Online Travel Agencies (OTAs) like Airbnb, Booking.com, and Vrbo are a double-edged sword for property managers. They offer crucial visibility and bookings but come with high commissions and reduced control over guest interactions. Despite these challenges, understanding and leveraging each platform’s strengths can turn OTAs into valuable allies.

At Scale Show Barcelona, Rental Scale-Up (RSU) curated and hosted the Knowledge Stage, featuring an unprecedented lineup of property managers—many of them first-time speakers—sharing practical, real-world tactics. 

In a standout session, Thibault Masson, Founder of RSU and Head of Product Marketing at PriceLabs, joined Bart-Jan Leyts, Founder of Otamiser, to dissect the recent changes by the industry’s big three—Airbnb, Booking.com, and Vrbo. They offered an insider’s perspective on leveraging these platforms’ algorithms to benefit property managers.

Recent Changes by Airbnb That Impact Hosts

Pressure on Hosts to Lower Prices

Airbnb has been on an aggressive expansion trajectory, now boasting the highest number of listings in its history, with a staggering 8 million listings, marking a 15% year-over-year growth. However, this surge in supply has put pressure on hosts to remain competitive, primarily through price adjustments and quality improvements.

Competing on Quality

To maintain high standards and ensure guest satisfaction, Airbnb employs a dual approach of “sticks” and “carrots.” On the stick side, the platform has increased the removal of underperforming listings, leading to a 17% listing growth that would be otherwise higher. The lowest 10% of properties are particularly scrutinized. On the carrot side, Airbnb introduced the “Guest Favorite” badge, which is set to replace the “Superhost” status, recognizing properties that consistently deliver excellent guest experiences. Properties now can aspire to be in the top 1%, 5%, or 10%, adding a competitive edge.

Affordability

Positioning itself as a more affordable alternative to hotels, Airbnb has encouraged hosts to remove cleaning fees, with 300,000 listings already complying. Additionally, new tools have been introduced to help hosts compare their pricing with similar listings in the area, ensuring they remain competitively priced.

Entering New Markets

Airbnb’s strategic push into new markets is multifaceted, targeting both group travel and geographical expansion.

Group Travel

Recognizing the growing demand for group travel, Airbnb has introduced features like Shared Wishlists, Postcards, and Group Messaging. These tools have contributed to a 15% increase in bookings for groups of five or more. By catering to larger parties, Airbnb is tapping into a lucrative segment of the travel market.

Key Market Expansion

Airbnb continues to strengthen its presence in mature markets such as the US, Canada, France, the UK, and Australia. Concurrently, it is making significant inroads into Latin America (particularly Mexico and Brazil), Europe (including Germany, Italy, Spain, Switzerland, and the Netherlands), and Asia (targeting Japan, Korea, China, and India for longer-term growth). This strategic expansion aims to diversify Airbnb’s user base and capitalize on emerging travel trends in these regions.

From Travel to Lifestyle Brand

Airbnb is evolving from a simple accommodation platform to a comprehensive lifestyle brand, reflecting its broader ambitions and strategic initiatives.

Launch of Icons

Airbnb is investing heavily in brand-building, moving beyond short-stays to encompass a wide range of services. This includes the launch of new icons that symbolize various aspects of travel and lifestyle, reinforcing Airbnb’s identity as a holistic travel solution.

Changing Identity

The platform is redefining its identity, transitioning from catering primarily to urban weekend getaways for couples to a multi-category site offering long stays, housing, experiences, and even car rentals. This diversification is designed to meet the evolving needs of modern travelers seeking comprehensive travel solutions under one roof.

Data and AI Integration

In its quest to provide personalized experiences, Airbnb is leveraging data from group travel to create detailed guest profiles. This wealth of information enables the development of more tailored offerings. Furthermore, Airbnb is integrating advanced AI tools, such as photo tours and automated messaging responses, to enhance guest interactions. Looking ahead, the company is preparing for the introduction of an AI Concierge, which will provide personalized services throughout a guest’s stay, from booking to checkout.

