27 August, 2015
WiFi, Hot Tubs And Big Data: How Airbnb Determines The Price Of A Home
The car service Uber needs two basic pieces of information to determine what a trip should cost you: how many passengers are in search of a ride, and how many drivers are on the road offering them. Uber’s pricing, which is also influenced by discounts designed to lure new riders and drive growth, primarily fluctuates with changes along these two axes, supply and demand.
Now consider another asset in the peer-to-peer economy — an Airbnb rental. What should you charge for one? The answer turns on a much longer list of variables beyond how many homes are available and who wants them. Is it a townhome, a penthouse, a cabin, a castle, a teepee, a yurt? A single room or a whole home? The bed: double or queen? The view: riverfront or city skyline? The Left Bank or right one? How gourmet is the kitchen? Is there a subway stop nearby or off-street parking? Are the Grateful Dead in town? Or the cherry blossoms blooming?
What’s worth more: A studio in Adams Morgan with half a dozen bars nearby, or a single bedroom in a Capitol Hill Victorian with views of the Capitol dome?