Home > > Ahead of its IPO,-what even is Airbnb anymore?

Ahead of its IPO,-what even is Airbnb anymore?

04/02/2019| 9:23:14 AM| 中文

To fully professionalize—to operate no differently than another hospitality giant like Marriott—would effectively wipe out many of the mom-and-pop listings that built what it calls an “unrivaled brand.”

Up until a few years ago, the phrase “getting an Airbnb” meant one thing: staying in the apartment, house, or spare room of a stranger, likely at a bargain price compared with nearby hotels.

But in 2019, things aren’t so simple. Eleven years after the company’s founding in 2008—and amid endless speculation about when it will launch its IPO—the meanings of that phrase have multiplied.

If you can book all these things and more on Airbnb, it’s worth asking: What even is Airbnb these days?

In the gauzy parlance of corporate tech, it is an “end-to-end” travel platform that “combines where you stay, what you do, and how you get there, all in one place.” But in becoming that, it has moved further and further away from the thing it was when its founders started it—literally, with air mattresses. 

That’s fine, of course. There was never a guarantee that Airbnb would remain what it once was—a clever, well-executed, and game-changing idea in the halcyon days of the early sharing economy. Venture capitalism-fueled growth demands that good ideas must scale up to a precarious size, and requires shifts in approach and mission. But in the transformation of Airbnb, it has become less and less clear what the company itself wants to be.

Mom and pop

Good evidence of how far Airbnb has come is the emergence of the term “mom and pop” Airbnb host. Though not used formally by Airbnb, the phrase has become a shorthand for a normal person who rents out their own home or apartment occasionally, perhaps when they themselves are out of town or when they are willing to sleep on their own couch to earn some cash.

These days Airbnb is regularly accused of being too “professionalized,” or riddled with commercially-motivated operators running informal hotels (some of them in compliance with city regulations, some very much not). These hosts rarely interact with guests, the critique goes, and are far from providing the ideal of a “live like a local” experience that Airbnb itself popularized. The professionalization of Airbnb is also implicated in making housing unaffordable for locals by encouraging landlords to rent homes to an endless parade of short-term guests, at higher rates than they could charge longer-term tenants.

So has Airbnb lost its soul? One way to settle that would be to ask a simple question: What percentage of total listings on Airbnb are hosts with a single listing? What percentage of hosts have more than five? But when Quartz asked a company spokesperson this, we got no clear answer. He noted only that the company is seeing “more professional hospitality entrepreneurs join our community precisely because they want to access our global network of hosts and guests and deliver the kind of high-quality, unique experience guests have come to expect.” 

On a more localized basis, the company has revealed pieces of these data in the past where they serve a rhetorical point. For example, in February, Airbnb told me for another story that 73% of hosts in Lisbon, Portugal have a single listing, while only 9% have more than four. But even those numbers can be hard to draw solid conclusions from. They don’t, for example, shed light on how many listings the larger operators have, and what percentage of total listings are from these 9% of operators who are “professional”—they may have dozens each, for all we know. 

Airbnb’s unwillingness to share these numbers, and general reluctance to release much data when asked, makes it hard to assess the company more than a decade into its existence, as it reportedly prepares for an IPO. Most of the data analysis regarding this central question about its offerings come from sources with pronounced interests: either those who can reasonably see the firm as a competitor (hotels and their lobbying groups) or companies interested in supporting the growth of the home rental industry. If Airbnb does IPO at a rumored value in the tens of billions of dollars, that information may become more transparent: Investors will presumably want solid answers on how much of Airbnb’s revenue is coming from people’s spare bedrooms.

But there are some strong indicators that the site is increasingly professionalized. AirDNA, a provider of market insights for the vacation rental industry, is one such source that is expressly pro-Airbnb and vacation rental. The firm gets its data by “scraping” the Airbnb site nearly every day and analyzing the calendar to ascertain things like the number of listings. (It’s worth noting that Airbnb says that while scraped data can serve a purpose, it may not be fully accurate, and can lead to “unreliable conclusions that don’t capture the complexity and nuance of the Airbnb community.”)