How To Rank Higher on Airbnb?

Understanding how Airbnb’s algorithm works is crucial for hosts looking to improve their rankings and visibility on the platform. During the Knowledge Stage at Scale Show Barcelona, Bart-Jan Leyts provided an in-depth look at the inner workings of Airbnb’s algorithm and shared practical tips for property managers.

The Airbnb Algorithm: Four Pillars

Bart-Jan outlined the four main pillars that Airbnb’s algorithm uses to rank listings. These pillars are Content, Price, Competitor Performance, and Reviews. By focusing on these areas, hosts can strategically improve their listings and enhance their chances of ranking higher.

1. Content

Key Elements:

• High-Quality Photos: Use professional, high-resolution images to showcase your property. The first photo should be particularly compelling.
• Detailed Descriptions: Provide clear, detailed descriptions of your property, including amenities, nearby attractions, and unique features.
• Accurate Listings: Ensure all information is accurate and up-to-date to avoid guest disappointment and negative reviews.

Tips:

• Regularly update your listing to reflect any changes or improvements.
• Highlight any unique selling points that make your property stand out.

2. Price

Key Elements:

• Competitive Pricing: Set your prices competitively compared to similar listings in your area. Use pricing tools to find the sweet spot.
• Dynamic Pricing: Adjust your prices based on demand, seasonality, and special events in your area.

Tips:

• Offer discounts for longer stays or early bookings.
• Remove additional fees, like cleaning fees, to make your listing more attractive.

3. Competitor Performance

Key Elements:

• Benchmarking: Regularly compare your listing’s performance to similar properties in your area.
• Adjusting Strategies: If competitors are consistently outranking you, analyze their listings to see what they’re doing differently.

Tips:

• Keep an eye on local market trends and adjust your listing accordingly.
• Use tools that provide insights into competitor strategies and performance metrics.

4. Reviews

Key Elements:

• Positive Feedback: Encourage guests to leave positive reviews by providing excellent service and memorable experiences.
• Responding to Reviews: Engage with guests by responding to their reviews, both positive and negative, showing that you care about their feedback.

Tips:

• Aim for a high response rate to guest inquiries and reviews.
• Address any issues mentioned in reviews promptly to improve future guest experiences.

The Airbnb Algorithm Combination Module: Balancing Factors

The Combination Module, as explained by Bart-Jan, is a sophisticated system within Airbnb’s algorithm that balances positive and negative milestones across the guest journey. This module is used by Airbnb to balance positive and negative milestones across the guest journey in the context of property listings, likely influencing the listing’s visibility or ranking on the platform.

Structure:

1. Output Score: This is the final result generated by the Combination Module. It represents the overall assessment or ranking of a property listing.
2. Combination Module: This central component integrates inputs from multiple sub-modules to produce the output score. It serves as the decision-making hub that aggregates various factors.
3. Shared Representation Module: This module contains two primary sub-components: the Base Module and the Twiddler Module. These sub-modules feed into the Combination Module by processing and embedding listing and context features. Both modules are part of the Shared Representation Module and are responsible for different aspects of feature processing.
   1. Base Module
      1. Listing Embedding: Part of the Base Module, this process converts listing-specific features (e.g., property details, amenities, pricing) into a format that can be used for further analysis.
   2. Twiddler Module:
      1. Context Embedding: Part of the Twiddler Module, this process converts context-specific features (e.g., location, market conditions, guest reviews) into a usable format.
   3. MLP Layers (Multi-Layer Perceptron layers): These layers are neural network components used in both the Listing Embedding and Context Embedding processes. They help transform the raw features into embeddings, which are compact representations that capture the essential characteristics of the listings and context.
4. Listing Features and Context Features:
   1. Listing Features: These are the specific attributes related to the property itself, such as size, location, amenities, price, and availability.
   2. Context Features: These refer to external factors that can influence the property’s performance, such as market trends, competitive landscape, seasonal demand, and guest feedback.

