Airbnb’s Superhosts Are not those You Think They Are
Platforms like Airbnb misidentify their “best” customers and “superhosts.” Revenue alone is misleading: competition and substitution reshape true value. Our research challenges conventional metrics and shows how platforms can rethink Provider Relationship Management (PRM) to identify -and invest in- the users who genuinely drive performance.
But it also creates a fundamental challenge: platforms do not control their supply. Individual providers decide what to offer, where to offer it, and at what price. As a result, platforms can’t manage supply through direct operational control. In other words, platforms need to manage their providers strategically, much like companies manage their customers.
Beyond Revenue: Understanding True Provider Value
For decades, companies have relied on Customer Relationship Management (CRM) to handle their customers. This strategic process aims to acquire new customers, retain existing ones, and increase the value of customer relationships over time. Platforms face a very similar challenge with their providers. It’s called Provider Relationship Management (PRM).
Many platforms already implement the strategies it enables. For instance, Airbnb highlights top hosts through its “superhost” program, while Turo offers special perks to its most active providers. These programs reward providers with higher visibility, better support, or additional services.
However, implementing an effective PRM strategy raises a fundamental question: which providers are truly the most valuable to the platform?
Read also: Effectuation: how to visualise your hidden resources
While identifying your most valuable customers is relatively easy, it is not so simple for providers. One might assume that the best providers are simply those who generate the most revenue. But this intuition can be misleading because providers do not operate in isolation. They interact with each other through competition and substitution.
The Example of a car sharing platform
Consider the example of a car sharing platform with two providers, Jacques and Paul. Both joined the same day and have the same average rating from customers. However, Jacques has been booked 7 times at 40 euros per day, and Paul has been booked 8 times at 50 euros per day. Which provider is more valuable to the platform?
If these were normal customers, the company would compare their revenue, and incorrectly assume that Paul is the most valuable provider, because he has rented more times and at a higher price, and so has generated more revenue. However, this simple calculation can be highly misleading because it ignores the competitive effects of local substitution and price competition.
Suppose that Jacques has a popular compact car, located in a low-income area with few other providers nearby, while Paul has a large car with a luxury brand, located in a high-income area with many other providers nearby. If Paul did not exist, then nearby providers could easily pick up his transactions, leading to no revenue loss for the platform. In addition, Paul might be under-pricing given the luxury status of his car, so if Paul left the platform, this would reduce competition for nearby providers, allowing other providers to charge higher prices. In this case, the platform revenue would even be higher without Paul!
In other words, to calculate the value of providers to the platform, it is not sufficient to compare total revenue. One needs to account for what we call externalities between providers, meaning both local substitution and price competition.
This example illustrates a key point: a provider’s revenue does not necessarily reflect their value to the platform.
Why providers influence each other
The reason is that providers create externalities for each other. In other words, the presence of one provider affects the performance of others. Two mechanisms are particularly important:
- First there is substitution: when many similar providers operate in the same area or category, customers can easily switch between them. If one leaves the platform, others may simply absorb their demand.
- Second, there is price competition. When many comparable providers compete for the same customers, they often lower their prices. These interactions show that the contribution of one provider can’t be evaluated by only looking at their own transactions. Instead, it is necessary to consider how that provider affects the behaviour of other providers on the platform.
Measuring the true value of providers:
To address this issue, our research proposes a way to estimate the true contribution of each provider to the platform, taking into account both substitution and price competition between providers.
Read also: Why Do We Believe in KPIs?
Using data from a French car-sharing platform, we apply this approach to analyse how platforms should manage their provider base. The results highlight how ignoring competitive interactions between providers can lead platforms to overestimate provider value by around 40 percent. Even more importantly, platforms may end up identifying the wrong providers as their most valuable ones.
This can have significant consequences for platform strategy. If incentives and rewards are allocated to the wrong providers, platforms may end up investing in relationships that bring little value while neglecting more important providers.
Rethinking provider relationship management (PRM)
Provider retention efforts should be carefully targeted. Rather than rewarding only the most active providers, platforms should focus on those whose presence generates the greatest overall value for the marketplace. Furthermore, provider acquisition strategies should be more selective. Recruiting more providers is not always the most beneficial way to go. In highly competitive areas, the growing number of providers might only intensify price competition. In contrast recruiting providers in underserved/underused locations could create value for the platform.
For example, we can score providers to identify those most worthy of retention efforts. We can evaluate geo-targeted ad campaigns across Paris to identify the areas where the platform should focus on the most on acquiring new providers. Finally, regarding provider development, we can simulate hypothetical interventions of the platform such as imposing price floors, price caps, targeted price changes, as well as hypothetical relocation efforts of providers.
Managing and growing the relationships with the providers a platform already has can be much more beneficial than simply growing the numbers of participants. Platforms must understand how providers interact with each other and how each provider contributes to the overall performance of the marketplace.
The success of sharing platforms does not only depend on attracting more providers. It depends on attracting the right providers, in the right places and at the right places.
