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AirBnB's Pricing Algorithm

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Re: AirBnB's Pricing Algorithm

#3

Post by bkohlmann »

We've been an airbnb host with multiple properties for a few years now in Austin. We've done our own version of dynamic pricing (manually), and the graph highlighting Austin in the article is spot on. The "Pricing Tips" tool has a long way to go, but its relatively close (within 20-30 percent). It still hasn't caught some of the big events, mostly because it only looks forward 3 months, and for popular events like SXSW, we usually book 4-5 months out at very high prices. That said, big props to ABNB for trying this and putting it out there. Hopefully their algorithm takes into account what humans are actually doing with their own pricing, and using that in it's calculations.

Re: AirBnB's Pricing Algorithm

#4

Post by EC1 »

I can't stand AirBNB. Prices are ludicrously high. I feel like prices are higher just because it's a nicer cuter interface than Craigslist. Obviously I can't prove this. Also wish I could filter by monthly for everything not map a certain daily range to a monthly range in my head.

Re: AirBnB's Pricing Algorithm

#5

Post by Lucadg »

I found that the Airbnb Price Tips feature works pretty well in mature markets but not in new locations. In some apartments we manage in Kenya for instance, there are two apartments which are exactly the same. One has no reviews and the suggested price is around 48 €. The other one has 3 reviews with 4.5/5 ratings and the suggestion is 30 €. So, it's good to look at but you always need to see if it makes sense to you. Anyway, amazing job, they left the competition 10 years behind.

Re: AirBnB's Pricing Algorithm

#6

Post by tdfw »

EC1 wrote: post #4

I can't stand AirBNB. Prices are ludicrously high. I feel like prices are higher just because it's a nicer cuter interface than Craigslist. Obviously I can't prove this. Also wish I could filter by monthly for everything not map a certain daily range to a monthly range in my head.

I feel Airbnb offers a value-added service and, in my personal experience, that has justified the extra price. Also keep in mind that the spirit of Airbnb was short-term vacation rentals; not long-term tenancies.

With Airbnb I can evaluate the host's social "credit" to some degree (have they connected with LinkedIn? What references have they provided?) and transparent straight-up reviews from past guests. Having Airbnb act as an arbitrator when things go wrong is priceless.

Re: AirBnB's Pricing Algorithm

#7

Post by throw42 »

This is the difference between airbnb and google. Google would have Hal Varian look at this. Airbnb has a music major re-invent the wheel (not sure if the managed to re-invent the whole thing).

There is a whole field of study called pricing mechanisms. For example, second price auctions work well because of a reason.

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