Process Flow:

• The listing and context features are first processed by their respective MLP layers within the Base and Twiddler modules.
• These processed features are then embedded into a shared representation that captures the essential information needed for the final assessment.
• The combination module takes these shared representations and integrates them to produce an overall output score.
• This output score reflects a balanced view of positive and negative milestones, aiming to provide a fair and comprehensive evaluation of the guest journey and the property’s potential performance.

Implications:

• This detailed mechanism suggests that the platform is using sophisticated machine learning techniques to assess and rank property listings.
• By balancing positive and negative milestones, the platform ensures a more nuanced and accurate representation of each listing, potentially leading to better guest satisfaction and improved property management.

Recent Changes by Booking.com That Impact Hosts

Booking.com continues to assert its dominance by expanding its reach and enhancing its service offerings. During the Knowledge Stage at Scale Show Barcelona, Thibault Masson shed light on the company’s recent strategies and initiatives aimed at maintaining its competitive edge.

US Push and European Resurgence

Booking.com has been aggressively expanding its presence in the US market while simultaneously reinforcing its stronghold in Europe. The platform now boasts 7.4 million listings, reflecting an 11% year-over-year increase. Notably, non-hotel accommodations account for 36% of room nights, underscoring the growing trend of travelers seeking unique lodging experiences beyond traditional hotels.

Key Initiatives:

• Expansion of Listings: The increase in listings is part of Booking.com’s strategy to offer a wider variety of accommodations, catering to diverse traveler preferences.
• Payment Solutions: To better serve the US market, Booking.com has introduced new payment solutions, including a “Request to Book” feature that provides more flexibility and control for hosts and guests alike.

Tools for Hosts

Booking.com has developed several tools to help property managers optimize their listings and improve their performance on the platform.

Preferred and Genius Programs

The “Pay to Play” model through the Preferred and Genius programs allows hosts to boost their visibility and attract more bookings. These programs, though involving a financial investment, can significantly enhance a property’s appeal by placing it higher in search results and offering exclusive benefits to guests.

Flexible Cancellation Policies

Hosts are encouraged to offer at least three types of cancellation policies: Non-Refundable (NR), Early Bird (EB), and Flexible (Flex). This variety caters to different guest needs and preferences, potentially increasing booking conversions by providing options that match various risk appetites and planning horizons.

The Connected Trip Concept

Booking.com is evolving from a simple accommodation platform to a comprehensive travel service provider. The concept of the “Connected Trip” is central to this transformation, aiming to offer a seamless travel experience by integrating multiple services.

Expanded Offerings

Flights, Cars, and Attractions: Beyond accommodations, Booking.com now sells flights, car rentals, and tickets to local attractions. This holistic approach aims to cater to all aspects of the traveler’s journey, making it a one-stop-shop for all travel needs.

Addressing Challenges

While Booking.com has made significant strides, it faces several challenges that impact both the platform and its users.

Higher Payment Fees

The introduction of new payment solutions has come with increased fees, which can be a burden for hosts. Additionally, there have been issues with payment processing that need to be addressed to maintain trust and satisfaction among users.

End of the Travel Sustainable Program

Booking.com has also ended its Travel Sustainable program, which aimed to promote eco-friendly travel options. This decision has raised concerns about the company’s commitment to sustainability, a growing priority for many travelers.

The attached image details the key components of Booking.com’s ranking algorithm, specifically focusing on the “4 Pillars” that influence a property’s visibility on the platform. Here’s a detailed breakdown of the image content:

Understanding The Booking.com Algorithm to Rank Higher

Booking.com’s algorithm considers various factors to rank listings, and these are grouped into four primary pillars. Each pillar encompasses several elements that collectively determine a property’s ranking. Additionally, the algorithm’s weighting can vary by market, meaning different factors may be more or less important depending on the geographical location.

