Airbnb Predicts Return on Investment

Airbnb wants to know what’ll make you click “book now.”

Photo by cottonbro studio via Pexels

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Airbnb wants to know if you’re actually going to book that trip to Bali (or if you’re just daydreaming at work). 

The company is seeking to patent a system for prediction of an “expected value of user conversion.” Essentially, Airbnb’s system collects “highly user-specific data” to determine if a user is planning to make a purchase, and how much that purchase could be worth. 

This system aggregates a bunch of data on individual users’ activity, specifically collecting real-time data within a “set window of time,” such as account history, same-day site activity, frequency of views and past bookings. The system then feeds this data to a “predictive intent model,” which calculates the probability that a user will make a purchase at all, and a “predictive value model” which calculates how much that user will spend. 

Within the intent model, a users’ viewing history is taken into account the most heavily, and within the value model, data related to price and market are the most considered. The outcomes of these models can then help guide Airbnb’s “user acquisition strategies for different home sharing markets.” 

Airbnb said this can help it decide where to spend its advertising money to get a better return on investment, rather than just making “guesses or inferences as to user intent” to make those decisions. “Such guesses are generally based solely on the advertiser’s intuition and market knowledge, requiring human intervention and intelligence.” 

Photo via the U.S. Patent and Trademark Office.

Companies wanting to track your clicks has been a recurring patent theme: WalmarteBayUberVisa and plenty of others are working on similar tech to figure out where to place hyper-targeted ads that will make them the most money. Plus, as advertising grows more expensive on platforms like Facebook, YouTube, Snapchat and TikTok, getting the best return on investment is crucial. 

In contrast to the hotel industry, the pandemic was a boon for Airbnb, posting its first-ever profit in 2022. But the company may soon face trouble in paradise… or at least trouble getting people to book a room in paradise. 

Airbnb said in its Q1 earnings report that travel levels are likely to drop, as pent-up, post-pandemic demand for travel in 2022 created conditions for temporary rapid growth. A viral Twitter thread from CEO of Reventure Consulting Nick Gerli pointed to data from analytics from AllTheRooms that top cities for Airbnbs like Phoenix and Austin saw revenue per available listing drop close to 50% in May 2023, compared to the same month last year. Airbnb, however, said this wasn’t consistent with internal numbers, Bloomberg reported.

Regardless, the travel industry is still recovering from the blow dealt by the pandemic. While it’s likely not going to reach 2019 numbers this year, the sector is showing signs of life. Focusing its efforts (and advertising spend) on customers that are actually going to take the plunge and book that bungalow in Aruba or that cooking class in Italy could be part of Airbnb’s work to keep momentum going. 

(P.S., if you want a breakdown of Airbnb’s, well, potential breakdown, check out TDU reporter Brian Boyle’s recent deep dive.)

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