Has Airbnb Actually Been A Net Negative On Our Lives?
Airbnb hit the travel scene a little over a decade ago and pretty much exploded right off the bat. It wasn’t the first vacation rental type of site out there but it quickly became the most popular. Airbnb disrupted the travel world much like what Uber did for the cab industry. But as time has gone on the shine has kind of worn off both companies, especially during the pandemic. All of a sudden cabs are often cheaper, and easier to get, than Uber. Airbnb has been tacking fees on top of fees for their rentals to the point that they no longer are the deal they once were as well. I recently shared how fees have gotten out of control with Airbnb in Around the Web but it opened up Pandora’s box on something else. Something that has me wondering, has Airbnb actually been a net negative on our lives?
What Am I Talking About?
The article I shared about Airbnb had people complaining about the insane fees on some properties. One of the ones highlighted had a room going for $99 a night but there were over $100 in taxes and fees tacked on top of that, more than doubling the cost. The fees were so high that Vegas resort fees looked like a deal! It was news to me that hosts get to pick their own cleaning fee rates. Apparently some hosts have been taking advantage of this fact. Throw that on top of Airbnb’s fee and the city taxes and Airbnb isn’t the great deal it once was.
But while reading that article I noticed some other points made about Airbnb and it got me to wondering, are they ultimately hurting us or helping us.
Airbnb was started in 2008 and was originally called AirBed & Breakfast. This was because the founders were renting out blow up mattress in their apartment in San Francisco. They also offered breakfast with the stay, hence the name. They were trying to offer an affordable alternative to the expensive and saturated hotel market in San Francisco.
That was the idea, connect travelers with people with extra space so they could visit areas at a much cheaper rate than a hotel. As they moved on from air beds they shortened the name to Airbnb and the company continued to explode in popularity.
What started as a way for people to travel on the cheap and for hosts to make extra money on space they had turned into a business. Enter in the institutional investor. A person who finds a popular travel destination, buys up the affordable housing and rents it out exclusively on Airbnb. This was not the intention of the site, it was supposed to be a way for people to make extra money on residences they owned an used. But the app made it easier to connect people and there was money to be made.
What happens as institutional investors buy up real estate in certain areas? The amount of real estate available shrinks which drives rent and purchase prices up. More competition for less spaces. There has been a direct correlation to popular Airbnb destinations and rising rents. One person on Twitter found a host in Atlanta with 17 properties listed.
On top of higher rents, tenets in the same building have to deal with constant parties and a stream of random people in and out of their building. Something that I am sure many are not fond of.
Throw in the fact that many local governments missed out on tax revenue for years and you have another problem. While it seemed like a nice “hack” when you were booking Airbnb years ago you know the government is going to get that money back one way or another (raising taxes elsewhere). That problem has since been fixed with Airbnb now collecting the taxes for the local government.
I have never been a lover of Airbnb, I prefer the consistency and on hand staff of a hotel, but I see where it is useful. Giving you access to larger spaces, in unique areas, has a purpose for sure. And allowing people to make money on a spare bedroom or their place when they are out of town is awesome too.
Along the way it has morphed from what it was intended to be though. Institutional investors have overtaken the platform driving up rent and pushing people out of areas where they once lived along the way. Some governments have taken note and are trying to curb it. I thought it was worth having a dialogue on and something to be aware of.