Airbnb: A Look at Its AI Strategy

Airbnb has launched an AI agent built on 13 different models for customer service in its app and plans to add more AI tools in the quarters to come. The goal: transform the Airbnb app into one that is AI native. CEO Brian Chesky said on Airbnb's second quarter conference call that the company's move into complementary services paid off with better-than-expected results. Airbnb has retooled its tech stack and is now rolling out improvements to its app and services at a faster pace. "We are massively ramping up development of product development pace at Airbnb. We do these typically biannual releases, but we are now iterating very, very quick even between these releases," said Chesky. Airbnb is navigating multiple shifts. The company is expanding into complementary markets including home market services and experiences, shifting its marketing approach to focus more on social over search and TV, and optimizing everything from pricing to customer service as it expands share globally. In the second quarter, Airbnb delivered strong metrics as it expanded its AI-powered customer service agent to 100% of US users and scaled new offerings. The company saw travel demand accelerate from April to July despite an uncertain economy. Airbnb reported second quarter net income of $642 million on revenue of $3.1 billion, up 13% from a year ago. As for the outlook, Airbnb expects revenue growth of 8% to 10% in the third quarter with stable nights and seats booked compared to the second quarter. However, the company expects lower margins due to investments in new markets including Airbnb Services and Airbnb Experiences. Additionally, Airbnb redesigned its app to make bookings across services in one place and has been continually optimizing since the May launch. This rapid product cadence will be necessary as Airbnb carries out its AI strategy.

Airbnb's AI Strategy Highlights

Start with the Hardest Problem

Chesky explained that most AI efforts in travel focus on trip planning and inspiration. Airbnb chose customer service as its AI use case because it is "the hardest problem because the stakes are high, you need to answer this quickly and the risk of hallucination is very high." "You cannot have a high hallucination rate. And when people are locked out, they want to cancel reservation, they need help, you need to be accurate. And so what we've done is build a custom agent built on 13 different models that have been tuned off of tens of thousands of conversations. We rolled this out throughout the United States in English. And this has reduced 15% of people needing to contact a human agent when they interact instead with this AI agent," Chesky said. The plan is to bring that customer service agent to more languages.

Increase Personalization and Context

The customer service AI agent will become "more personalized and more agentic" throughout the next year. Chesky said: "The AI agent will not only tell you how to cancel your reservation, but it will also know which reservation you want to cancel, cancel it for you and it can start to search and help you plan and book your next trip."

Expand AI into Travel Search and Planning

Airbnb plans to leverage AI across its use cases and app, including expansion into hotel bookings, especially boutiques, bed and breakfasts, and independents in Europe.

Become AI Native

Chesky emphasized that Airbnb aims to become an AI-native app. Currently, the top 50 apps on Apple's App Store are mostly not AI native, with ChatGPT being a notable exception. "You've got basically AI apps and kind of non-AI native apps. And Airbnb would be a non-AI native application. Over the next couple of years, I believe that every one of those top 50 slots will be AI apps—either start-ups or incumbents that transform into being AI native apps. And I think at Airbnb, we are going through that process right now of transitioning from a pre-generative AI app to an AI native app. We're starting to customer service. We're bringing into travel planning. So it's really setting the stage."

Stay Focused and Strategic

Chesky cautioned against viewing AI chatbots and agents as a replacement for Google or a single AI tool to rule all. He predicts specialized AI models for different categories. "ChatGPT is a great product, but the approach isn't exclusive to OpenAI. Airbnb can also use the API, and there are other models that we can use. In the coming years, you're going to have a situation where these large AI models can take more and more, and more things will start there, but people won't often go to one chatbot. You're going to also have start-ups that are going to be custom-built to do a specific application, and you're going to have incumbents that make a shift to AI. It's not enough to just have the best model. You have to be able to tune the model and build a custom interface for the right application. The key thing is going to be for us to lead and become the first place for people to book travel on Airbnb. As far as whether or not we integrate with AI agents, I think that's something that we're certainly open to. Remember that to book an Airbnb, you need to have an account, you need to have a verified identity. Almost everyone who books uses our messaging platform. So I don't think that we're going to be the kind of thing where you just have an agent or operator book your Airbnb for you because we're not a commodity. But I do think it could potentially be a very interesting lead generation for Airbnb."

Frequently Asked Questions (FAQ)

About Airbnb's AI Strategy

Q: What is Airbnb's primary goal with its AI strategy? A: Airbnb's primary goal is to transform its app into an "AI-native" application by integrating more AI tools, starting with customer service. Q: What specific AI tool has Airbnb launched? A: Airbnb has launched an AI agent built on 13 different models for customer service within its app. Q: What problem did Airbnb focus on first for its AI implementation? A: Airbnb focused on customer service as its initial AI use case, considering it the most challenging problem due to high stakes, the need for quick responses, and the significant risk of AI hallucinations. Q: How effective has Airbnb's AI customer service agent been? A: The AI agent has reduced the need for human agent contact by 15% for users who interact with it. Q: What are Airbnb's future plans for its AI? A: Airbnb plans to expand its AI tools to more quarters and languages, and further enhance personalization and context awareness in its AI agent. Q: How does Airbnb view the role of AI agents in travel booking? A: Airbnb sees AI agents as a potential lead generation tool rather than a direct replacement for booking on their platform, emphasizing the need for verified identities and the messaging platform. Q: What is Airbnb's approach to AI model development? A: Airbnb believes in specialized AI models for different categories rather than a single, all-encompassing AI tool. They also emphasize the importance of tuning models and building custom interfaces for specific applications.

Crypto Market AI's Take

Airbnb's aggressive push towards an AI-native app mirrors the broader trend we're observing across industries, including the financial and technology sectors. The focus on tackling the most complex problems first, like customer service, demonstrates a strategic approach to AI implementation. This mirrors how we leverage AI at Crypto Market AI, not just for market analysis but also for enhancing user experience and providing efficient customer support through our advanced AI agents. The concept of AI agents becoming more "agentic" – capable of not just providing information but also taking action, like booking or canceling reservations – is a significant step towards truly integrated AI services. This capability is something we're actively exploring and implementing within our own platforms to streamline user interactions and deliver more proactive assistance.

Airbnb: A look at its AI strategy