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Case Study on Airbnb's Business Model and Trust Issues
- 1. INFM612: Case Study 1 Name: Pujita Tipnis UID: <deleted> ™
- 2. About Airbnb Online marketplace for “people to list, discover, and book unique accommodations around the world” (as cited on airbnb.com’s About page) Founded in August 2008 by roomies Brian Chesky (CEO) and Joe Gebbia (CPO); later joined by Nathan Blecharczyk (CTO) as the third co-founder Works on a marketplace platform model The Good Affordable (Sharing Economy) Remote / Exotic Location coverage Access to International Locations Social Networking The Bad Property may not be as described on website Theft Eviction Vandalizing the property The Ugly Safety of guest at risk Murder cases at Host’s property Using Host’s property for seamy activities Tax issues
- 3. Vandalizing Act at EJ’s Apartment (June 2011) Avoid It - Provide Host Guarantee Perform Thorough Background Check Implement Better Ways to gauge Trust & Safety (Reviews not enough) Provide Precautionary Tips Allow ways to cross-check Guest’s online footprint (Facebook, LinkedIn, etc) Not pressurize Hosts with timely acceptance of requests Handle It - Show sympathy and enthusiasm Take responsibility (especially financial) Communicate clearly Apologize promptly Ways in which Airbnb could: Key: Now Implemented Suggestion
- 4. Jacob Lopez’s Horror Experience (July 2015) Avoid It - Perform Thorough Background Check Implement Better Ways to gauge Trust & Safety (Reviews not enough) Provide Precautionary Tips Allow ways to cross-check Guest’s online footprint (Facebook, LinkedIn, etc) Implement an ‘SOS’ feature (as implemented by Ola Cabs) Implement a Recommendation System (like the ‘endorsing’ feature in LinkedIn) Train the Customer Support Staff better Handle It - Be Proactive Show sympathy and enthusiasm Take responsibility (especially financial) Communicate clearly and apologetically Ways in which Airbnb could: Key: Now Implemented Suggestion
- 5. Comparing Ebay and Airbnb’s Business Models Follows the Online Marketplace Platform Model Deals with selling products Consider Quality of Service and Product Rewards for Gaining Trust Suggestion: Assign unique codes to every product sold and make buyers mention code with their review Follows the Online Marketplace Platform Model Deals with providing and renting accommodation Consider Quality of Service and Property, and Safety too Rewards for Gaining Trust and building a strong Safety Meter Suggestion: Recommend a user you trust
- 6. Strengthening Trust & Assuring Safety Implemented Tools - Host Guarantee (covers theft & vandalism charges up to $1,000,000) Dedicated Trust & Safety Department 24 X 7 Customer Hotline Safety Tips for Hosts and Guests Verified ID feature Customize Trust Settings Product Suggestion Poll Fraud Detection Algorithms Flagging Capabilities
- 7. Strengthening Trust & Assuring Safety Suggestions - Check up on the flagged / suspicious users Provide a list of Do’s and Don’ts based on Country (with local emergency contacts) Implement an ‘SOS’ feature (as implemented by Ola Cabs) Implement a Recommendation System (like the ‘endorsing’ feature in LinkedIn) Get users to sign a legal paper of trust & safety before signing up Reward customers for helping improve trust Safety Meter : Calculate based on Verified ID, Guest-Host Reviews, Airbnb visits, etc Not pressurize Hosts with timely acceptance of requests (as mentioned in the paper provided)
- 8. References Case Study Paper titled ‘Airbnb (A)’ News Article titled ‘2015-08-14 Airbnb Horror Story Points to Need for Precautions’ http://www.statista.com/topics/2273/airbnb/ http://www.airfarewatchdog.com/blog/18453390/10-incredible-airbnb-horror-stories/ http://www.komando.com/happening-now/323929/airbnb-horror-story-this-guy-came- home-to-find-strangers-in-his-bed https://www.airbnb.com/ http://abcnews.go.com/Business/airbnb-user-horrified-home-burglarized-vandalized- trashed/story?id=14183840 http://blog.airbnb.com/our-commitment-to-trust-and-safety/ https://en.wikipedia.org/wiki/Airbnb#cite_note-60 http://blog.airbnb.com/introducing-airbnb-verified-id/ http://sfist.com/2015/08/17/should_airbnb_have_responded_differ.php http://techcrunch.com/2011/07/27/the-moment-of-truth-for-airbnb-as-users-home-is- utterly-trashed/
- 10. Thank You !
