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What should Airbnb’s strategy be during the COVID-19 pandemic?

  • Related to Leadership
  • For Generalist PM
  • Asked at Airbnb
  Airbnb
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Answers (3)

Clarifying questions –

Are we focusing on strategy to implement changes during lockdown restrictions or post lockdown time when things are open. Let’s assume post lockdown when things are open with certain restrictions and norms.

Are we focusing on the guest or the host side changes ? Let’s continue with guest platform changes.

About Airbnb – 

Airbnb is an alternate accommodation platform where travellers or guests can book and stay in unique properties such as sea facing villa or a tree house amidst a lush green jungle. Hosts are property owners who welcome these guests in their properties and create a bonding with guests.

Current Situation –

Currently due to corona pandemic, most countries have imposed lockdown and have travel restrictions. It has badly impacted Airbnb and other hotel and travel industries. At this point we do not even know by when this virus will totally go away. Will it either go or we have to start living with it in days to come.

People are now fearful and will avoid unnecessary travel till fullprof vaccine is launched and available worldwide.

List of strategic choices

During this time Airbnb can experiment with some new business strategies that can help them bringing business back to the shape.

Strategic or business decision How or why?
Flexible rescheduling policy for current bookings Guests who had advance bookings and are no longer travelling can get flexible scheduling window for next 6 or 12 months.
Allowing self-quarantine/isolation facility in properties  Help guests to quarantine themselves away from their family which will reduce exposure and family infections.
Promoting Monthly stays or long term stays Local citizens can stay in properties close to their workplaces helping them to avoid unnecessary travel and opting public transports such as metros, cabs or buses.
Offer online or virtual experiences Unique activities to do from home or property itself like cooking or dancing.
Recommending clean, hygienic and safe properties Airbnb can partner with third party services which will provide regular deep clean and sanitizing facilities in the property.
They can engage few rating agencies as well which can give scores based on cleanliness and hygiene.
Discouraging shared properties Dormitories or shared rooms are either not to be sold or to be sold on lower capacity keeping social distancing of users in mind. This should be done till the fear of corona is completely gone.
Banning usage of shared amenities such as pools, gyms etc in the properties.  
Showing Active or total positive cases with in given proximity of the property Airbnb can integrate with authentic third party sources which can provide information regarding active or total cases around any locality.
Collecting and showing User reviews and scores based on property hygiene, cleanliness and safety.  

Evaluation criteria – 

strategic or business decision Effort Revenue Impact on users Challenges
Flexible rescheduling policy for current bookings Low medium High What if user is not ready for rescheduling and asking for full refund.
What if host is not ready for rescheduling
Allowing self quarantine/isolation facility in properties High High Medium Operational challenges as need to connect with healthcare providers, relief workers etc
Promoting Monthly stays or long term stays Low low low No major challenges
Offer online or virtual experiences low low Medium No major challenges as Airbnb is already providing this facility.
Recommending clean, hygienic and safe properties Low Low High No major challenges
Discouraging shared properties Low Low Low NA
Banning usage of shared amenities such as pools, gyms etc in the properties. Low Low Low No major challenges
Showing Active or total positive cases with in given proximity of the property Medium Low High Legal and data privacy challenges. Third party integration required.
Collecting and showing User reviews and scores based on property hygiene, cleanliness and safety. Medium Medium Medium No major challenges

Recommendation –

To conclude the answer, I would like to say Airbnb should focus more on cleanliness and hygienic attributes of the property. These are to ensure user safety and satisfaction. Airbnb can promote virtual and online content as well. Need to come up such solutions which motivates guests to book properties as well as keeps hosts morale up.

Clarifying Questions

  1. Is the strategy for the duration of the pandemic? Or for post-pandemic?
    1. Assumption: for the duration of the pandemic
  2. Are we focusing on any specific geographic region?
    1. Assumption: No, focus on global operations
  3. Are we focusing on any specific part of the business (stay vs experiences)?
    1. Assumption: No, focus on the overall health of the business

 

Context on Airbnb

  1. Airbnb is a travel / hospitality company that operates as a marketplace, connecting hosts and travelers. Like any other marketplace, engaging and growing this ecosystem of hosts and travelers is key to Airbnb’s business.
  2. The company’s mission is to give its patrons an opportunity to “Belong Anywhere” – essentially creating a feeling of community. That is achieved by
    1. keeping users engaged
    2. creating a positive experience (for continued use)
  3. A large portion of Airbnb’s current busines model is dependent on physical movement of people, which is espically limited given the pandemic lockdowns
  4. The company has two main sources of revenue – listing fees charged to hosts, and booking fees charged to travelers

 

