BMGT41040: Operations, Innovation and Management

Report
Case: Airbnb

Date: 12th Apr’ 2021

Sumit Madan (20200353)

sumit.madan@ucdconnect.ie

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 Airbnb Case – Questions
1. Is there anything Airbnb could have done to avoid the “EJ” incident? To reduce the
aftermath?

Ans. A good solution to prevent incidents like the “EJ incident” is to make guests pay a
security deposit. The article does not talk about security deposits, but in my personal
experience using the Airbnb site, I was charged a security deposit to ensure I leave the house
as I came to it. When I arrived at the cabin, I was greeted by the owner who gave me the key
and code to the property, and went over a list of rules they expected me to follow if I want to
get my deposit back. I think this is a perfect solution to avoid damage to one’s property because
it is easy for guests to see nice things in the house they are staying in and want to take them. A
security deposit gives the guests more motivation to ensure the house is left clean, with nothing
stolen so they can get their money back. Also, a good reason for a security deposit is to see
how the guest is financially. If a guest cannot afford the security deposit or tries to talk the host
out of having to pay it, then it gives the host insight that this person might not be trustworthy
inside their residence with nice things.

To reduce the aftermath, instead of being reluctant to comment on the “EJ” incident, Airbnb
should have responded much more quickly to the public after the “EJ” incident and apologized
via the media to the host. In order to solve the situation, Airbnb should have taken charge in
finding out where the guest was, using any sort of background check, which is another
precaution Airbnb should have taken in the first place. However it is still impossible to fully
reflect the “EJ” like incidents. Incidents like or worse than the “EJ” will still probably happen
and harm the reputation of Airbnb. Hence, beyond the suggestion of immediate, these are
possible steps to avoid the aftermath:

Short Term: Launch of public relation and social media activities in order to reduce the
damage to their image. Immediate support and personally responding to EJ could have averted
negative media altogether. Writing to hosts and assuring them of strong actions towards
misbehaving users would also have appeased the hosts community preventing more incidents
being discussed in social media. Launching insurance to protect its customers from similar
situations and making up for damages is also a solution.

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Long Term: Training and equipping customer support staff for timely solutions that address
the problem customers issue taking into account the materiality of the event. Designing
standard operating procedures(SOPs) to reduce response time. SOPs could be designed for the
customer support staff to honor a Service Level Agreement (SLA) involving the most common
performance metrics. Further, design intelligent CRM systems that can detect automatically
abnormal situations - either in Airbnb’s platform or in media and social media- classify them
by severity and take automatic actions.

2. How should Airbnb further facilitate trust between renters and hosts?

Ans. As the article states, enabling a “review” or “comments” section on the hosts profile, and
on the listed property will give insight to future renters to learn what they will be expecting if
they choose that listing. These comments should be regulated by Airbnb because if a certain
host or property is getting bad reviews, Airbnb can step in and deal with the issues. I also
believe there should be some criteria for the hosts to follow before posting a listing to ensure
the photos and descriptions match what the residence actually looks like.

The factor of trust between the renters and the hosts is the foundation that makes Airbnb a
business. Airbnb is a marketplace for renters and hosts and could not survive without them.
The hosts are the major stakeholders and have more to lose than the renters, so the system
Airbnb conducts should be aimed more towards them. A solution that would help the hosts
better trust their guests would be if Airbnb collaborated with a pre-screening agency to obtain
more information about the renters that they might not disclose on their profiles. This would
show the hosts what type of people they are renting their properties to, and will help them feel
more secure. Airbnb could have implement a better protection measures to build trust such as:

 Prescreen & Require more complete profiles about the hosts and guests.
 Provide insurance for hosts.
 Be less restrictive on hosts when they reject unsuitable renters.
 Differentiate price charged based on guest’s ratings.
 Present more sophisticated consumer reviews.
 Use incentives to encourage reporting of problems.

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3. Airbnb and eBay are similar in that both companies run online marketplaces that
match buyers with sellers. How should Airbnb’s reputation system differ from that
of eBay?

Airbnb’s reputation system should be different from eBay’s because renters are not
reviewing a “product”, they are reviewing a service. On eBay, customers rate the products
they buy by their quality, description, and authenticity of the product. They also rate if the
seller is friendly, and if they ship out their packages on time. Airbnb is different because it
sells an experience and is a service company, which means they should be rated based on
the overall quality of the stay/experience. Ratings for Airbnb can be more helpful because
what some people might not have liked about their experience, others won’t mind. This is
different than eBay because if many people review that a product is bad, other people won’t
buy it. Airbnb offers a wide variety of properties to choose from, and while some guests
might think a property is too small, other guests might think it’s the perfect size.
Hence, Airbnb requires a more sophisticated reviewing systems like the ones found in
TripAdvisor. This could increase the amount and the quality of the information available
for hosts to make better decisions. Uprating and downgrading reviews (E.g. Amazon) based
on the raters credibility is another good addition. To do so, company must offer rewards to
frequent reviewers that make decisive contributions These rewards could be translated into
special bonus & loyalty programs, increasing prices for bad reviewees, preferential spots in
the search engine, etc. The reviews could also be improved by being translated in the user’s
language automatically and being able to support pictures from users. The downside of this
is that if not implemented and communicated correctly, it could affect the system’s
functionality, users’ perception and might be expensive to develop.

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