Hinweis der Redaktion
- About Airbnb: Airbnb is a website that allows users (called ‘Hosts’) to post accommodation listings on the website so that other users (called ‘Guests’), who are interested, can rent the accommodation for the required duration for a certain amount (plus a 6-12% fee on the total amount while hosts are charged a fee of 3% for successful bookings by Airbnb). The users cannot exchange numbers or email addresses and are limited to interacting over the Airbnb-provided platform. Once a reservation is made, Airbnb makes the phone numbers / email addresses available and 24 hours after the start of the stay, the amount paid by the guest through Airbnb’s payment system is disbursed to the Host’s account (after deducting the 3% fee). The Good: 1) Airbnb offers affordable options for people who wish to travel to new places and do not want to spend a lot on hotels. At the same time, Hosts make an earning by providing temporary accommodation to the Airbnb guests. 2) Guests can therefore, get to travel to remote / exotic locations where Hotels are few in number or not present at all 3) Airbnb’s international presence allows guests to travel abroad and not spend heavily on Hotels and at the same time receive help and tips from Hosts about the locality and places to visit 4) Airbnb, in this way, enables people from different countries, backgrounds and cultures, to meet and socialize The Bad: 1) As faced by most online marketplace websites, what you see may not be what you get. One can only decide based on reviews and other tools implemented by the website to help the user make good decisions. Reviews alone are not enough for one to make sound decisions. Therefore, the website needs to implement strong methods of ensuring Trust and Safety. 2) Lack of proper tools provided by the website would hinder users from making the right decision. Only reviews may not help a Host to predict that a certain Guest would steal from his/her apartment. A certain guest may have a sudden temptation to steal expensive items placed in the Host’s house. 3) Many cases speak of people giving out available rooms, in apartments they stay as renters, to Airbnb guests, thereby making money for themselves. The Landlord / local authorities on discovering this, not only evicted the so-called Hosts but also the poor guests who had absolutely no idea before hand that the space was being rented to them illegally. 4) A couple of cases mentioned of guests vandalizing the host’s apartment and damaging the property to great extents (as in the case for EJ). The Ugly: 1) As we saw the case of Jacob Lopez, it brings to our attention that Airbnb is not that safe after all. A lot would be needed to be done by the guest as well as Airbnb to ensure the safety of its users. 2) A case spoke of an Airbnb host who had rented her apartment to another lady. She gets a call from the local police saying that the lady was a prostitute and was murdered by a man over money. This raises a question on Airbnb’s model again. 3) Many cases spoke of guests using the host’s property for sordid activities without the host’s knowledge of it. 4) Being a host through Airbnb meant earning income. And as many countries require its citizens to pay taxes for every source of income (at times above a certain limit), being an Airbnb host demanded the same. But till recently, there were many people who didn’t pay their taxes and earned in millions only by renting their space.
