Before we delve into the topic, you may have noticed me being somewhat absent the last few months. There was a reason for that. Now that the quiet period is over, I can write a little bit more. It’s been an interesting ride to see an IPO from this side. Expect lots more excitement to come!
Now, that said, I had the opportunity to do the AirBnB thing a couple of times this year. This is a great model for taking advantage of excess housing supply and is turning out to be quite disruptive to the hospitality space. Like Uber and Lyft for taxi-like services, AirBnB is marrying up property owners with extra space with travelers who need a place to stay. My family & I stayed at a very lovely place in Candler Park, GA for a weekend and I loved everything about the experience. My host was amazing and we tried to leave the place better than we found it.
Those of you who follow me know that I spend a few nights on the road every year. I’m pretty loyal to my brands as well. As long as I continue to receive fantastic service and feel valued and rewarded for my loyalty, I will keep spending there. My family benefits from my loyalty when we decide to take a trip. I like being rewarded for my loyalty, and Momma likes her a beach weekend every so often!
AirBnB and HomeAway, among others, have demonstrated the model works, but they are missing something extremely important. Perhaps their executives can go back to the 1980s and review Bob Crandall’s moves at American Airlines. He is largely credited with the creation of the first loyalty program among the airlines, and nearly every single airline has followed suit.
And that’s what AirBnB and HomeAway are missing.
Consider the loyalty programs by Marriott, Starwood, and Hilton, which create fierce loyalty among their top customers. Now, consider the same concept at AirBnB and HomeAway where loyalty is rewarded among renters. For a lower price than a regular room at a full service Marriott, Westin, or Hilton, I can now rent a one bedroom apartment where I can enjoy the amenities of the neighborhood and essentially stay in an expensive suite (when compared to the hotel). Yet, today, I receive zero reward for continuing to do it over and over again. The network effect that these guys position with property owners is intentionally weakened through their lack of foresight on loyalty, which in general, is one of the biggest components of customer retention.
AirBnB and HomeAway have a lot of work to do to figure out how to build one to make it work, but they would do their property owners a huge service by offering a sticky nature to their rentals—especially during the week when the highly profitable business traveler needs a place to stay. A loyalty program would increase the customers driven to their property owners and make the service much more valuable.
Full disclosure, I reached out to both AirBnB and HomeAway to offer up this feedback and received no response.