![AI And The Short-Term Rental Industry: How It Could Impact Hosts And Property Owners](https://www.american-apartment-owners-association.org/wp-content/uploads/2024/06/Girl-on-bed-Shutterstock_2239226127.png)
AI And The Short-Term Rental Industry: How It Could Impact Hosts And Property Owners
Everyone has experienced the introduction of artificial intelligence in one way or another, not least in the travel and hospitality industries. From how we book flights, explore accommodations and make our final decisions, AI is playing a part in providing choices and deals.
As it did for so many others, the short-term rental industry’s technological advancement exploded during Covid-19, and we had to find new ways to meet quotas and satisfy a new range of customer needs.
Thankfully, as technology stepped in to provide many of those answers, AI, being part of that range of solutions, brought even more to the table, providing higher levels of operation and customer satisfaction than ever experienced.
Given it was only a few years ago, it shows how quickly we adapt and take such improvements for granted. From uniquely personalized recommendations and pinpoint pricing strategies to automated property maintenance and steps forward in customer service, AI has made the world easier.
At the same time, modern consumers expect more from every penny they’re willing to part with, and with competition as it is, they’re getting it.
But what does that have to do with the short-term rental industry? As the co-founder of a property management company, we take care of onboarding and managing our clients’ properties on various platforms, including Airbnb.
Monitoring the changes in our industry, I’ve recently seen some AI-powered additions to Airbnb’s platform that could push hosts to work even harder to earn prime positions within their listings. We’re watching Airbnb’s operations to see how its latest moves will be reflected across the competition.
Need Legal Help?
Chat with a real estate lawyer near you. It’s only $5 for a 1-week trial. Ask unlimited questions.
Generative AI is behind a significant overhaul of Airbnb’s guest reviews.
You may have thought there was already enough to help customers navigate the quality of their rental stay using existing filters to sort searches by most recent, highest and lowest rated, and “superhosts.” However, in their latest winter release, the short-term giant introduced “Guest Favorites,” a new way of judging the standards set by properties and their hosts, as well as the verification badge.
The Guest Favorite Badge
Now, earning the “guest favorite” badge will show which properties are in the top 25% of listings and also the top 1%. Those badges will become the goal of every provider, especially those offering high-end luxury stays that claim to be the best a traveler can expect.
Airbnb is also introducing another badge for the bottom 10% to indicate a low-quality let, hopefully encouraging those hosts to raise their game, too.
So, what’s different about these new badges? The guest favorite badge relies on additional metrics, such as subcategory ratings, review sentiment, host cancellations and quality-related customer service issues, diving deeper into the data provided by visitors.
This move toward providing deeper insight into property and host quality and behavior should close the gap between the unpredictable nature of what visitors expect and what they find.
When it comes to validating an Airbnb host’s claims, generative AI is being tested to write review summaries, and it’s not only Airbnb that’s using the new tech; Booking Holdings (booking.com) and Expedia have introduced generative AI to their chatbots.
The Verification Badge
Using AI, Airbnb is also working to verify that properties are what their hosts claim they are. Last year, a verification badge was introduced to reduce the number of fake listings across its top five markets (the United States, Canada, Australia, the United Kingdom and France). The process includes anti-fraud technology and human review.
Given their volume of listings, that’s still a lot of work, especially when they announced that 1.5 million properties would earn the badge by the end of March, and it would be introduced to 30 more countries by the third quarter of the year.
However, the process is to be streamlined with AI photo and video verification tools. Now, backed by the new tech, their claims sound a lot more manageable.
What does it mean for hosts, and how will it impact them?
Apart from pushing hosts to provide an experience that matches their claims and listings, these new badges will further gamify their marketing processes.
The redesigned pages will display overall and category-specific ratings, meaning hosts must pay attention to every part of their presentation and process. It’s not solely about how attractive the property is or how idyllic the location is, but also how customer service incidents are handled and resolved and what those customers genuinely feel about their stay.
According to AirDNA, under the current model, 88% of Airbnb reviews in the U.S. were 5-star (and 85% around the rest of the world). A minuscule 3% scored three stars or less. You might think a property with a 4.75/5 rating will provide a great stay, but according to AirDNA, only those scoring higher than 4.9 are the true quality performers.
Moreover, AirDNA found that persuading your visitors to give you 5-star reviews goes a long way in boosting revenue. These higher ratings enjoy a 9.7% higher occupancy rate and a 7.7% higher average daily rate. This results in 18.2% higher revenue compared to the lower ratings.
If those new badges help customers get a more accurate picture of the level of service and presentation, it’s going to be a huge incentive for hosts to earn those awards.
As for hosts, they’ll need to accept where they’re failing and work to rectify those issues instead of hacking their review process. For their visitors, this should hopefully translate into walking straight into the high-quality stay they expect instead of a disappointing, over-optimized marketing ploy.
Source: Forbes