Impact of pandemic on “overall health” of Airbnb

  1. Health of Aibnb business
    1. Cash inflow / outflow
      1. Revenue
        1. Given Airbnb’s revenue is driven from booking fees – with reduced travel and in-person engagement, revenues have probably taken a beating.
      2. Costs
        1. In my opinon, Airbnb’s biggest costs can be categorized in 3 buckets
          1. Workforce
          2. Operations (office space, utilities, etc.)
          3. Platform (costs associated with keeping the platform functional)
  2. Health of paltform users
    1. Hosts
      1. SMBs struggling to make ends meet
    2. Travelers
      1. Feeling lack of adventure / travel in their lives
      2. Unable to engage in experiences and maintain sense of community

 

Objective

  1. Identify ways to alleviate revenue crunch faced by the company right now, while ensuring that the company is still able to support its mission of keeping users engaged and creating a positive experience
    1. Reasoning: The pandemic greatly affects Airbnb’s cash inflow (revenue), with lilttle change to cash outflow (costs). Although Airbnb can simulatneouly take some measures to reduce its costs, these measures will independently not be very effective in solving for user’s need and revenue crunch.

 

Strategic Options

The following options are listed with the intention to increase revenue. Given revenue is product of price and quantity, they each either try to either change pricing or increase the quanity of units sold or explore new ways of monetization altogether.

  1. Sell essential products (disinfectants, extra sanitation equipment, etc.) to hosts that are still hosting guests
  2. Increase price for listings
  3. Provide long term rentals
  4. Offer virtual tours and experiences
  5. Create travel podcast sharing user experiences

 

Evaluation

 

Eval Table

Option Revenue Impact Impact to Users Difficulty of Implementation Notes
Sell essential products M M H
Increase price for listings M H L Not the best time to increase prices. Might further drive down demand and engagement
Provide long term rentals H H L Encourage property listings for longer time period – helps to maintain quarantine if you’re sick or an essential worker
Offer virtual tours and experiences M H M Creating the tech system, in addition to vetting new virtual experiences, might require slightly more effort. But can drive high user engagement
Create travel podcast L M M Although this might dirve user engagement, it does not offer the potential for a lot of immediate return on investment. Can be an option that the company explores later

 

Conclusion

Airbnb should focus on offering virtual experiences and long terms rentals in the short term as these can be implemented with relative ease and build on top of existing services. It should also simultaneously work on creating other revenue streams by incorporating a sales platform for complimentary goods – given its inexperience in this field, it can also look to partner with existing players like Shopify to release as a pilot.

Overall all these activites, by further engaging users and prividing a positive experience, will enable Airbnb to help its users build a virtual community and feel belonged. This will provide a diversified product line in the long term and also paint Airbnb in a positive light today.

 

My best advice to answer this product strategy question.

Clarify

Are we talking about what Airbnb can do strategically during corona restrictions? Yes

Company & Product

Airbnb connects guests & hosts (people who provide accommodations) to provide home-like experiences. Recently the company has also expanded into experiences – for example, people visiting Hawaii could book tours for whale-watching, land tours, etc.
During this time – Airbnb business has been hit hard due to restrictions on travel, fear in people who are avoiding travel. At this point we do not know if the Coronovirus would totally go away or it will continue to affect life.
The strength of the company is the large base of hosts and the guests. The threat right now is the restrictions on travel etc.
Due to the current situation – it is imperative that Airbnb rates the host for hygiene and sanitization needs. The host should provide PPE (personal protection equipment) like masks, wipes to the guests. This should be listed as one of the amenities if provided by the host.

List of strategic choices

During this time Airbnb can experiment with some new business strategies that can help them recover some lost business
  1. Focus more on long-term rental (Quantantine stays)
  2. Provide accommodations at reduced prices for front-line workers (hospital staff, grocery store employees), etc.
  3. Local accommodation experiences
  4. Experiences where the host can teach something online. This could be cooking, dance, etc.
  5. Virtual video tours of scenic places
  6. Child-care facilities for essential workers

Evaluation criteria

We will try to evaluate the above choice with the following criteria – business impact/revenue, effort, strategy, climate.

List of choices with evaluation criteria

 Revenue potentialEffortExperienceStrategy

Focus more on long-term rental (Quantantine stays) M L Most of the features already exist – Airbnb should surface the listing for long term stays more prominently. Current business strategy
Provide accommodations at reduced prices for front-line workers (hospital staff, grocery store employees), etc. M L Most of the features already exist – Airbnb should surface the listing for front lines worker stays more prominently. Current business strategy
Local accommodation experiences L L Most of the features already exist – Airbnb should surface the local listings more prominently. Do users really want to rent near the place they live in?
Experiences where the host can teach something online. This could be cooking, dance, etc. ? L Need to start with MVP and see user engagement Diversifying into new business
Virtual video tours of scenic places Very Low M New features need to be built to support this product. There are competing platform like youtube which provide these for free
Child-care facilities for essential workers L M New features need to be built to support this product. Diversifying into new business. Regulatory requirements might apply.

 

Recommendation

I would recommend that we choose the first 2 strategic choices in the above. Airbnb already has features that allow the host to specify the duration of the stay. The front page will be have to redesigned to allow the users to find the long term rentals & stay for hospitality workers.