- Airbnb could have avoided this incident by: 1) providing Host Guarantee that would give its Hosts an assurance of being financially covered in case of such incidents. This has now been implemented by Airbnb and covers upto $1,000,000 for thefts and vandalism 2) Airbnb should have implemented means of performing thorough background checks of its users. In case of hosts, they should have checked whether the property is owned by the host itself and in case of guests, they should have checked against the user’s other online profiles (like Facebook, LinkedIn, etc), police records, etc to ensure user authenticity. If individual background check is not possible, then at least the ones flagged by other users need to be checked up on. ‘Verified ID’ is a feature they have now implemented where in a user can either provide a scanned copy of his/her government issued ID or provide certain personal details that are known only to the user. This information is then matched against an online profile held by the user on other social networking sites and if there are no issues, the user is tagged as ‘Verified ID’ which makes it slightly easier for other users to trust him/her. 3) Only reviews are just not enough to trust someone or feel safe about staying in an unknown person’s home. Airbnb should have implemented better ways of governing trust and safety within its marketplace. These could include, but are not limited to, adding a recommendation system or implementing an SOS feature (described later). 4) Airbnb could provide a list of precautionary tips for its users, so as to make them aware of the possible things that could go wrong with their Airbnb experience. This has now been added to their website; one list each fro Hosts and Guests. 5) Airbnb was strict about not letting its hosts and guests share their personal contact details before striking a deal. Also, it was not mandatory for users to include their full names in their profiles. This meant that a host / guest could have absolutely no idea who they were interacting with, making it difficult for them to even cross-check against certain other social networking sites, so as to confirm the genuineness of the person they were dealing with. Airbnb has now allowed users to link their accounts to their other networking site accounts, there by making it easier for others to check out profiles on Facebook, etc, before making / accepting a reservation. 6) Airbnb pressurizes its hosts to accept requests within 24 hours and not reject too many requests failing which their rating goes down. Airbnb should in fact allow its hosts to take time to check out the guest’s profile, reviews and Facebook profiles etc, too, enabling them to make sound decisions rather than having to accept guests’ requests even though they don’t want to. Airbnb could have handled this situation better by: 1) Showing sympathy to EJ and taking up the problem enthusiastically rather than shrugging off the responsibility initially. 2) Airbnb’s spokesperson initially made a statement that they would not be covering the theft and vandalism charges for EJ. Later, after receiving several negative comments from various sources, Airbnb’s CEO blogged that they took care of the theft and vandalism charges and are trying their best to make life easier for EJ. (the blog too sounded ‘tepid’ according to some) 3) As seen above, communicating wrong information or that which has not been given much thought, creates negative emotions amongst the public and ends up giving a bad impression of the Company as a whole. Any statement made publicly, must be discussed and given proper thought, taking into consideration the ramifications of making public a certain piece of information. 4) Apologizing is one of the first things a Company must do when one of its users has incurred a loss because of / while using its services. Even though Airbnb themselves weren’t directly responsible for the vandalism, they had certainly missed taking precautionary measures to avoid it in the first place.
- Airbnb could have avoided this incident by: 1) Ensuring that a thorough background verification has been done for each user or at least the ones that had been flagged. Since Airbnb must take care of not only Trust but also Safety of its customers, they need to go to great lengths to make sure that their customers feel safe using their service. They can work with the police departments across countries (at least the ones they have their presence in) to ensure that their users don’t have a criminal background while they also verify their profiles against other social networking websites (again, there could be certain people who create fake Facebook profiles or who don’t obviously reveal their negative sides on such platforms). Airbnb must also require its users to provide their property ownership documents to ensure that the hosts are renting their owned properties and not someone else’s. 2) Again, reviews are just not enough for one to determine whether their hosts / guests are who they say they are. There have been cases where guests were evicted from their Airbnbs because their host didn’t actually own the property. Also, in Jacob’s case, the host had received good reviews due to which he made a reservation at her Airbnb. Now that raises a lot of questions about their Review system and whether one should trust it. Probably she had all female guests before and therefore there wasn’t a reason for such an incident to happen before and each previous guest may not have met her personally to flag suspicion. Airbnb, therefore, needs to implement better ways to make their users feel safe and be able to trust one another. 3) Airbnb should have made available to its users a list of precautionary measures they must take as guests. This could prepare the guests for situations they wouldn’t expect and equip them with tools to make their trip safer and easier. Airbnb has already implemented this. Airbnb can provide a copy of these tips to its guests / hosts each time they make a reservation. 