Tag: airbnb

When AirBnB comes for real estate agents

Disruption for the real estate industry has only just begun, but it could be the local newspaper that is the first victim of AirBnB into property sales and management

One of the web’s promises was to eliminate the middleman – the retailer, the broker and the agent. During the heady days of the original dot com boom in the late 1990s many of us, including this writer, thought relationships between producers and consumers would become stronger without intermediaries.

As it turned out, things things didn’t quite work out that way with new middlemen like Uber and Amazon rising while some sectors, like real estate, just saw the industry evolve around new tools, distribution channels and advertising models.

Now it appears AirBnB is coming for the real estate industry with a plan to move into rental management, something that publicly bemuses the incumbents but no doubt privately worries them.

Like Uber, AirBnB is having to look at alternative revenue streams to justify its sky-high stock valuation. Particularly so given the company is looking at an IPO in the next few years.

Rental management is a pretty low margin, high maintenance business so it’s an odd choice for AirBnB and it’s not hard to think the real target is the real estate sales business which far more profitable and in many cases quite doable with algorithms.

No doubt real estate agents will retort with how they add value and how computers couldn’t do their sales job but in truth it’s like many other industries where automation can deliver cheaper and quicker results.

If AirBnB does successfully enter the real estate market the first victim won’t be the agents but the newspaper industry.

With local newspapers still dependent upon real estate display advertisements, particularly in Australia where the print media’s only real revenues come from property advertising, losing out to an app would be the industry’s killer blow.

As with many other things in the digital economy, it may be we underestimated how long it would take some industries to fall. We could be about to see two sectors fall to disruption now.

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A lack of systems, process or even a working website

AirBnB had almost no working technology when it launched in 2007. But they proved their idea.

The first ever guest of AirBnB tells his story. At the time the site had no contact details and Amol Surve was desperate to attend the San Francisco’s Industrial Design Conference in 2007.

He tracked down AirBnB co-founder Joe Gebbia to get the air mattress and the business was born.

Which shows a good business idea doesn’t need all their processes and technology in order to prove it works. Something that anyone with a new business idea should consider.

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Working in the gig economy

The motivations of demand economy contractors are varied and not without suspicion towards the services that employ them.

Just what do people think about the on-demand, or gig, economy? A survey by public relations company Burston-Marsteller looked at those who use and provide services for companies like Uber, AirBnB and Instagram.

Unsurprisingly the majority of users are have positive experiences with on-demand services which allows them to access product they couldn’t afford otherwise.

More important are the views of the contractors, and those who are doing these jobs for the flexibility are matched by those who’d rather have full time employment but can’t find a role.

Strikingly, the longer a contractor has worked for one of these services the more likely they are to find the company’s practices exploitative and more than half believe the platforms are gaming the regulations.

Overall, it shows participants in the ‘sharing economy’ have no illusions about the caring aspects of the services that employ them, unlike many of those touting the benefits from the sidelines.

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The limits of the sharing economy

What happens when an accident happens at an AirBnB illustrates the limits of the sharing economy business model

What happens should you have an accident while staying at an AirBnB rental?

The answer won’t surprise anyone with the sharing economy’s business model, as Zak Stone tragically found out when his father was killed while staying in a Texas AirBnB rental.

Stone’s story is only redeemed by the rental’s home insurance covering the claim, had they not things would have become very expensive for everyone.

The conclusion of the story isn’t satisfactory as AirBnB, while sympathetic to the Stone family, isn’t about to accept any liability while those booking through the service remain at the whim of the property owners’ insurers.

Ultimately what the Stone’s tragic tale shows is just how flawed the comparisons between hotel chains and booking platforms, the line “AirBnB is the world’s biggest accommodation service but it owns no hotel rooms” is a trite as saying the local travel agent owns no aircraft.

The model of the ‘sharing economy’ services depends upon pushing as many costs as possible onto the users and providers, while that might be sustainable it creates a new set of costs and risks for customers which aren’t really understood.

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The new one percent

In many ways the backlash against AirBnB and the tech community in San Francisco is of their own making.

Today San Francisco goes to the polls and one of the many questions being put to voters is Proposition F, an initiative to put restrictions on short term rentals.

Also known as the AirBnB initiative, Proposition F is also being seen as part of San Francisco residents’ push against the tech community’s takeover of the city.

In countering the Proposition F supporters, AirBnB hasn’t helped its case with a clumsy public campaign and an aggressive $8 million war chest to support the initiatives opponents, but the real problems for the service lie in the hostility towards the tech and startup community in general.

A notable thing about the new tech community is how their staff are isolated from the community around them. Probably the worst example of this in Southern California where Google has been accused of harassing homeless people on the public footpaths around its Venice Beach complex.

