In the summer of 2010, approximately 47,000 guests stayed at Airbnb properties. By the summer of 2015, that number had risen to a cool 17 million.
That kind of staggering growth would seem to indicate the progress of a true entrepreneurial success story. And, from a bottom-line perspective at least, that is most definitely true: Airbnb is rightly held up along with brands like Uber and Lyft as examples of innovative concepts that have leveraged new tech tools and the power of the “sharing economy” to reach new heights.
While the dollars and growth are impressive, there are an increasing number of questions about whether the Airbnb model is sustainable, and, more importantly, whether it is actually having a positive impact on the communities where we live and work.
For those of us in the hotel community, it can be challenging to talk about Airbnb, especially in a critical manner. The misleading narrative that hospitality professionals who call for some perspective on Airbnb are motivated by greed or self-interest can be tough to shake.
But the reality is that the hotel industry today is a product of many decades of growth and evolution, and successful hoteliers have navigated a raft of regulatory challenges, new taxes and fee obligations, as well as a host of professional responsibilities. This is a mature and vibrant industry, populated predominantly by good corporate citizens who have earned the right to speak up and speak out when our developed industry is subverted by a new concept that doesn’t play by the same set of rules.
Not only do we have a right to speak up—we have a responsibility. Because the real worry with Airbnb is not about fairness or competitive balance, it’s about the well-being of communities across the country and around the world. And because Airbnb can have a significant and potentially detrimental impact on the quality of life in the communities where we live and do business.
Those of us in the hotel business know better than anyone the potential consequences of being in the overnight lodging business. Here in my own home city of Chicago, for example, I don’t think that families and working professionals are really ready (or willing) to have their evenings disrupted by a bachelor/bachelorette party, fraternity event, or other loud and raucous gathering across the hall due to an Airbnb visit. Unlike hotels, which are well-equipped to monitor, manage and deal with disruptive or disrespectful guests, Airbnb providers (and their neighbors) have had little recourse.
In the same way that some people treat rental cars with less care and respect than their own vehicles, hospitality comes with its share of abuses. Inevitably, and unfortunately, we know this too well in the hotel industry. From time to time, there are incidents of reckless behavior and unsupervised, excessive consumption of alcohol and drugs. The issue is significant enough for Airbnb that the company recently launched a tool that allows neighbors to report rowdy or disruptive behavior from Airbnb guests. While it remains to be seen whether reports from neighbors will have a meaningful impact, the best-case scenario is that the concerns may be addressed days after the fact. Issues about cleanliness and maintenance (on both on the part of the renter and the Airbnb landlord) further complicate matters.
Then there is the security issue. Very few private residences have been built with the same type of safety and security features that are mandatory in hotels. From high-quality locks to sophisticated fire alarm systems and professional security support, hotels offer a range of standard protection for guests. Airbnb has no such protocols or resources, so unfortunately it is only a matter of time before something tragic happens. We have heard a great deal of vocal concerns from neighbors and community members who are worried about giving strangers access (sometimes in clear violation with community, building or rental agreements) to private buildings and residential communities.
Even outside of the issues that have been raised regarding community impacts, Airbnb has stirred a number of other concerns, as well.
Because Airbnb listings typically include a photograph of the host and the guest, concerns about subtle and not-so-subtle discrimination have been raised. In some cases, those concerns have boiled over into full-fledged grievances. A handful of high-profile cases have inspired activism on social media (such as the hashtag #AirbnbWhileBlack), and a much-discussed Harvard study—which found that guests with African-American names are approximately 16% less likely to be accepted by Airbnb hosts than their white counterparts—have added more fuel to the fire. To its credit, Airbnb has emphatically denounced racist or discriminatory practices, and has developed a comprehensive anti-discrimination policy. But the inherent challenges in addressing an issue that seems to be exacerbated by the business model itself will likely be tough to resolve.
Finally, and perhaps most importantly, Airbnb’s image as a way for independent homeowners and renters to make a few dollars on the side by renting out their place is very different from the reality: a business model that allows unscrupulous individuals to take rental inventory off market and rent to daily users (making more money than if they rented to tenants). A significant portion of Airbnb essentially functions like a black market hotel operation. The downstream impact of this behavior has another worrisome impact on communities: it drives up rental rates. An estimated 5,000 rental units in Chicago are offline because they are being rented out by the day.
The challenge is to determine how to address these concerns in a way that is fair to both Airbnb and traditional hotel operators, while protecting residents and preserving the quality of life in our communities. There is no simple answer, but it’s encouraging that civic and community leaders are starting to grapple with these issues in a meaningful way. One of the biggest questions is figuring out how much responsibility government entities and civic institutions should have for regulating businesses of this nature.
In Chicago, several aldermen have assumed leadership positions on these issues, and some ordinances that are being debated would impose basic standards on Airbnb operations–such as requiring properties to have proper evacuation routes in case of emergency, obtain insurance with reasonable limits and secure neighbor input with respect to how many units in their building can be used for these purposes.
Ultimately, moving away from a Wild West atmosphere and toward a model with sensible regulation and consistent enforcement of basic standards and community-sanctioned practices will allow Airbnb and traditional hotels to exist in harmony, while having a lasting positive impact on businesses and communities.
Robert Habeeb is president and CEO of First Hospitality Group, Inc., a national, experienced, and established hospitality management and development company serving the investment and real estate industries. Since 1985, FHG has been an award-winning pioneer in the hospitality industry. FHG has successfully developed, marketed and managed more than 16 brands and 50 properties throughout the Midwest. Visit www.fhginc.com.
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