Airbnb, the popular short-term rental website with over 2 million listings in 34,000 cities, was relatively unheard of five years ago, forcing people to rent travel accomodations in the traditional way. Now, however, the company is valued at $25 billion, exploding on the heels of the more functional “sharing” frenzy, alongside companies like Uber.
Airbnb is enticing on a number of levels. For hosts, it allows them to bring in extra income – in some cases, a lot of income.. For guests, it gives them a chance to stay in the middle of a popular city for relatively cheap – some people in the middle of Manhattan rent their spare beds for only $50 a night.
It seems like a win-win for everyone. Everyone, that is, except for the communities in which the rental properties are situated.
Last year, New York City forced Airbnb to turn over 10,000 listings in the city, allegedly to crack down on “illegal hotels”. There have also been fights in Berlin and Barcelona to regulate short-term rentals. But the most publicized fight, at least so far, has been in Airbnb’s own backyard: San Francisco.
Last week, the company squeaked out a win against a ballot backed by housing activists, hotel worker unions and the hotel industry that would have imposed significant additional restrictions on how they can run their business (reporting to the city, allowing neighbors to sue violators, etc.). The spent $8.4 million to fight it and beat it, but the city has already said that the fight is far from over.
Boston too has begun discussing a tighter grip on Airbnb, suggesting taxes and regulations for the short-term rentals to cut down on landlords trying to convert traditional housing units into short-term rentals. The Boston Globe found that in Boston, 15 percent of people have multiple listings, restricting the already tight Boston real estate market. Landlords believe it to be more lucrative than having a single tenant sign a lease, but opponents think Airbnb is forcing rent prices to rise, cutting down on affordable housing. Hotels also think it’s unfair that Airbnb and other short-term rentals aren’t regulated the same way they are.
Airbnb has said they aren’t opposed to regulation and taxes. They claim they are willing to work with communities to help find a balance so the company can operate effectively and citizens don’t feel slighted. They’ll need to make some moves to prove it.
As with Uber, the issue of liability is a real one. If you get hurt while staying at a hotel, the hotel has clear duty of care and will compensate you justly. Renting with Airbnb, though, leaves all this very up in the air (pun definitely intended).
Sometimes they’ll accept responsibility and pay, such as when a person was bit by the host’s dog (though they only paid when the New York Times asked them about it). Other times, however, the company pawns you off, such as when they told a young woman to call the police after allegedly being assaulted by the host.
The website directly advises guests to, “Sign up for traveler’s insurance”, writing, “Airbnb does not offer traveler’s insurance for guests. However, traveler’s insurance is a relatively affordable option that can protect you in case of an injury or emergency on a trip.”
Airbnb (and Uber) has been cautious about accepting responsibility for incidents in fear of setting a precedent and implicitly taking responsibility for all future incidents, which is fine and dandy for protecting the company. But if users begin feeling widely unprotected, they may significantly curb their usage.
It’s probably in the best interest of Airbnb to start setting a policy now of who’s liable in what situation. If they truly are going to be only an online marketplace, everybody needs to be very aware of exactly what everyone is responsible for. By insuring hosts for up to $1 million in damages, they’ve already accepted some reasonable responsibility, so it’s likely time for the company to expand that position.
Airbnb is a useful tool for sure. But it has careful about being too disruptive. And it has to take care of its users. Clearly people are eager to use the service, and it’s becoming a very lucrative enterprise (Expedia is getting in the game by buying HomeAway for $3.9 billion). But there are some huge forces working against short-term rentals, and unlike Uber, a considerable chunk of those forces are just regular people who instead of protesting could be using or promoting the service..
To their credit, Airbnb is already working to placate communities, having released this week a compact that solidifies its commitment to transparency and communities. With time, it hopefully will be clear about liability.
Airbnb is taking steps in the right direction, but it has to be careful not to misjudge the power of the establishment – or its guests. Otherwise, it could become the next Haystack.
- New Clink Investment App Has One Social Feature That Sets It Apart - April 28, 2016
- 5 Great Startups For Book Lovers - April 21, 2016
- Can Blendle Micropayments Save Publishing and Journalism? - April 14, 2016
Tommie Sullivan says
Very well written article! This is something that I would have never thought about with this company. Such an odd company to take off like it did in my opinion. It is too bad that some people have had bad experiences while using the service.
Willie Houston says
These are real reasons to be careful what you wish for when thinking the next best thing is actually the best. Having moved the liability to ME, AirBnB has just taken the seat closest to where the cash comes in and that is all they are worried about. That is a huge valuation, by the way, but I am sure we’ll see the crash when they get itchy and host an IPO.