AirDNA shared data with Quartz that showed that since January 2016, multi-listing hosts (which include hotel offerings and other traditional hospitality offerings on the platform) in the US have grown faster than single listing hosts. The spokesperson noted that many of these professional or commercial operators with multiple listings are vacation rental management companies, rather than individuals-turned-entrepreneurs.

A 2017 report from CBRE Hotels, a commercial real estate services firm, similarly relied on AirDNA’s scraped data for Airbnb listings in 13 US markets. It found that 32% of all the revenue generated by Airbnb in the US from October 2015 to September 2016 came from multi-unit hosts (defined as any host that “rents out two or more unique, entire home units during the same month”) and that revenue growth in this category was up 89% year-on-year in the 13 studied markets.

Scott Shatford, the founder and CEO of AirDNA, argues that increased professionalization isn’t necessarily a bad thing—and in many ways it’s driven by consumer demand for “a more consistent, hotel-like experience” as Airbnb has matured.

He notes that the more professional an Airbnb host is, the more likely they are to be compliant with the regulations that are cropping up in cities around the world—though he said that evidence to support this claim is anecdotal. He even went so far as to suggest that these regulations meant to limit Airbnb’s impact on neighborhoods are perhaps driving professionalization, by making it too onerous for “mom and pop” hosts to rent out their homes.

“If you’re going to make a homeowner go to city hall, wait in line for three hours to get a permit to rent their place for two weeks while they’re in Europe, they’re just not going to do it, right?” Shatford said. He theorized that this dynamic is “driving down the small mom and pop” Airbnb hosts who find the process too difficult.

“Guerrilla War”

So if Airbnb is inexorably professionalizing, losing its scrappy vibe, and becoming more compliant with municipal laws, why doesn’t the company just embrace its all-grown-up reputation as a company that has more listings than the top six hotel groups put together? 

Partly because it can’t. Airbnb’s unique homesharing offering has, since day one, been based on a practice that is, at best, questionable under the zoning, health, and safety rules of many cities (not to mention individual buildings), and in some cases outright illegal. Setting up a legal hotel or bed and breakfast business is an expensive and onerous process; Airbnb’s success, at least in part, is in giving hosts a convenient way to ignore much of that.

Antipathy to Airbnb and the broader era of home-sharing and “live like a local” travel it ushered in has prompted a slew of reactive regulations in cities around the world that interfere with the company’s fundamental practices. These include limiting the total nights per year a property can be rented out, outlawing “entire home” Airbnbs by requiring a host be present for stays under 30 days, and requiring host registration with the city or state.

Indeed, amid all this municipal pushback, the company is engaged in what a source in a recent Wired piece (paywall) called “a city-by-city, block-by-block guerrilla war” when it comes to regulations around tax, zoning, and safety laws. (The taxes in question are ones that Airbnb hosts are supposed to collect from guests and then remit to local coffers, in the same way hotels are often required to collect occupancy taxes on top of a room rate. Much of the company’s disagreement with cities is how proactive Airbnb— which sees itself as a platform, not an accommodation provider—should be in making sure its hosts collect and pay those taxes.)

While Airbnb often highlights its cooperation with city officials on many of these issues, it has also actively fought them (with varying success) with lawsuits in cities like Boston, Miami, New York, and Palm Beach. Airbnb said in an email to Quartz that it has “made a commitment to treat every city personally” and in that quest, has forged partnerships with more than 500 locales globally, and collected and remitted more than $1 billion in taxes to governments.

“As we do this work, we have advocated for sensible rules that regular people can follow without hiring a team of lawyers and accountants,” Airbnb wrote. “There’s no question that renting a room or renting out your home is fundamentally different than operating a hotel, and we think rules and regulations should reflect that.”

