This is a continuation to this post from last November.
So it seems that time has run out for airbnb.
The last couple quarters have shown a swell of cases where cities and various municipalities have actually started issuing citations against airbnb tenants.
Even cases that have been celebrated as wins for Airbnb like Amsterdam and Portland are actually major losses for airbnb.
The problem is that the highest growth most lucrative and representing the biggest market rents are those renting an independent unit - something that gives to the visitors the equivalent of a hotel room or suite. For example in NY more than 60% of all airbnb rentals in for full appartment units.
Airbnb's 10B valuation has been predicated in its ability to disrupt the hotel industry.
At this point even the most liberal city is staying away from allowing full unit airbnb round the year rentals. I think it is clear that within residential zones at best what may be expected is occassional rent of probably just a room or two.
Even though I am huge proponent of the "sharing/collaborative" economy, I feel a bit vindicated about this. Not because I was predicting that it would happen but because in my view Airbnb, even though it is one of the earliest success stories it is one of the last ones to attempt to find a balance between disrupting and (possibly violating) antiquated laws and regulations while going above and beyond those regulations that make sense - and by doing so have a defensible line.
There are many ways that highway motels regulatory discipline is inadequate - be it cleaning-ness or safety or noise or false advertising of amenities not there. Airbnb could come up with innovative ways to bring these elements of quality (and process and self regulation) in the marketplace similar to the way it practically forced "professional photos" for its listings and did its breakthrough.
Airbnb could have put efforts in tax-collection on behalf of it listers - even though it would imply a 10-20% increase in the cost of its listings and would definitely affect its total volume.
Today lyft and uber (in much less time since launched) have done more than any taxi/medalion licensing union or regulation has done to make sure that all the safety rules are obeyed and they bring better service (in all aspects of quality and safety) than typical taxis do - they are not just cheaper.
If airbnb had done the things I mentioned I believe it would end up having a thiner gross margin, but it would have a better chance to fight the eventual regulatory battle for its true target big market - for the hearts of the hotel-staying customers. My guess about what happens next is that an increasing # of cities will start enforcing the zoning rules, airbnb would have to add 10% hotel taxes in most remaining listings and the company will need to accept a future that is not valuing it as a $10-20B company but something much less exciting than that.
So it seems that time has run out for airbnb.
The last couple quarters have shown a swell of cases where cities and various municipalities have actually started issuing citations against airbnb tenants.
Even cases that have been celebrated as wins for Airbnb like Amsterdam and Portland are actually major losses for airbnb.
The problem is that the highest growth most lucrative and representing the biggest market rents are those renting an independent unit - something that gives to the visitors the equivalent of a hotel room or suite. For example in NY more than 60% of all airbnb rentals in for full appartment units.
Airbnb's 10B valuation has been predicated in its ability to disrupt the hotel industry.
At this point even the most liberal city is staying away from allowing full unit airbnb round the year rentals. I think it is clear that within residential zones at best what may be expected is occassional rent of probably just a room or two.
Even though I am huge proponent of the "sharing/collaborative" economy, I feel a bit vindicated about this. Not because I was predicting that it would happen but because in my view Airbnb, even though it is one of the earliest success stories it is one of the last ones to attempt to find a balance between disrupting and (possibly violating) antiquated laws and regulations while going above and beyond those regulations that make sense - and by doing so have a defensible line.
There are many ways that highway motels regulatory discipline is inadequate - be it cleaning-ness or safety or noise or false advertising of amenities not there. Airbnb could come up with innovative ways to bring these elements of quality (and process and self regulation) in the marketplace similar to the way it practically forced "professional photos" for its listings and did its breakthrough.
Airbnb could have put efforts in tax-collection on behalf of it listers - even though it would imply a 10-20% increase in the cost of its listings and would definitely affect its total volume.
Today lyft and uber (in much less time since launched) have done more than any taxi/medalion licensing union or regulation has done to make sure that all the safety rules are obeyed and they bring better service (in all aspects of quality and safety) than typical taxis do - they are not just cheaper.
If airbnb had done the things I mentioned I believe it would end up having a thiner gross margin, but it would have a better chance to fight the eventual regulatory battle for its true target big market - for the hearts of the hotel-staying customers. My guess about what happens next is that an increasing # of cities will start enforcing the zoning rules, airbnb would have to add 10% hotel taxes in most remaining listings and the company will need to accept a future that is not valuing it as a $10-20B company but something much less exciting than that.
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