car Retnals
7

Strategy and Economics

How does Adding a Vehicle feature improve the Business?

If we were to increase the service for renters by 1.5% on average, then we can improve our MRR from the Renter channel. Currently, there is a non-refundable fee for renters that holds at 14.2%. With the introduction of the vehicle rental, we would increase it to
15.7%
If we were to increase the service fee for homeowners
that include a vehicle
by 1.5%, then we can improve our MRR from the Owner channel. Currently, there is a 3% charged fee to owners with every booking. With the introduction of the vehicle rental, we would increase it to
4.5% per booking.
If we were to partner with uber and take a share of the booking fee, we could increase our revenue by x%
If we were to partner with different rental car vendors (AVIS, Enterprise etc.) and take a share of the reservation fee, we could increase our revenue by x%.

TL;DR

Airbnb connects travelers seeking affordable lodgings with hosts who offer their properties as short-term rentals.
Renters are charged a nonrefundable service fee of under 14.2% based on the listing. We would increase this rate by at least 1.5% for each booking.
Hosts are also charged a fee of no more than 3% for every completed booking.We would increase this rate by at least 1.5% for each booking.
Cited from:

Resources:

Dependencies & Considerations

Technical

Reusable components from Adding a home for renter flow
Additional data tables and endpoints needed from the BE to call for client-side apps:
Owners to add/edit car listings
Renters to be able to modify their listings
Renters to be able to get refunds allocated to car rentals

Legal

What are the potential legal liabilities for both the renter and homeowner
Do we need to partner with any insurance providers in terms of protections
What do we do incase there is an accident? What services do we provide as Airbnb?
What happens if there is a dispute between the renter and owner regarding the vehicle’s condition pre/post stay?


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