1. The Case – Opportunities and Challenges of Sharing Economy: Airbnb and InsideAirbnb
Airbnb - Holiday Lets, Homes, Experiences & Places
Airbnb (Airbnb.co.uk) is an online marketplace for arranging or offering short-term rental/lodging i.e. temporary accommodation, primarily homestays, or tourism experiences. It was founded in August 2008 by Brain Chesky and friends, and it
currently has 6,300 employees as in 2021.
On December 10, 2020, Airbnb went public with a valuation of over $100 billion, making it one of the largest IPOs (Initial Public Offerings) of 2020. It is reported that Airbnb capital market was more than the top three largest hotel chains (Marriott, Hilton, and Intercontinental) combined1. Though some are calling over evaluation, the company lacks traditional mortgages, employee fees, and maintenance fees which burden hotels. Airbnb hosts pay their own mortgage and clean their apartments, leaving the company much freer of debt, thus making it far more valuable.
Airbnb service overview
Airbnb provides a platform for hosts to accommodate guests with short-term lodging and tourism-related activities. Guest can search for accommodation using filters such as location, price, specific types of home. Before booking, users must provide personal and payment information. Some hosts also require a scan of government-issues identification before accepting a reservation. Hosts provide prices and other details for their rental or listing e.g. number of guests included in the price, type of property, type of room, number of bathrooms, number of bedrooms, number of beds and type of bed, and minimum number of nights for a reservation, and amenities.
In addition, Airbnb provides a guest review system where hosts and guests can leave reviews about their experience, and rate each other after a stay. However, the truthfulness and impartiality of reviews may be adversely affected by concerns of future stays because prospective hosts may refuse to host a user who generally leaves negative reviews. Besides, the company's policy requires users to forego anonymity, which may also detract from users' willingness to leave negative reviews.
Criticism of Airbnb
Airbnb has attracted criticism for increasing housing/residential rental prices in cities where it operates and creating nuisances and security issues etc for those living near leased properties and has negatively affects the quality of life in residential areas, and housing crisis around city in the UK, USA and Europe. The company has attracted regulatory attention from cities such as San Francisco, New York City, and the European Union over the past number years. It has also faced challenges from the hotel industry and other, similar companies.
Airbnb has made a quarter (25%) of its global workforce redundant in 2020 due to the global pandemic2. But the news was welcome by some campaigners who were fighting for soaring rents in cities with large number of Airbnb hosts. The number of longer-term rental properties (i.e. residential as opposed to short-term/holiday lets) in central Dublin was up 71% on comparable period last year, as landlords abandoned short-term lets through Airbnb3.
1 https://www.businessinsider.com/airbnb-ipo-valuation-tops-three-hotel-chains-combined-opening-day-2020-12?r=US&IR=T
2 https://www.theguardian.com/technology/2020/may/06/airbnb-to-make-quarter-of-its-global-workforce-redundant
3 https://www.rte.ie/news/ireland/2020/0417/1132149-rent-sale-property-ireland/
Inside Airbnb – Adding Data to the Debate (insideairbnb.com)
Inside Airbnb (insideairbnb.com) is an independent, non-commercial set of tools and data that allows individual to explore how Airbnb is really used in cities around the world. It was set up by Murray Cox and John Morries in 2016.
Airbnb claims to be part of the “sharing economy” and disrupting the hotel industry by offering short-term rental/lodging. However, data shows that most Airbnb listings in most cities are entire homes, many of which are rented all year round (i.e. illegal short-term rentals)– disrupting housing and communities.
Most recently, New York City’s plans to crack down on illegal short-term rentals which could remove as many as 10,000 Airbnb listing is sparking fierce debates about housing, hotels, the tourist market and residents’ rights4.
By analysing publicly available information about a city’s Airbnb’s listings, Inside Airbnb provides filters and key metrics so users can see how Airbnb is being used to compete with the residential housing market. With Inside Airbnb, user can ask fundamental questions about Ainbnb in any neighbourhood, or across the city as a whole, such as:
• how many listings are in my neighbourhood and where are they?
• how many houses and apartments are being rented out frequently to tourists and not to long-term residents?
• how much are hosts making from renting to tourists (compare that to long-term residential rentals)?
• which host are likely running a business with a multiple listings and where are they?
These questions (and the answers) get to the core of the debate for many cities around the world, with Airbnb claiming that their hosts only occasionally rent the homes in which they live. In addition, many cities or state legislation or ordinances that address residential housing, short term or vacation rentals, and zoning usually make reference to allowed use, including:
• how many nights a dwelling is rented per year
• minimum nights stay
• whether the host is present
• how many rooms are being rented in a building
• the number of occupants allowed in a rental
• whether the listing is licensed
The Inside Airbnb tool or data can be used to answer some of these questions. Some understanding of how the Airbnb platform is being used will help clear up the laws as they change.
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