Josh Bivens, director of research at the Economic Policy Institute—and author of a recently published literature review asserting that the economic costs of Airbnb are likely greater than the benefits—said those tax agreements are still “voluntary, ad hoc” agreements that often don’t reach parity with what hotels are legally obligated to pay. “The amount of data they are offering up to the tax authorities is more limited than what is demanded of other commercial operators.” For example, these agreements often hide hosts’ names and identifying details from tax authorities—”a gross departure from standard practice,” a former tax commissioner told Wired— which makes it hard to corroborate whether the correct tax is being paid.

Bivens added that these voluntary tax agreements might paint a picture of compliance, even if Airbnb hosts are ignoring other laws. “I think they’re hoping if they strike a deal on taxes, that means they have a legal blessing to operate in the city even if maybe we shouldn’t be operating in the way they are on the zoning front.”

It’s plain to see that for a company about to go public at a multibillion-dollar valuation, being at loggerheads with the law and city officials around the world is a problem. Perhaps to address that problem, Airbnb has made a number of moves lately to make its product more palatable. 

These moves include its entire Experiences product, which is one way the company has diversified its offerings beyond controversial short-term listings to more agreeable ceramics and baking classes (and even wanna-be Instagram influencer photo shoots). Most recently, the acquisition of the boutique hotel booking platform HotelTonight will allow Airbnb to add vetted properties to its growing hotel inventory. That will ensure a greater share of listings that are regulated and taxed like hotels (because, well, they are hotels).

Airbnb has also launched a Friendly Building program, which would bring more hosts into compliance by providing tools for landlords, property managers, and homeowners’ associations that want to allow and set rules upon Airbnb renting in their buildings. In some cities where officials have demanded it, like San Francisco, Airbnb has also scrubbed its platform of listings that don’t follow the rules—though it has refused to do that, or done so only patchily, elsewhere. 

And the truth is, pre-IPO Airbnb is in a bit of an existential tangle, Bivens said. To fully professionalize—to operate no differently than another hospitality giant like Marriott—would effectively wipe out many of the mom-and-pop listings that built what it calls an “unrivaled brand.” 

“On the one hand they have an interest in not claiming to be a hotel-sized, huge operation of unlicensed hotels in places they’re not allowed to be in,” Bivens told me. “But on the other hand, if they’re not at really big scale, what are investors pouring money in for?”

Airbnb’s woes fit into a broader context of the turbulent democratization of travel.Though Airbnb frequently draws attention to the sizable economic contribution it and the tourists it brings make to cities and tourism revenues around the world, the ongoing crisis of overtourism has proven that there is such a thing as too much of a good thing. While tourism revenues look good on paper, those figures don’t account for the hidden costs that some local residents have borne in service of that growth. 

No one can deny that in just 11 years, Airbnb changed the face of modern travel. It’s also undeniable that the very concept of renting a local’s spare room is inextricably linked with Airbnb—even as competitors such as Booking.com and VRBO build similar homesharing operations. But in its meteoric transformation from a rent-your-air-mattress startup to one of the world’s largest travel companies, Airbnb bas become, in a way, a victim of its own stunning success.

“Getting an Airbnb” that’s someone’s actual home can still be great, to be sure. But that core Airbnb experience itself isn’t what it used to be. Nowadays, you might be instructed not to tell anyone who lives in the building that you’re an Airbnb guest, as has happened to me in New York and Paris. And when I see anti-Airbnb graffiti on the walls in a city like Lisbon or Barcelona, it doesn’t make me feel I’m living like a local; it makes me feel that my vacation comes at the expense of locals. That’s a problem that’s hard to fix with platitudes and branding.

How Airbnb addresses this disconnect while also having to answer to investors remains to be seen. But, Bivens said, “My sense is that the pure wild west ethos that has governed Airbnb’s expansion so far has run into enough pushback that the pendulum is going to start to swing the other way. And if they can adapt and thrive while complying with democratically passed legislation and laws and taxes, then they should be given the chance to.”

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TAGS: Airbnb | IPO
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