Week 13 Discussion

1.      Which pricing strategies does Airbnb use?

An algorithm offers dynamic price tips to property owners. The price tips are based on a system known as a classifier that takes all the available information about a listing and compares it to historical data, other homes in the same neighborhood, and local events around the booking dates to come up with the maximum price that travelers will be willing to pay for each listing.

2.      Does the number of reviews matter for an Airbnb host?

Yes - travelers are willing to pay more for a listing with only one review than they are for a listing with no reviews.

3.      The article mentioned the various attributes affecting an Airbnb rental list. Which attribute matters the most? Why? 

Geographic location is "hugely important" because travelers will be planning on going to a certain area. An AirBnB that isn't close to their desired location is much less valuable to them.

4.      How does the machine-learning model help a host manage the rental list?

The host doesn't have to spend hours doing their own research on similar listings, and doesn't risk losing potential income or visitors due to improper pricing. Additionally, the machine-learning model can take into account historical data that the host may not have access to.

5.      Listed below are a series of pricing strategies/polices. Place them onto the correct section of the matrix and explain you choose that strategy.

• Holiday Inns try to fill hotels during winter weekends. - skimming. Holiday Inn is not necessarily a high-end hotel, but can get very expensive quickly.
• Burger King introduces a new range of value meals. - economy. The price of the meals is low, however the nutritional value is also low.
• Nokia launch a new videophone. - penetration. Nokia phones are known for their durability and low pricing.
• Wall-Mart launch a new range of own-label soups. - economy. Walmart brand products are much less expensive, however typically lower quality than name brands.
• Cunard launch two new cruise ships. - premium. Cruise ships are an expensive, luxury item and customers must pay for such.
• A cable TV provider moves into a new area and needs to achieve a market share. - penetration. The most important part of this endeavor is convincing customers to leave their current provider, which requires low prices and superior service.