Airbnb Marketing Problem Analysis

Executive Summary:

As of June 2022, international departures originating from the United States increased 82.1% from June 2021 and is still 16.9% lower than in 2019. This is an opportune time to bolster currently available international properties and increase the number of bookings originating from the United States. As there is still some ground to makeup as we emerge from the COVID-19 pandemic, Airbnb has the daunting task of overcoming international regulations, supply and demand issues, competition, and how to effectively market international destinations to new customers and to those who have visited their website in the past and ended up not booking a stay.

Narrowing the customer data by eliminating the United States as a destination, we were left with 151,075 observations. We then analyzed this data using a combination of Microsoft Excel and the KNIME Analytics Platform. Out of six different models that were created, the Decision Tree gave us our most accurate results at 78.975%. Across all models, France is the most likely choice for someone’s first international travel destination booking.

After evaluating the results, we have recommendations for Airbnb in the 4-P’s, Place, Product, Price, and Promotion. For Place, we recommend Airbnb divert a portion of its funds to lobby the French, Italian, Spanish, and British governments to extend the number of days a host can rent their properties, and that they create a “how-to” link on obtaining a city-approved license, for places like Barcelona, Spain where one must obtain a city-approved license to rent their property on Airbnb. For Product, we recommend focusing and prioritizing marketing and host recruiting efforts in France, Italy, Spain, and Great Britain, as they are the top international destinations. For Price in the short-term, due to the current negative impact on supply and demand, we recommend Airbnb adjust pricing to better control the imbalances in the aforementioned countries by raising fees in the top destinations where there are a limited number of hosts. For a longer-term solution, we recommend Airbnb investigate alternative fee structures in the top destinations that will better incentivize property owners to list their properties on the Airbnb website. Finally, for Promotion, we recommend targeting Millennials and Gen Z, as they are a rapidly growing segment in international travel, by increasing the marketing on Instagram and TikTok. Not to be forgotten, Baby Boomers and Gen X have a higher income yield, a lower Airbnb rate, and should be targeted with each generation’s unique travel preferences, wants, and needs to increase their use of Airbnb as a place to book their next vacation. Furthermore, we recommend Airbnb to alter its advertising to include more messaging regarding “living like a local” as it was discovered that over 77% of Airbnb customers said they chose Airbnb over a traditional hotel stay due to wanting to “live like a local.”

In conclusion, as the global travel market returns to pre-pandemic levels, there is a great deal of opportunity for Airbnb to position itself to gain market share, expand profit margins, and increase revenues in 2023. The team's research into Airbnb's background and organizational challenges showed that the organization suffered significant revenue loss due to the pandemic, supply and demand imbalances, outcries from hosts and guests over user satisfaction and safety issues, and recurring political battles. The team also uncovered tremendous opportunities within the United States global travel market and through our recommendations we are confident Airbnb will garner a greater hold on the entire vacation rental market, with an emphasis on international travelers.