While having onsite facilities may make sense in remote Silicon Valley business parks, in city areas like San Francisco this only creates hostility from those who feel displaced by the new elite.

The remoteness of the new tech elite is also shown in their companies’ attitudes towards customer support. Services like AirBnB, Facebook and Google consistently try to reduce their support overheads by pushing responsibility onto users and contractors by making it difficult, if not impossible for the public to contact them.

Inevitably that remoteness from the general community breeds distrust and hostility. Which is what we’re seeing now being directed towards AirBnB.

Paradoxically, despite the hostility towards the tech community and AirBnB, they are probably not the reason for San Francisco’s soaring property prices as around the world the price of homes is soaring as the effects of cheap money filter through investment markets.

As long as those prices keep soaring beyond the reach of working and middle class residents, AirBnB and the tech community can expect to continue feeling the pressure. Although it’s not hard to think though that a bit of humility might help their case.

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What should we call the sharing economy

What label should we give to businesses like AirBnB and Uber?

Stop calling it the sharing economy, cries marketer Olivier Blanchard in a blog post describing how the label is inappropriate and doesn’t accurately describe the imbalances in the relationships between providers, users and the online platforms that facilitate them.

The question is what do we call the business model of companies like Uber, AirBnB and the myriad other services that take providers’ time and resources – cars in the case of Uber, homes or spare rooms for AirBnB – then make them available to people who can use them, taking a commission in the process of course.

Blanchard wonders if much of the success of these companies is because America’s cash strapped middle classes are desperately trying to find additional source of income and there is very much a strong argument for that.

More importantly, is what do we actually call these businesses? While they are potentially are as exploitative as the free labour models that have evolved in the media with businesses like Huffington Post, at least they provide some type of income even if for Uber drivers the net returns may be marginal at best.

Blanchard himself suggests the Microtransaction Economy however that’s not a satisfactory label as the transactions – which may be many thousands of dollars for some AirBnB rentals – are not always small.

Maybe we should call it the downtime economy, where we’re using the time we’re not busy or when we’re not using our homes, cars or others assets to earn income. That too though doesn’t strike me as satisfactory although it does seem to address the underlying idea these services are really only intended to supplement somebody’s earnings, not be their primary livelihood.

None of these labels though are satisfactory and maybe we have to ditch the economy moniker. It’s time to start thinking about what we really should call these businesses.

Your thoughts.

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Mapping AirBnB in San Francisco

The San Francisco Chronicle mapped the city’s AirBnB rentals showing how both hospitality and data journalism is evolving

The San Francisco Chronicle has a great feature mapping apartment rental service AirBnB’s effects on the city’s economy.

By trawling through the AirBnB database, The Chronicle found 4,800 properties for rent in the city to glean a great deal of information that the company is not keen to share.

A key point from the survey is that over 80% – 3200 – of the properties are householders renting out spare rooms or their places while they are away, which is exactly what AirBnB claim their service is designed for.

The other, professional hosts are what’s attracted the wrath of regulators in cities like New York, where it appears unofficial hotels are skating around taxation and safety regulations.

A new breed of middleman

Catering for these professional hosts has seen another group of middlemen service pop up and The Chronicle features Airenvy, a service that helps landlords manage their properties.

Airenvy is now the biggest San Francisco host, managing 59 properties on behalf of its clients and charging 12 percent commission for dealing with the daily hassle of looking after guests. Since launching in January it employs twelve staff.

Unlike many of the internet middlemen, Airenvy does seem to add value to the renting process above being a simple listing service. For absentee hosts, the fees would seem to be worthwhile in reducing risks and problems.

Filling the gaps

A unique thing about San Francisco is the concentration of hotels around Union Square with 20,000 of the city’s hotel rooms within a ten minute walk of the Moscone Centre.

For non-convention visitors, particularly those visiting family or friends, AirBnB is an opportunity to get a place out of downtown.

The price ranges reflect the service’s diversity as well; from $18 a night for a couch through to $6,000 for a mansion. The average though is close to a typical hotel rate of $226 a day.

The effects of AirBnB

What the survey shows is AirBnB has diversified San Francisco’s accommodation options without the problems being encountered in New York.

That isn’t to say there aren’t problems – the Silicon Valley model of pushing responsibility and consequences onto users leaves a lot of risk for the both the service and its customers – however AirBnB is another example of how industries are evolving as information becomes easier to find.

Another thing this survey shows is the new breed of data journalism and how analysing the numbers can be the foundation of building great stories.

The AirBnB and the changing global travel industry is a great story in itself as the San Francisco Chronicle has shown.

 

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