Tag: airbnb

• Airbnb’s predictive abilities

  I recently discovered and subscribed to Packy McCormick’s “Not Boring” newsletter. So far it’s quite good, and so here I am mentioning it to you all on the blog. In his latest newsletter, he makes the case for why Airbnb and Zillow — the two largest residential real estate tech companies — should merge. Naturally this new company would be called Zillbnb. You can read all about why he thinks this is a good idea over here, but I would like to point out one thing that I found interesting.

  Packy makes the argument that “easiest-to-book, shortest duration reservations” are a leading indicator for changes in demand. In other words, platforms like Airbnb can start to tell you where people might want to live and platforms like Breather can start to tell you where people might want to work.

  To support this argument he uses the example of his Airbnb rental outside of New York City. Sure, demand initially fell off a cliff at the beginning of lockdown, but then it started to surge as New Yorkers sought refuge outside of the city. And while I think that this particular change in demand will likely end up being short-term in nature, a similar trend is being reported around in the world. Did we hear it first on Airbnb?

  2020.06.22

• Systemizing Airbnb

  Wired recently published a long read called, “I stumbled across a huge Airbnb scam that’s taking over London.” Apparently the people who do these sorts of things on the platform (things that are both illegal and questionable) call it “systemizing.” This is the process of trying to create scale. Secure lots of units. Create a bunch of fake/duplicate accounts. And try and maximize revenue.

  This obviously runs counter to Airbnb’s mission of “authentic places”, “community”, and “local hosts.” But as Benedict Evans points out in his latest newsletter, “where there is money and people, there will be scams.” And Airbnb is obviously doing everything it can to quash this kind of activity, especially as it prepares for a possible IPO this year. The company has a policy of zero tolerance.

  Fraud and government regulation are likely to be the two biggest kinks to work out as the company gets ready for public consumption. I am sure an equilibrium will be found; it’s just going to take some time and a few lawyers. It goes to show you just how challenging startups can be when you combine digital (tech) and physical (real estate).

  2020.02.17

• Hotels are here to stay

  I have a copy of Monocle’s Guide to Hotels, Inns and Hideaways sitting on my desk and I love flipping through it. There’s something magical about a great hotel. Part of that magic is intrinsic — it’s just a good hotel. And part of it is the fact that we’re probably all a bit more open to new experiences when we travel. Our mindset changes.

  On the first of January, I wrote (briefly) about two recent experiences where I was no longer required to interact with a person in order to check into a hotel. It was all done electronically. Some of you followed up and asked: “Do you think this is a good thing? Don’t you miss the human connection?”

  My response was that I think it is inevitable. There is a long history of technology/automation replacing human jobs. We used to have elevator operators. Now we don’t. We used to have people shoveling coal into furnaces. Now we don’t. And I think that’s okay. We created different jobs. The same is likely to happen with Uber/Lyft drivers.

  At the same time, our need for human connections isn’t going away. One of the best features of a great hotel is the bar. Whether it’s sitting at the bar and talking with the bartender or meeting someone new, those moments of interaction will always remain precious.

  And it’s one of the reasons why, I think, platforms such as Airbnb haven’t meant the demise of hotels. Part of it has to do with the service offerings and consistency of a good hotel. But part of it also has to do with our desire to be around other humans. In the words of Monocle: “There’s something about a hotel bar that captures our collective imagination.”

  2020.01.09

• Airbnb is powering new purpose-built short-term rental buildings

  This past weekend I was in a condo building here in Toronto with large signs in the elevator saying, “No Short-Term Rentals Including Airbnb Are Permitted. Trespassers Will be Prosecuted.” It was the first time I had seen anything like this, but it immediately signaled to me that the building must be having a problem with short-term rentals. Why else would you deface the elevators? There are some buildings that allow short-term rentals, but most don’t.

  However, over the last few years we have started to see purpose-built short-term rental buildings. In some cases, existing apartments buildings were “converted”, as was the case with Niido’s two properties in Nashville and Orlando. Here tenants in the building can rent both unfurnished and furnished apartments and then rent them out on Airbnb up to a maximum of 180 days per year. To date, I think these are the only two properties to use the “Powered by Airbnb” moniker, but more are on the way.

