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Airbnb - New lease of life

2014-10-21 11:30:42

Oct 16th 2014, 15:52 by J.J.C.

LAST week San Francisco finally passed laws legalising short-term property

letting through platforms such as Airbnb. The laws will come into force in

February, but come with restrictive ownership clauses, as Business Insider

explains:

The new regulation only allows people to rent homes through these sites if they

are San Francisco residents living in the unit for at least nine months a year.

They also have to register as hosts with the city, promising under penalty of

perjury that they meet those conditions.

The fact that cities are revisiting statutes reflects the growing influence of

Airbnb. In just six years the firm has flourished, and now boasts over 800,000

properties in 34,000 locations with 20m users. The company was recently valued

at $10 billion and reported revenue of $250m last year. This has caught hotel

chains short. In February, Fast Company claimed that this year Airbnb would

"usurp the InterContinental Hotels Group and Hilton Worldwide as the world's

largest hotel chain without owning a single hotel."

For business travellers there are obvious benefits. Booking may be less

convenient than for hotels and prices are not always lower, but travellers

benefit from more choice and, usually, space. For more seasoned road warriors,

Airbnb's varied portfolio makes a refreshing change from the depressing

homogeneity of hotel interiors.

But even as Airbnb claims victory in its home city the honeymoon period may be

coming to an end. There are worries that speculative investment in buy-to-let

properties, with a mind to renting them on Airbnb, is pricing out locals and

creating a housing bubble. Meanwhile, hotels are now lobbying lawmakers, hoping

to persuade them that Airbnb's practices are illegal, despite the firm s offer

to pay hotel taxes. Regulators remain divided, but New York in particular is

under pressure to crack down, led by a dedicated opposition group called

ShareBetter.

Part of the problem is the gold rush Airbnb has prompted. What began as a

platform for homeowners with spare rooms to make a bit of pocket money on the

side, is becoming overrun with property entrepreneurs looking for lucrative

short term gains. The market is also getting more crowded with competition

coming from upstarts such as Roomorama and HomeAway. Meanwhile success breeds

exploitation. From trashed properties and wild parties to a multitude of scams,

there are plenty of Airbnb horror stories circulating to put off prospective

tenants (and landlords).

These kinks will be worked out over time and the outlook for business

travellers is overwhelmingly positive. Hotels will have to up their game as

Airbnb and its competitors grow. Scams might exist, but the biggest challenge

comes from regulation, and San Francisco has already signalled a step in the

right direction.