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The Problem

Airbnb’s growth has been slowing, with a recent 14% decline in net income for Q2 2024 compared to the previous year. While its strong user base and unique offerings set it apart, frequent customers lack incentives to stay loyal. High-spending Airbnb users, like travel expert Sam Kemmis, express frustration at the lack of loyalty rewards, contrasting it with their experiences on other platforms. Industry benchmarks reveal loyalty programs increase annual spending by up to 18% and improve retention by 5-10%. For Airbnb, enhancing frequent traveler retention by 10% could add approximately $130 million in annual revenue.

Competitive Landscape

Vrbo (OneKey): Offers 2% back in travel currency across Expedia’s platforms but is limited by complex terms, lack of valuable perks, and low personalization.

Booking.com (Genius): Provides 10-20% discounts across three loyalty tiers with perks like free breakfast and upgrades, though availability is limited and benefits vary.

Loyalty Program Value Research indicates loyalty programs drive repeat bookings and retention, especially with personalized incentives. Existing customers often spend 67% more than new ones, and increasing retention by 5% can boost profits by 25-95%. Programs that foster emotional loyalty through instant rewards achieve significantly higher customer lifetime value (306%).

High-Level Approach

The Airbnb SuperGuest loyalty program is designed to increase customer loyalty and retention by offering rewards for frequent bookings. It is a tiered reward system with three levels, each providing progressively valuable benefits to encourage repeat engagement with the platform.

Our approach involves an initial pilot phase in select markets to assess user interest and gather feedback, followed by a global expansion based on insights from the pilot. The loyalty program will integrate with Airbnb's platform and involve UX and design updates, creating a loyalty dashboard where users can monitor their progress, access rewards, and track savings.

Goals and Success Metrics

Primary goals include improving retention, differentiating Airbnb from competitors, and building strong relationships with both guests and hosts. Key performance indicators will track rebooking rates, booking frequency, booking value, tier progression, customer satisfaction, customer lifetime value amongst others.

Key Features

The SuperGuest program is a hybrid model, combining activity-based rewards and tiered benefits. Users will earn points through bookings, advancing through three main tiers:

Tier one: Discounts on experiences, early access to select stays, instant booking. Appeals to casual travelers and experience-seekers.

Tier two: Early check-in, late checkout extended-stay discounts, curated recommendations. Targets frequent travelers and digital nomads.

Tier three: Milestone rewards, special perks for long-term bookings, workspace benefits, priority support, exclusive experience access. Attractive to frequent users across all segments.

Other notable features include milestone bonuses (e.g., a free night for ten consecutive nights booked at the same rental), anniversary rewards, and personalized experience recommendations. The automatic enrollment ensures all users can start earning rewards without an additional sign-up step.

Host Participation and Benefits

Hosts participating in the SuperGuest program benefit from greater visibility and access to high-quality guests. Host incentives include:

Priority search placement for loyalty program properties.

Exclusive access to loyalty members and higher booking potential.

Flexible booking policies for loyal guests (such as easier cancellations).

Dynamic pricing and volume-based discounts.

To support hosts, Airbnb will offer dedicated customer support, revenue management insights, and exclusive listing opportunities. Host participation metrics include Host Participation Rate and Revenue Impact, measuring the program’s financial benefit for hosts.

Program Cost Structure and Risks

Airbnb will cover costs through discounted host fees and potentially minor service fee adjustments on non-loyalty bookings. Marketing and onboarding costs will be shared between Airbnb and hosts, with a significant portion covered by Airbnb to promote engagement.

Risks include increased costs if high-value rewards reduce profit margins, as well as potential complexity in managing tiered structures. Trade-offs include prioritizing the loyalty program over other initiatives, with short-term costs expected to yield long-term revenue and retention benefits.

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