  The developer behind Niido — Newgard Development Group — recently launched a new Powered by Airbnb brand called, Natiivo. This one looks to be focused on for sale product, with two upcoming projects in Austin and Miami. Both projects will have hotel licenses in order to avoid any regulatory risk going forward. But this makes me wonder how materially different this model is from the condo-hotels we’re already familiar with.

  For landlords and developers, the goal is obviously to maximize rents and prices. Allowing (or explicitly encouraging) residents to rent out their place and earn some extra cash, should help with that. And given the way I started this post, we also know there’s a desire to do this, particularly in places with strong tourist demand like in Nashville and Miami. But the reviews are mixed. Not everyone wants to live in a hotel. But then again, not everyone wants to co-live. To each their own.
  

  2019.09.24

• The WeWork of vacation rentals

  

  The word on the street is that Sonder — the marketplace for vacation rentals and competitor to Airbnb — is close to finalizing a $200 million investment round that would value the company at $1 billion.

  I first wrote about Sonder back in 2016 after I met someone from their business development team here in Toronto. I have yet to stay in a Sonder, but I’ve looked at their rentals a few times.

  One of the main differences between Sonder and Airbnb is that the former head leases their rental supply. And they do this by trying to go higher up on the food chain and partner with developers and real estate operators.

  In this regard, they are similar to WeWork. And it allows them to sit somewhere in between Airbnb and a conventional hotel. The supply is distributed, but the service offering is more consistent.

  Of course, this arguably makes their business model slower (they have to negotiate leases) and more costly (they’re committing to fixed costs). So it becomes a question of: How valuable is that consistent service offering?

  Lately when I travel, I’ve been trending more toward hotels, as opposed to Airbnb-like rentals. I like the experiences that many hotels are now focused on creating and I like knowing that if my flight arrives late (in a place like Brazil), I’ll be able to get into my room.

  I guess consistency does matter.

  Photo by Spencer Watson on Unsplash

  2019.04.28

• IPOs and home prices

  Fred Wilson made an interesting remark in his recent post about the current “IPO bonanza” that is taking place in the tech space. He is, of course, talking about the recent IPO of Lyft, the recent S-1 filings from Pinterest and others, and the expected filings from Uber, Airbnb, and so on.

  After listing the benefits of going public, he went on to say that this bonanza will surely also mean that it is going to become even more unaffordable in the Bay Area. Part of this is perhaps self-serving, since he operates a VC firm out of NYC. (Take your money and move to NYC.)

  But the data suggests that there is truth to this.

  When Twitter when public in 2013, it was estimated that it created some 1,600 millionaires. This is great for the local startup ecosystem as many of these beneficiaries could go on to found their own companies and create a whole new batch of jobs. The money gets recycled.

  But what does it do to the local housing market — especially a supply-constrained one like that of the Bay Area where it is difficult to build?

  In 2018, Barney Hartman-Glaser, Mark Thibodeau, and Jiro Yoshida penned a paper called, Cash to Spend: IPO Wealth and House Prices. In it, they looked at the impact of IPOs on local home prices in California from 1993 through to 2017.

  What they found, among other things, was a “positive and significant association between local house price changes and firms going public.” The price increases were also found to be the greatest the closer you get to the headquarters of the firm that just went public.

  If you’d like to download a copy of the paper, you can do that here.

  2019.04.02

• Airbnb empire comes to an end in NYC

  At the beginning of this year, the City of New York filed this lawsuit in an attempt to shut down an Airbnb business that has supposedly generated around $20 million in revenue since 2012. It is currently illegal to rent out an apartment in most buildings in the city for less than 30 days unless the owner/permanent tenant is present. And that’s not how this business was being operated.

  Here are the locations of the rentals named in the lawsuit (map from the New York Times):

  

  The defendants include a real estate brokerage, the three partners behind the business (more on them here), as well as others. NYC has been trying to pass legislation that would force Airbnb to disclose more information to the Mayor’s Office of Special Enforcement. Information such as the full name(s) and address(es) of every host and whether the short-term rental is an entire dwelling or a room. That presumably would have helped here.

