Should You be Using Airbnb?

One of the most apparently successful of the new ‘sharing economy’ internet startups is Airbnb.  It started business in 2008, and in the ten years since then has gone from being an irrelevant footnote to the main accommodation choices, and is now the largest single source of accommodation offered in the entire world.

It nowadays claims to have over 5 million lodging listings spread over 81,000 cities in 191 countries.  The largest traditional hotelier is believed to be Marriott, with 1.1 million guest rooms in its system.  Expedia is developing and expanding a similar service to that offered by Airbnb, called HomeAway, and it has perhaps more than 1.5 million listings.

Airbnb’s accommodation choices run the entire gamut from quite literally air beds in a living room through to renting entire luxury penthouses and showcase quality sprawling luxury mansions.  Still privately held, it reported revenue of $2.6 billion in 2017 and a net profit of $93 million, both numbers being up on 2016.  Recently, it has been valued at perhaps somewhere in the range of $53 – $65 billion, more than Marriott, the world’s largest hotel company, with a $46 billion.

This valuation is extraordinary when matched with its small net profit and the fact that it doesn’t own a single hotel room.  Its last round of financing, early in 2017, was based on a $31 billion valuation.

The company and its service has truly revolutionized not only accommodation options for travelers, but also has provided an entirely new way for people to make money from second houses, investment properties, and even spare rooms in their primary residences, with flow-through impacts to the property market and reportedly many investors now valuing and buying properties based on their Airbnb rental potential.

In a manner eerily similar to the other great ‘sharing economy’ service, the private car type taxi services such as Uber, Lyft and others, Airbnb has plenty of detractors and critics – mainly either traditional hoteliers or cities, but matched by a fiercely loyal group of users (also like Lyft/Uber).  Hoteliers, no matter what they publicly say, are feeling the impact of Airbnb, and cities are concerned that Airbnb operations are changing the character of neighborhoods, causing commercial accommodation services to appear in residential neighborhoods, and are also very aware that many Airbnb hosts are not registering with the city, obtaining necessary business licenses, or collecting and remitting the sometimes steep taxes cities levy on hotel stays.

It is unclear what share of total accommodation stays are now directed through Airbnb, and the company’s market share varies enormously from region to region.  It seems that in areas where it has an active presence, it might perhaps have a 5% – 10% market share, and about one-quarter of all travelers use Airbnb at least once every year.

All of the preceding is interesting, but what does it actually mean to you as a potential Airbnb client and guest?  I tried an Airbnb a week ago, and while one experience is far from indicative of that which would follow from every stay, the overall system issues and procedures are fairly standardized.

Talking about standardized, there is no standard at all for Airbnb listings.  Whereas you can be fairly certain what to expect every time you stay at a Best Western, or at a Hilton, or any other branded chain, Airbnb listings can literally be anything.  You need to read the listing carefully, evaluate the photos, being aware of how wide-angle lenses can make things seem larger than they are, and also wonder/worry about the parts of the accommodation that aren’t photographed.  You need to read the reviews carefully, and appreciate that most reviewers tend to be astonishingly forgiving and positive in their reviews.  You need to understand exactly where the property is located, and use Google Streetview to get a feeling for the surroundings – is it a good neighborhood, or are there homeless people sleeping under the bridge just down the road and round the corner?

What is access to the space like, and what is security like?  Is the space up a flight or two of stairs?  If so, are they steep and narrow, or broad and easily climbed?

You also need to understand exactly what the person renting the space expects you to do.  Even though there is probably a cleaning fee levied, you’ll likely be expected to do some cleaning yourself, and take out the trash.

One more thing to be aware of.  Sure, you’ll see a fairly obvious nightly rate, although make sure this rate relates to the dates of your stay.  But what about additional fees and charges – is there a cleaning fee?  How much of an extra charge does Airbnb add on to the published rate?  And, of course, the chances are there’ll be some taxes collected too, perhaps to be passed on to the city (and perhaps not!).

In my case, the quoted $65/night rate, based on a two night stay, ended up at $85/night, and then taxes went on top of that.  One can’t really blame Airbnb for taxes, but the lead $65/night rate suffered a 30% boost through extra fees and profit-taking by both Airbnb and the host.  These are not optional fees, they are unavoidable mandatory fees (for cleaning and Airbnb’s variable added fee).  They should be included in the lead rate.

How would you feel if your $400 airfare actually ended up costing you $520, and then the government taxes were added further?  We demand (and the law requires) to know the total cost of an airline ticket up front, shouldn’t we expect the same of an accommodation service, too?

