But then won't they have to jack up the price, after earning a sufficient threshold of trust, to compensate for the huge losses their making at the beginning?
i.e. price their beds the same as hotels, or higher?
No, they can't do that, because, you know, competition. Basically, those few weeks/months of below market rate prices are the cost of bootstrapping your business. Of course, if, over time, you acquire stellar reputation, then you probably can price yourself slightly higher than competitors based on that. But that's very unstable state.
They will raise their prices until they are in the normal market range.
That's different from jacking up the price "to compensate" for the losses at the start. They just have to eat the initial costs, and it will take a while for normal market profits to put them in the black.
No, because money has a time value, the break even rate will be higher because a dollar today is worth more than a dollar a few months from now. It by definition will cause the rates to be higher then they otherwise would be. This might be worth paying for to be guaranteed a high trust host. But that doesn’t the change the fact that the costs are shifted around instead of being reduced overall.
i.e. price their beds the same as hotels, or higher?