Price/Discounts

This pillar evaluates how competitively priced a listing is compared to others in the same market. It also considers any discounts or special offers available.

Key Elements:

• Competitive pricing relative to similar listings.
• Availability of discounts or special offers to attract bookings.

Competitor Performance

This pillar looks at how a listing performs compared to its direct competitors in the same market.

Key Elements:

• Analysis of similar listings’ performance metrics.
• Adjustments based on competitor strategies and performance outcomes.

Property Page Score

This pillar assesses the quality and completeness of the property’s listing page.

Key Elements:

• High-quality photos, detailed descriptions, and accurate information.
• Completeness of the property’s profile, including amenities and policies.

Weighted Reviews

This pillar evaluates the reviews received by the property, taking into account both the quantity and quality of reviews.

Key Elements:

• Number of reviews and average rating.
• Recency and relevance of reviews, as more recent reviews might be weighted more heavily.

Additional Factors

1. Rate (In) Parity: Ensuring that the rates offered on Booking.com are in parity with or better than those offered on other platforms or the property’s own website.
   1. Key Elements:
      1. Consistency in pricing across different channels.
      2. Avoiding discrepancies that might disadvantage Booking.com users.

2. Market Dependent: Acknowledges that every market has different weights for the factors considered. The importance of each factor may vary depending on the location.
   1. Key Elements:
      1. Tailoring strategies based on local market dynamics and competition.
      2. Understanding regional preferences and booking behaviors.

Vrbo’s Recent Moves

Vrbo, a key player in the short-term rental market, continues to focus on its core strength: catering to groups and families. During his session at Scale Show Barcelona, Thibault Masson, Founder of Rental Scale-Up, shared valuable insights into Vrbo’s recent developments and strategic adjustments aimed at maintaining its competitive edge.

Focus on Groups and Families

Vrbo’s primary market positioning remains firmly centered on groups and families. This focus is reflected in its inventory of larger houses designed for longer stays, which typically generate higher booking values. By catering to this niche, Vrbo sets itself apart from competitors that might target solo travelers or couples. The strategy is clear: offer spacious accommodations that appeal to extended families and group travelers, thereby driving higher revenue per booking.

Challenges with the New Platform

However, Vrbo has faced significant challenges with its new platform. Technical issues and conversion difficulties have plagued its rollout, leading to a halt in marketing efforts. These problems have hindered Vrbo’s ability to fully leverage the platform’s potential, causing frustration among property managers who rely on seamless technology to manage their listings and bookings efficiently.

Potential Upside: The One Key Program

Despite these setbacks, there’s a potential silver lining in the form of the One Key program. Although details are still emerging, this initiative could provide a much-needed boost by offering integrated solutions that enhance user experience and operational efficiency. If successful, the One Key program might help Vrbo recover from its recent technical woes and regain momentum in the market.

New Owner Dashboard

Looking ahead, Vrbo plans to introduce a new Owner Dashboard, a significant upgrade from the current system. This new dashboard will replace the Boost program, aiming to provide property managers with better tools and insights to manage their listings more effectively. By offering enhanced analytics and streamlined features, the new dashboard promises to improve the user experience for property managers, making it easier to optimize their properties and maximize bookings.

Conclusion

Whether navigating the challenges posed by OTAs like Airbnb, Booking.com, and Vrbo, or leveraging their strengths, the key lies in understanding and optimizing the tools at their disposal. With new developments such as Airbnb’s algorithmic changes, Booking.com’s integrated travel services, and Vrbo’s focus on groups and families, there are ample opportunities for property managers to enhance their operations. By staying informed and agile, property managers can not only overcome the hurdles of high commissions and technical issues but also thrive in a competitive market, ultimately delivering exceptional guest experiences and achieving sustainable growth.