In addition to the rate, what are the cancellation fees like?  In my case, the listing had a headline about a 48 hour free cancellation policy, which at first glance seemed like one could cancel with no penalty up to 48 hours prior to arriving – a fairly common industry standard.  But when I expanded that section, what it was actually saying was that I could cancel within 48 hours of making the booking, but then if I cancelled subsequently, between 14 – 7 days there’d be a 50% penalty of the total booking, and within seven days, there’d be a 100% penalty.  That is harsher than most hotels, all the more so for the cancellation fee being of the total booking, not just of the first night.

This brings up a good point.  Not only is it common for business travelers to need to change or cancel their booking, making such penalties almost inevitable, but it is also sometimes desirable to extend a booking too.  That is usually possible with a regular hotel that has maybe 100 or more rooms.  But when you’re booking a single room or a single unit/apartment/house, perhaps someone else has booked to take it from the day you had scheduled to depart, making any extension to your booking impossible.  So you might have to switch properties halfway through your stay, because for sure you can’t cancel the original booking, even though it can’t accept your request to stay longer.

Another issue is ease of contact/communication with the person renting the unit.  I never got any direct phone number, and all communication had to be either via email or via an app on my phone, which I never downloaded.  I’m starting to rebel against the need for apps for everything, because that is increasingly the case – everything needs its own app, and finding them on the phone is getting harder and harder.

When I had a problem (not able to unlock the front door due to the access code apparently not working) and wanted to urgently immediately phone someone and get the problem solved, I had to instead send an email and wait for the owner to receive and reply to the email, while standing unhappily outside the house in the 90° heat at the end of a long day.

The apartment I rented in Spokane had gorgeous photos, and seemed stylish, modern, and finished to a high standard.  At a cost of $65/night – or, for that matter, at a true cost of $85/night, it seemed like a great bargain.

But, in reality, it was a mix of great and not-so-great.  I’d not realized there were about 25 steps to reach the apartment front door.  And I’d also not realized it was in a not-so-great part of town, making parking my car on the street a not quite so relaxed event.  Yes, there were indeed a couple of homeless people living under a nearby bridge, something none of the reviews had done anything more than perhaps very delicately and obliquely hint at.

The apartment interior was essentially as shown in the photos.  But I’d failed to realize there was no work desk.  There was a tiny high-top wobbly table with two high bar stools that I guess was intended for two people to eat small meals on (see picture), but the tiny table was too small for my laptop and extra external screen, and the bar stools rapidly became uncomfortable to sit on.

What does one do in a case like that, when unexpectedly one’s planned working productivity plunges down to close to zero?  One has a drink, right!?  Except that, while there was a kitchen with cutlery and crockery and glassware and pots and pans, and a nice large fridge/freezer, there was neither a bottle opener nor a corkscrew!

I mentioned the 90° heat.  I’d checked with the owner that the apartment did have air conditioning.  She assured me that not only did it have a/c, but that the apartment was naturally very cool to start with (a statement that invariably is a lie, or, to be kinder, is accurate only when there is no-one inside and no internal heat sources generating heat).

When I was finally able to unlock the front door and access the apartment, I was greeted by what seemed to be no cooler than the outside air.  I immediately went to turn the a/c on, only to discover that it comprised one teeny tiny unit in a living room window which struggled to drop the temperature at all – indeed, in the dead of night, with outside temperatures back down into the 60s, it was still struggling to bring the inside temperature into the mid 70s.

This forced me to strip almost to complete nakedness in a desperate attempt to cool down, which caused me to become aware of the fact that the living room windows had no curtains (I had not thought to check for that when looking at the picture, above).

The spacious apartment had a bedroom down the far end of a hallway, and none of the very small amount of cool air coming from the a/c unit made it to the bedroom.  Unfortunately, there was nothing to sleep on in the living area, or else I’d have slept there for the two nights.

The apartment has a five-star rating on Airbnb, and something like 300 generally gushingly positive reviews.  I found it a hellish experience full of unexpected gotcha moments.  And at the end of it all, I was expected to do the dishes, load the washing machine with used sheets and towels, and take the trash out to the rubbish bins around the corner of the building – all the things one doesn’t want to do when on vacation, and doesn’t have time to do when traveling on business.

That’s not to say I won’t try Airbnb again in the future.  But I’ve now got a better idea of what to anticipate, and what to check before committing to a booking.  You should do the same.  Specifically, be sure to understand :

• True total cost compared to other Airbnb listings
• True total cost compared to other accommodation on other sites
• Cancellation policies
• Check-in and check-out times
• Location (safety/crime/etc)
• Access (steps, locks, security)
• How to contact the owner instantly/real-time if needed
• Adequate air conditioning in summer everywhere in the apartment
• Bring your own bottle opener/corkscrew (!)
• Workspace – Desk and chair (and internet!)
• What chores one has to do at the end of the rental

Good luck.  You might need it.