Browse Tag: airbnb

Airbnb Owners Program: Letting The Landlord In

In an attempt to formalize and normalize the apartment subletting craze brought to the mainstream by home-sharing website Airbnb, the website this week launched a program for building owners.  In a move that will serve to differentiate the home-sharing leader from its many competitors, Airbnb is now soliciting landlords directly through its new owners program to create a building status declaring the property “Airbnb friendly”.

The program lets property owners decide the rules of sharing and codify these into a set of rules tenants have to follow, as well as making sure that a portion of revenue generated by Airbnb sharing is kept by the landlord.

After a pilot of the program in April proved a success, the company moved ahead with purpose. From Kia Kokalitcheva’s piece in Fortune “Inside Airbnb’s Plan To Partner With The Real Estate Industry”:

For Airbnb, finding a way to involve building owners and landlord is critical. While the company regularly touts stories from hosts whose extra income from renting out their homes has allowed them to afford their rent or a much deserved vacation, it’s no secret that landlords have not been the biggest fans of the practice. According to Airbnb, this animosity largely stems from their lack of control over the activity as tenants are ones usually listing and renting out the homes. Airbnb’s solution: Involving them in the process and giving them control along with a financial gain.

The company began piloting this program in April, and to date, somewhere between 1,100 and 1,500 units are either participating or scheduled to soon join, according to Airbnb. The company declined to reveal much details about the building owners it’s been working with, though it did say they’re in U.S. cities including San Jose, Calif., Philadelphia, and Nashville, Tenn., among others. They also widely vary in size and type, from small “mom and pop”-owned properties, to large companies that manage 50,000 units.

The Plan Design Includes Design

A major evolution of Airbnb that figures in its Friendly Buildings program has been the company’s Samara division, concerned with design of communal housing  with the specific intent of community revitalization.

As the technology ecosystem and Airbnb continues to force itself on the operational realities of commercial property, the company continually seeks ways to differentiate itself from a basic business model that, like so many others in the so-called “sharing economy” is utterly dependent upon other people’s stuff — in this case, on the inventory of landlords and property managers that appears nowhere on the company’s balance sheets. Samara’s attempt to become involved in property design boils down mainly to advocating space-sharing features such as smart locks and moveable walls. It’s high concept, unlikely to apply to the vast majority of their business, which is conducted in existing apartments. But it’s also absolutely critical to a business worried about prospering in a future where its competitors seem so numerous and easily spawned.

FiveThirtyEight: Airbnb Probably Isn’t Driving Up Rents Much

Data, data everywhere, but what are we to think?

A major consequence of the revolution in data collection is the rise of the data journalist – writers using tables of statistical data to tell useful stories in (hopefully) plain English.

What we do with these narratives is up to us, as is the decision of where we get them from. The leader in this kind of journalism is likely FiveThirtyEight.com, creation of Nate Silver, a statistical analyst and writer who moved from the world of baseball statistical analysis into electoral politics. Today, FiveThirtyEight.com also covers business issues, starting by counting some kind of event or transaction and extrapolating from there.

That basic formula is on display in the recent piece by Ariel Stulberg, who asks: are apartment rents rising due to the market influence of space-matching service Airbnb?

Not just yet, says Stulberg:

[A] FiveThirtyEight analysis of Airbnb booking and revenue data provided by consulting firm Airdna gives the most rigorous look to date at how many units Airbnb could be taking off the rental market nationwide. It shows that Airbnb’s impact is probably still small in most cities, but it also shows that a disproportionately large share of the company’s revenue comes from the listings that most worry its critics — homes that are rented out for a large portion of the year. That could give the company an incentive to focus on increasing such listings as it grows — something some experts believe may already be happening.

Airbnb disputed the analysis but declined to provide its own data.

Because Airbnb has developed from its origins as a site matching travelers to spare rooms into a site that includes so-called commercial listings of whole units rented out full-time, the economic impact is worth looking at.  Sharing economy technologies tend to be very disruptive in their effect upon established industries.  Airbnb commercial listings, according to the piece, add up to only one tenth of total listings but account for over a third of host’s revenue. With that kind of balance on display it would be fair to assume that traditional apartment inventory in certain markets could be lost to the general market in the chase for those revenues.

On the other hand,  the balance between “commercial” Airbnb listings is very uneven between markets.  West coast towns such as Portland, OR and Los Angeles are where nearly half of all cash spent by Airbnb travelers goes to commercial hosts.  Meanwhile, NYC shows about only 30% of the same kind of spending.

If apartment inventory trends in any of the top 25 markets in the US is of importance to you, check out the rankings in Stulberg’s Airbnb piece here.

 

AirBnb: Hotel Execs Say Bring It On

Chicago Hilton Hotel 720 S Michigan Ave Chicag...
Chicago Hilton

The disruptive force of the sharing economy is undeniable. As noted by tech cheerleader Tom Goodwin, the world’s largest taxi company (Uber) owns no vehicles, the most popular media company (Facebook) makes no content, and $25B lodging provider Airbnb owns no real estate, despite its operations adding up to giant impacts on apartment rents in its biggest markets.  There is a chance that large apartment landlords will bring increasing levels of apartment inventory onto a collision course with hotels, at least in the top cities.

But measuring the impact Airbnb has on national hotel business is tougher – and the executive leadership of national hospitality operators doesn’t seem too worried about it. In Lydia DePillis’s piece in the Washington Post, collecting thoughts from hotel CEOs on conference calls, quotes from hotel execs were generally dismissive, noting that the amenities and service such as their industry is known for providing can’t spring from a vacuum:

Trade Group Highlights Multifamily Landlords

Hotel industry trade group AHLA released a white paper that claimed 40% of Airbnb’s revenue was from persons operating multiple units, prompting a pushback from the technology company and a bit of controversy, none of which has to date affected the CEOs outlook on Airbnb as a national-level threat to their hospitality expertise. Will the boardrooms remain confident in their business model, or will they get drawn into the technology-driven disruption as many industries have before them?  Time will tell.

(Photo Credit: Wikipedia)