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: Is that Airbnb too expensive? CEO plans ‘systematic update on pricing’ as travel recovers

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Brian Chesky helped transform the travel industry when he co-founded Airbnb Inc. More than a dozen years later, the COVID-19 pandemic has changed the industry anew, and the co-founder and chief executive is making changes to the online-booking platform in response.

The upgrades were inspired in part by what Airbnb’s
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CEO said were the three major changes the company has seen in travel as the coronavirus pandemic enters a new phase: People are traveling anytime; they’re going to more places, not just cities; and they’re staying longer. In an interview with MarketWatch on Monday, during which he discussed the travel recovery and addressed some of Airbnb’s challenges, Chesky said he expected this evolution of travel trends to “last for years to come.”

“When people couldn’t fly, they started going to rural areas, or the suburbs,” he said. “Now instead of staying in New York City, they’re saying they have alternatives. [They] can go to the Catskills. Instead of San Francisco, they go to Sonoma.”

“More and more it’s about who you’re with and shared spaces, getting a house together,” Chesky added.

See: Travelers are booking trips online again, but they mostly want the same thing: Not a hotel

Airbnb is positioned to take advantage of the current travel environment, analysts say. But demand for alternative lodging and cleaning fees that may be affected by the pandemic are leading to some sticker shock. A recent viral tweet included a screenshot that showed cleaning and service fees, along with occupancy taxes and fees, costing more than the nightly rate of an Airbnb, and led to angry responses over recent bills for stays.

Chesky stressed that Airbnb sets one fee but hosts set their own cleaning fees. He said the company has more than 5.7 million listings, and that “in many cases, the value is amazing.”

“We are working with hosts so prices don’t get out of whack,” he added, and said he has assigned an executive to work on the issue and make plans for a “systematic update on pricing” later this year.

The CEO also said he is not seeing evidence of prices rising related to pressure on supply, and that the company’s flexible-dates feature should help “redistribute” travel so that people aren’t clamoring to go to all the same old places at once.

“Our job is to show people there are more interesting places to go,” Chesky said.

According to Airbnb’s trends report for the summer, people in the United States are traveling close to national parks and beaches, with destinations in Montana, Rhode Island and Florida topping the list. The company said rural-destination travel is up 28% in the U.S., and has risen 48% in the U.K., 45% in France, 43% in Canada and 42% in Australia.

Summer 2021 travel trends: From Airbnb’s fee fiasco to a ‘crazy’ short-term rental market

The company will need to find new hosts in regions that are growing in popularity, and hold on to the ones they have amid competition from services like Booking Holdings Inc.
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and Expedia Group Inc.’s
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+1.63%

Vrbo business. Analysts said the changes Airbnb is installing now could help alleviate any supply issues as travel continues its rebound.

“We believe the new features are in the right direction given the investor concerns about the supply, and should increase the number of hosts and retention,” analysts for Mizuho Securities wrote this week, although they maintained their neutral rating on the stock and added that they “would like to see quantitative results before getting more constructive.”

Some of the improvements Airbnb is rolling out for guests are related to booking flexible stays and a promise for faster checkout, while the company says hosts should have an easier time listing their homes on the platform. Airbnb also said it is doubling the number of its support agents, and increasing the number of languages they speak from 11 to 42.

Beyond the travel rebound, Chesky referred to the company’s past battles with cities around the world over collecting hotel occupancy taxes as a combination of the company growing too fast and not knowing any better. He says he has learned how to deal with regulatory issues, and that it’s important for Airbnb to be a good partner with government.

“I was 26 when we started Airbnb,” Chesky said. “I didn’t know how to work with governments. Thirteen years later, we have partnerships with thousands of cities around the world.” He said on the company’s recent earnings call that Airbnb now collects or remits taxes in 30,000 jurisdictions.

As the company grows, its CEO said, “People are rightly suspicious of anything large and powerful. I don’t ever want us to feel like a huge scary juggernaut.”

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