Airbnb, a threat to short term rentals - hotels, apartments etc?

Question

So it seems Airbnb is attempting to intrude into the short term rentals business space? Anyone see this as a threat or legitimate competitor to either hotels or short term rentals generally?

There just seems to be a substantial amount of risk and liability exposure in terms of the type and scope of crimes/issues either the host or client can encounter -- not to mention what actual property owner could get looped into.

Any thoughts? Some of these cases sound really awful.

http://nypost.com/2017/05/05/tourist-beaten-sexual...https://www.nytimes.com/2015/08/15/your-money/airb...https://www.nytimes.com/2016/06/26/travel/airbnb-d...

Account Closed · Answer

Quite frankly, I have never used an Uber or really looked into it. They really only got on my radar when we were trying to decide on a corporate location for a venture and California was mentioned as a possible "problem" state. Problem= risk.

This became evident with the recent issue of Google suing Uber about stolen technology/business secrets etc. Something about an employee leaving google with certain business secrets to use at Uber.Unfortunately this is just another problem with the way the  law is written in California. I can understand why some of these companies are getting upset and relocating corporate offices to other countries in some cases. Google for instance appears to have plans of moving headquarters to London, it seems?Unlike many other states where a company can legally require an employee to sign and abide by certain trade restraint contracts for some time,  limiting that employees ability to literally leave  the company and set up shop next door with patent type secrets he took from the employer, in California, such contracts are not enforceable. I mean the concern isnt about an employee leaving, they just have to keep hands off employer's business secrets.

So some are of the view that California laws is very anti business, but this is of course getting way off topic. My view of Uber is limited to its legal issues and lawsuits by google about business secret infringements.

You seem to have a things for companies that like getting into all sorts of legal trouble -- seeing a pattern here?  :)

https://www.theguardian.com/technology/2017/jun/01...

Sebastian E. · Answer

I can see what you are saying @Mike Fletcher. I think Uber is the prime example of a company using the strategy of non-compliance and then forcing localities and cities to react to their business model. When cities do oppose, since these companies have overwhelming public support, (like Uber for example) it becomes very unpopular for politicians to continue to oppose. I think we saw this in Austin and South Florida.I am interested to see how the politicians sort this one out.

Account Closed · Answer

It is very easy to distort issues... airBNB for the most part have been playing that card for a while now. They try to shift the publics focus from the fact that they are running an illegal business which enables their customers to break local laws and are making it a case where big money hotel is trying to impede their ability to do business.

You use hitchhiking as an example. In some areas its illegal. If you then set up a website to enable people to hitchhike in an area where it is illegal, does that mean hitchhiking is suddenly legal. No.

Of course we do not know what is going on behind closed doors in a hotel. Neither do we know what is going on behind closed doors in a various residential homes either using airBNB or not.

Neither really matters, fact still is, city or state says residential building isn't zoned for use as a hotel, it ain't up to code! Host doest have a license to operate a hotel -- do you really want to be in a car operated by an unlicensed driver?

Simply put, if the city or state says what they are trying to do is illegal, they have to comply. The current class action case by landlords (not the hotels by the way) is a legitimate case; especially if they are raising the right issues.

Sebastian E. · Answer

I guess that many Airbnb hosts will drop out of the market as the regulation becomes tougher. People will also start to realize that it's not free money. Airbnb takes a lot of work and I guess that will become clear to many current hosts over time.

As for safety concerns, I think this has to do a with a basic difference in worldview. I have hitchhiked throughout Europe, done couch surfing before that, and am an avid Airbnb user and guest. I am writing from an Airbnb in Bulgaria as we speak. My experiences have been overwhelmingly positive and by and large better and cheaper than staying in hotels during my travels. Hotels do not have to release the criminal activity occurring in their properties but my guess (and this is a guess) is that on average there is more crime happening per room in a hotel room than an Airbnb rental simply because you can have a lot more anonymity in renting a hotel than a profile and review based service like Airbnb. I am not here to impose my belief on anyone else and I also think there will also always be space for hotels in the market but I tend to think competition is a good think in these kinds of calcified markets to break monopolistic tendencies, encourage creativity, and ultimately bring more choice to the consumer. I also use Uber :)

This tracks some of my differences in how I also manage my rental properties and tenants. My guiding principle has been to give people the benefit of doubt and trust in the basic goodness of people. It's not so much that I think this is necessarily the most efficient way of running my business but it's the one that has worked for me so far. Of course as I scale my ideas on this may evolve.Thank you all for your thoughts as always.

Seb

Account Closed · Answer

In New York using a residential property for short term rentals of less than 30 days is illegal. This is bigger than airBNB. There are many businesses in the room booking business, which is what airBNB business model is. Homeaway.com (similar to airBNB) for instance is owned by Expedia Inc. They have to find ways to operate legally within the space.

Account Closed · Answer

Its really probability in many ways... if the airBNB host is required to register the residential home being utilized for airBNB with the city or state, obtain a business license to operate a hotel (something which a hotel owner typically does), the probability that the host would prey on clients or evade taxes is very slim or 0. What airBNB doesnt realize (apparently) is that its trying to enable anyone turn their home into a hotel violates local ordinances in many of theses areas that forbid such usage that conflicts with its zoning. The building has to be zoned for a hotel before you can use it for a hotel and you typically don't file a petition to change the zoning of one residential address in a certain subdivision. Thats just strange.

John Lim · Answer

I don't know too much about the New York market, but I'd imagine that Airbnb is experiencing a little bit of city pushback. I've definitely used Airbnb while in NYC, but more for leisure as opposed to business travel.

John Lim · Answer

Yeah - Airbnb is generating a lot of discussion as to what extent they are actually disrupting the hotel market. I think two things to consider are location and demographics. In Chicago for example, getting a license to operate an Airbnb is pretty costly. The pushback on Airbnb and home-sharing in general is a huge obstacle to a lot of Chicago operators looking to get into the Airbnb market. Despite the significant cost differences between Airbnb and hotels, it seems that the Chicago hotel market is still doing relatively well.  This is true even considering the population shift in Chicago in the last 2-3 years.

I think overall, I think hotels still have the stronghold in the corporate market - I do know that there is a huge pull for Millennials to travel using Airbnb, particularly for leisure. When companies book travel, the default is still to book at a hotel.

From what I know, Airbnb is trying to step up their professionalization among hosts, especially with those cases that you mentioned. But at least in the foreseeable future, hotels are still pretty standard.