  For more on the lawsuit and the backstory, click here.

  You may also find it interesting to go back to the five-point plan that Airbnb put forward back in 2016. It was intended to serve as a framework for new short-term rental legislation. The points make a lot of sense.

  2019.02.23

• Airbnb announces new Backyard initiative

  Airbnb has just announced a new initiative called Backyard, where it will be looking at new ways in which homes can be designed, built, and shared. They are, in a broad sense, becoming architects.

  The initiative has been in the prototyping phase for some time now, but the plan is to put forward some sort of product in 2019. Despite the name, the initiative won’t just be focused on small backyard cottages or accessory dwelling units.

  Here is an excerpt from Fast Company:

  “Backyard investigates how buildings could utilize sophisticated manufacturing techniques, smart-home technologies, and gains vast insight from the Airbnb community to thoughtfully respond to changing owner or occupant needs over time,” Gebbia says. “Backyard isn’t a house, it’s an initiative to rethink the home. Homes are complex, and we’re taking a broad approach–not just designing one thing, but a system that can do many things.”

  This is yet another example of tech and real estate coming together. But as I’ve mentioned before on the blog, I think eventually we’ll stop making that distinction; it will just become the way in which we build companies.

  2018.11.29

• Airbnb and affordable housing

  

  Fred Wilson published a good post last weekend on the proposed bill that went to New York City Council this week regarding new reporting requirements for Airbnb and their hosts in NYC. You can read more about his position on his blog, but he is in favor of a comprehensive bill that would properly legitimize short-term rentals. He is also not opposed to city and state taxes on the service.

  What I wanted to focus on today were his comments around housing. This is already sounding like a broken record, but Fred draws attention to the severe supply-demand imbalance that is occurring in the boroughs of Brooklyn, Queens, and the Bronx, precisely because many/most young people were priced out of Manhattan long ago and want to live in these places.

  But I particularly like his comments around what makes for good policy and what makes for good politics. I agree with his view that it is often a case of the latter over the former. I think a lot of the excitement around Airbnb is a red herring. For me, it’s akin to the fixation on foreign buyers and their impact on the local housing market in places like Toronto and Vancouver.

  Yes, they are factors. But the data suggests they are marginal ones. As Fred points out, they are almost certainly not the root cause of the problem. The reality is that we need a lot more housing – both market-rate housing and subsidized housing. The challenge is that nobody wants to pay for the latter and so we’ve instead decided to focus on things that sound like they’re going to help.

  Photo by Jon Tyson on Unsplash

  2018.06.29

• Toronto’s first Airbnb-friendly condo building

  This week it was announced that the very first condo building in Toronto (and in Canada) has just signed on to Airbnb’s Friendly Buildings Program. The agreement will take effect on November 1, 2017.

  As the name suggests, the program is about bringing greater legitimacy and structure to short-term Airbnb rentals. Here are two key measures from this particular agreement:

  – Building security will now have full transparency with respect to who is hosting and who their guests are at any given time

  – Airbnb will share 5% of the building’s revenue with the condominium corporation (hosts will also need to pay $50/month to cover any additional maintenance costs)

  What’s compelling about the above is that there’s now a bit of a financial incentive for buildings/boards to support Airbnb rentals. 

  At the same time, if something happens, it’ll now be a lot easier to figure out who was responsible and then chargeback any relevant costs. Right now it’s all happening under the radar.

  My view on Airbnb is the same as the one I took (publicly on this blog) on Uber: It’s not going away. Many people clearly want it. An entire building just accepted it. So let’s figure out how to make it work better.

  One regulation that Toronto is currently exploring and that I think will materialize in some form is a limit on short-term rentals when the unit is not your principal residence.

  This is the difference between Airbnb’ing your place when you leave on vacation (or when you have an extra room) and buying a condo strictly as a short-term rental investment.

  It’s interesting to see the evolution of companies like Uber and Airbnb. Both would never have been successful if they started out by first asking for permission. 

  But now they are mature enough that they are being forced to play nice.

  2017.10.28