Airbnb has made a move that could jeopardize the budding ecosystem of pricing startups promising to help renters achieve the greatest profits: The popular platform has made its internal pricing prediction software available to developers to include in their own apps.
This is a shot across the bow at the proliferation of startups with their own pricing algorithms, such as Beyond Pricing. While these companies usually offer this as only a component of a fully-managed rental service, there's always the risk of host rebellion when building a business on another company's platform.
Airbnb introduces the service in a blog post called "Aerosolve: Machine learning for humans," saying that the algorithm allows for a more successful — and profitable — experience:
We have been operating on the belief that enabling humans to partner with a machine in a symbiotic way exceeds the capabilities of humans or machines alone.
From the project’s inception we have focused on improving the understanding of data
sets by assisting people in interpreting complex data with easy to understand models. Instead of hiding meaning beneath many layers of model complexity, Aerosolve models expose data to the light of understanding.
The team build image analysis to determine specifics about a particular listing, in addition to automatically creating neighborhoods for comparison.
The algorithm then also takes into consideration such inputs as the images that are most popular with users in an organic way — rather than just those that trained photographers think are the best. For example, photographers always prefer the living room shot as the top-most photo. Yet, actual users want to see warm and inviting shots of the actual bedroom being rented.
By combining all of this together, the team has been able to create a pricing algorithm that works best for Airbnb. The open source code is now available on GitHub, meaning that any developer can integrate Airbnb's pricing model right in their own app.
This news is tied to another announcement that further challenges pricing startups: Airbnb will make this information available to its own users via a feature called Price Tips. While Airbnb had always included a suggested price for a particular listing that used micro-targeting to analyze a listing, it had never been a full feature.
The feature was announced at Airbnb's OpenAir conference, where Airbnb VP of Engineering Mike Curtis explained the pain point being solved for:
It’s often looking at hotels in the area, seeing how much they charge. In lot of cases it’s someone typing in a number and hoping for the best. It’s one of the biggest points of friction in the startup process, and worse than knowing what to price is understanding how that price should evolve over time.
Here's how the interface will look for the Airbnb host: