Edited from the draft of my next article. I hope you will still read it!
(Akerlof 2003) describes consumer suspicion can lead to the devaluation of all Airbnb in a paper called The Market for Lemons. This is a Nobel prize-winning literature so it’s a big read. To paraphrase, it’s about the car dealers of the 1970’s. I think it is still applicable for Airbnbs too. You can find it in PDF form here
His argument goes something like this.
Imagine an area where there are two types of Airbnb, good ones and bad ones. Let’s say a fair price for a good Airbnb is $100. The fair price for a poor one is $50. A pragmatic (bargain hunter) guest would conclude a fair price in the region is the average, $75.
Now the trouble is that now when bargain hunter goes looking for an Airbnb they see good ones being $25 too much and bad ones being $25 cheaper. So they see the cheap one as better. When they find that cheap means poor quality, confirmation bias kicks in: Airbnbs are bad. Repeated over and over the result is that all Airbnb’s lose business, good ones and bad ones.
Akerlof describes this as asymmetric information… the guest has no idea what a good Airbnb is before purchase so has to take a leap of faith. He concludes that regulation by a third party balances the lack of knowledge. I guess Air would argue their reviews do this. In the paper’s case, it recommends car dealers have a trade body or registration scheme as regulators.
I’d argue that guests (and nieve hosts) need to stop thinking as Airbnb as a commodity ie something that only competes on price. As hosts, we can do this by marketing the #experience and moving guests from what @dpfromva correctly describes as a utilitarian view. I think Air would agree with this too. But I will leave that for my article.
I try to leave my writing to “stew” a while so I can read and refine it before publishing.
That got a bit more academically wordy than I would have prefered but hopefully, you get the gist.