4) Airbnb should allow users to see their guest / host’s Facebook, LinkedIn, etc profiles before they can decide as to whether they want to go ahead with a certain reservation. Currently, they allow this only after a reservation is made. 5) Airbnb should have had an ‘SOS’ feature in place on its mobile apps so that any guest / host who felt a threat to their lives could quickly tap on the icon and immediately 3 loved ones (the user would need to set up the details in advance) and the local police would be alerted the user’s location and details. This feature has already been implemented by several companies including Ola cabs services. 6) Airbnb could have implemented a Recommendation System where in a friend on Airbnb could recommend you as a host / guest and in a way vouch for you as being someone who can be trusted. The more the number of recommendations, the safer you appear. This is something similar to LinkedIn’s ‘endorsing’ feature. 7) Airbnb should have trained its customer support team better such that when Jacob’s mother asked for the host’s address and contact details (as this was an emergency), they should have provided the same and alerted the police too. Since the team wasn’t cooperative, Jacob ended up going through a horrific incident. Airbnb could have handled the situation better by: 1) Being proactive and helping Jacob and his family with their needs as Airbnb was at fault (by not cooperating with Jacob’s mother when she needed help) 2) Airbnb should have shown sympathy and enthusiasm to help but instead earlier stated that they don’t help the host / guest’s family and that they must take responsibility of the issue themselves. This portrayed a callous attitude on their part. Later, a spokesperson provided a different statement saying that they would do their best to help the family and would take complete charge of an emergency of this sort. 3) Airbnb should have taken responsibility of the situation while it was occurring instead of running away from it. After the incident had already occurred, they should have offered to pay for his therapy too. 4) Airbnb should communicate clearly and sympathetically, especially when the incident is as serious as this one.
- Ebay and Airbnb, both, follow the online marketplace platform model wherein, one user provides services while another user buys the provided services (online). While ebay deals with selling products, Airbnb deals with providing and renting accommodation. Ebay, being a website dealing with the buying and selling of products, would need to focus on ensuring quality service and products. Gaining the trust of the customers is of prime importance. But Airbnb, being a website that deals with providing / renting accommodation (and not products), needs to focus on a little more – Quality of Service and the property as well as safety. Not only trust but safety matters too. One way that Ebay can achieve this is by offering rewards for gaining the trust of its customers. In addition to its existing Buyer Protection facility, not only would frequent discounts help but rewards to encourage its users to write reviews, that will help distinguish between a good and a bad seller, would do too. Similarly, Airbnb has a review system of its own, wherein, users provide feedback / reviews about a certain guest / host / experience. Using these reviews, other users can decide whether to go for a certain accommodation or not. But are reviews enough? In case of Ebay, as mentioned in the case study paper provided, a buyer is generally worried as to whether the product under consideration is as described; or is it defective. Also, reviews could be misleading or not delivering the complete information required to make a sound decision. For eg., different users have different preferences. A certain review may help or not be of much help to someone else. Or a certain seller could eventually get better with his service or may get worse. Or the review itself could be fake; probably something accomplices of the seller wrote in order to lure people into buying from him / her. Additionally, as mentioned in the paper provided, a seller could have multiple accounts and could switch to the other one as soon as he /she gets a bad review. In order to counteract this problem, Ebay needs to develop better techniques to portray the right information to its users. For instance, it should restrict sellers to only one account, allow buyers to flag certain sellers, assign unique product codes to each product sold and get users to enter the product code along with their review. Similarly, in case of Airbnb, since safety also comes into consideration, the review system and safety gauging tools should be even stronger. A user should be able to flag suspicious hosts / guests (implemented feature) and Airbnb staff can go and check up on them to verify. The ‘SOS’ feature should be deployed on its mobile apps. If practical, a legal paper like an oath should be signed by every user while signing up. A strong friend recommender system should be in place where in a user can recommend another one as a good host / guest. Here, if the person recommended ends up being flagged, the recommender would be flagged too. This would ensure that every person recommends someone else only when you know the person really well and can vouch for his / her genuineness. Rewards can be given to users in order to get them to provide a genuine review about their experience with a host / guest. A way to attract them is by offering say, a free trip to some nice place for the host that provides helpful reviews (that way, while they are away on their trip, they can make use of Airbnb to rent out their property and Airbnb earns a fee out of it). And for guests, a way would be by offering say, a cool camera like a DSLR so that winning that would make them want to go on more trips to capture more photos. A Safety Meter would be something that calculates your genuineness, probably by considering your Verified ID (preferably govt issued ID compared against a social networking site’s profile details), allowing guests to leave reviews only for the hosts they have had business with (and vice-versa), Airbnb visits to a host’s property or to verify information about a guest and considering recommendations, if any. All (and more) of these factors can together help rate a user on the Trust & Safety Meter.
