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Airbnb: Commoditizing the Supply Side

Darren Vincent
Former Supply Side Manager, Australia, NZ, Pacific at Airbnb

Learning outcomes

  • The long run dynamics of Airbnb,, and Expedia all owning the same inventory

Executive Bio

Darren Vincent

Former Supply Side Manager, Australia, NZ, Pacific at Airbnb

Darren was one of the first employees to join Airbnb in the APAC region. He joined the company in 2012 when the company opened the first office where he was responsible for opening new destinations in Australia, New Zealand and South East Asia. Darren was then promoted to lead recruiting and onboarding hosts where he led the supply side to grow from 5,000 to 200,000 hosts. Read more

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Interview Transcript

On that point then, let’s play this forward 5-7 years, and if you’re a host, either a small Airbnb or independent hotel, or a professional manager. You’re going to want to list your property on as many channels as you want. Therefore, is there any reason why some of these hosts will typically prefer Booking versus Airbnb for example?

You’re definitely going to have hosts that prefer one channel over another. That’s going to happen and you’re probably going to have it coming from different sides. It could be different experiences that they’ve had. You’re going to have hosts that are going to want to push their direct booking channel, for example. Direct booking, you saw hotels were very big on driving direct booking.

I think direct booking when you’re not a big hotel or not a big chain, it maybe comes across as easier than some of them think. When they think about in terms of what is the cost of actually generating that booking to their own channel, when they’re actually bidding on Google Ads and so on, when they have issues, they’ve got to deal with charge back, different things. They’ve got to start factoring that into the costs. If suddenly the cost of doing that is 15-20%, when you factor it over a year or something like that, it’s like is it actually better from a cost perspective. I think a lot of the professional hosts have started to think about that.

In terms of all of that inventory eventually ending up across multiple platforms, I think that’s going to happen. You already start seeing a lot of the different technology that’s already being built or is already out there to drive some of that. Whether it’s channel managers or GDS systems and all of those other things. Eventually, you’re going to want to be able to put your property in front of someone as much as possible. It’s about getting to them at the right time of purchase or intent to purchase is going to be the main thing. That could come across in multiple channels.

Then it becomes like you said, if I’m a hotel and I’m on, I know my fee, I’m going to pay and that’s my cost of filling that room. Arguably, the two are commoditized unless, like you said, they have completely different sets of demand. Or one has much large demand.

For sure, yes.

How do you see the competitive nature between take Airbnb versus Booking in five/six/seven years out when you have – let’s say they all have the same inventory?

Yes, it’s a very good question. The issue of becoming too commoditized is a real issue. I think is probably someone that potentially when you look at some of the things they’ve said on their earning’s calls, I think they’re probably worried about that. There’s just not a lot of loyalty really there when you start doing that. I think that’s also one of the reasons you’ve got all of these companies and different folks really focused on loyalty programs.

Then it really comes down to, if you’re a guest and you do see the same property listed on multiple channels for the same price. You’re probably going to end up going to the one you like, or you trust or that has something offering that you prefer. That’s whether it’s a loyalty program or a point system. Ultimately, that’s where the winner is going to come from ten years down the track, a company that can really focus on that experience and provide high value-add services. That’s where I know Airbnb was really focused on things like Airbnb plus program, different services that you can add on and make that booking experience seamless. Let’s say you want to stay in a property, and you want the fridge to be stocked when you get there, something simple like that. How do you offer those services? Again, Airbnb did a great job eight years ago focusing on things like review system, payments, even their fee structures and different things like that. Every platform now has a two-way review system, they’ve all done that.

That doesn’t matter also for the hotel because they can deal with their own payments.

Yes, exactly. Then it becomes you have almost having an unmanaged marketplace to more of a managed marketplace. That’s where you start getting into more segmentation, the more ability to help guests to find the right place for them. There’s going to be a lot of work I’m sure from all the different OTAs and so on in terms of things like machine-learning, predictive algorithms that will help a guest find the right place for them.

Let’s just use any given night, the issue with searching on a or an Airbnb or a HomeAway. On any given night, if you’re finding a place, it’s only bookable once. It’s not like a Google search where you can push up the same result hundreds of times and the person will click on it. Once that’s booked, that place is gone. Then you’ve got to find the next place down the list and so on. If these companies like Airbnb and so on can get better at actually helping to push up and show you properties that are right for you out of a list of 20,000-30,000 properties, I think that will go a long way to ensure that the guest is getting a better experience.

Then these other things that they can add on, whether it’s a seamless offline experience whether it’s food or cooking or groceries and all of those kinds of things. I think that’s going to go a long way to actually help stop everyone’s got that same commoditized property across every channel.

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