Oct 23, 2023Liked by Gad Allon

Professor Allon,

I loved learning about Airbnb’s delicate balance to achieve equilibrium for their hosts and customers. I also liked the “long tail risk” idea that irregular issues can have hugely disproportionate effects. As you mentioned, if Airbnb does not improve their customer service, reliability, and pricing algorithms, the company will lose considerable market share to alternative providers. To overcome these issues and regain consumer trust, it seems Airbnb will have to increase transparency while decreasing the algorithm’s rising prices.

Additionally, I saw that Nick Gerli posted something interesting on X: with the housing market’s higher mortgage rates and fewer available properties, Airbnb may soon struggle with owners turning away from renting in favor of selling. Do you think Gerli is correct? Do these factors exist and could they pose a major difficulty for the company?

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I am not an expert on real estate, but with financing cost increasing, owners are either going to increase prices or sell. In either of these, this is not a good situation for Airbnb.

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