- The above mentioned tools have already been implemented by Airbnb. These include: Covering theft and vandalism charges up to $1,000,000 A dedicated Trust and Safety department that takes care of improving the Trust and Safety for its users A 24 by 7 customer hotline Safety tips for Hosts and Guests to read through in order to be aware and equipped with the right information and things to do Verified ID feature : Airbnb allows its users to either upload a scanned copy of their government issued ID or answer certain personal questions (answers to which are only known by them) which are then matched against their profiles on either Facebook, LinkedIn or Google. If it matches then, they tag the user as a verified ID user which helps others to be able to trust them more than the ones without it. Hosts can also customize their trust settings by which only those guests, who are as per the Host’s requirements, are allowed to send them a reservation request. Users are free to post suggestions to improve the website while others can vote for your idea Airbnb has deployed several fraud detection algorithms Users can flag others if they feel something is suspicious or to report abuse
- Some suggestions that are probably not already implemented are: Users can flag suspicious hosts / guests and Airbnb can check up on these flagged users and remove them from the listing if they prove to be unsafe to deal with. Airbnb can work with the local police authorities to verify this Airbnb can provide a detailed list of Do’s and Don’ts specific to each country they have their presence in so that guests have easy access to the information they need to know before travelling to an international location. Details could include local police contact numbers, other emergency numbers, list of hospitals, list of things that could offend the local people, etc. Similar to the ‘SOS’ feature a few companies already have in place, like Ola Cabs, Airbnb can also implement (if not already done) such a tool where in a user would have to provide a list of 3 emergency contacts and during an emergency, tapping the ‘SOS’ icon on their mobile app would automatically send the user’s current location and details requesting the emergency contacts (including the local police) for help. Airbnb could introduce a recommendation system, similar to the endorsing feature of LinkedIn, wherein a user can recommend his / her friend as a good host / guest. More the recommendations, better the trust and safety level of the user. But if the recommended user is flagged by someone, then even the recommender gets flagged. This way one can be sure that only those are recommended whom you know really well and can trust. If acceptable, Airbnb can get its users to sign a legal document, like an oath or a code of conduct, whereby stating that they’d act morally else would be entitled to pay a heavy fee Airbnb can reward its customers as a means to improve trust amongst its users. It can reward based on several factors including, but not limited to, providing prompt yet genuine reviews about their latest experience with the host / guest, using a lot of their service (i.e., providing or renting a lot), recommending many friends, etc. Rewards could be in the form of a free trip for the best host (that way, the host would end up giving their property for rent over Airbnb and Airbnb gets a fee out of it) or a professional camera like a DSLR for its best guest (that way, the guest gets tempted to travel more in order to be able to use the camera more). Thus, in this way, Airbnb gets to make its platform more safe. A Safety meter can be developed by Airbnb wherein based on whether a user is tagged ‘Verified ID’, has received and provided genuine reviews, has had Airbnb visits for property inspection or information verification (in case of being flagged), number of recommendations received etc., the user can be rated on a scale of 5 or 10 as being genuine / safe or the opposite. This can help users decide whether they want to deal with a certain user or not. Airbnb currently imposes strictness on its hosts to not reject too many reservations and accept reservations within 24 hours. Due to this, hosts feel pressurized to accept a request even though they don’t want to as otherwise their rating would go down. Airbnb should not pressurize its hosts this way as they may end up taking decisions in haste and end up regretting them later. A host should be given enough time to look up on the guest’s Airbnb as well as other social networking profiles, just to be safe.