Airbnb keeps making headlines across the country, and every major city seems to be struggling with what exactly to do with the popular home sharing app. It’s in over 34,000 cities, it’s in 190 nations, its assets are soon to be valued at over 20 billion, and regulators are still scratching their heads over whether or not the whole thing is even legal. Riding the wave 2000s tech startup-splosion, Airbnb rose rapidly to prominence, and is every bit as controversial and right at home with ride sharing apps like Uber and Lyft. All this begs a very important question: why all the hubbub and – more importantly – what the heck is a home sharing app?
It began, seemingly like all stories tech, on the fabled streets of San Francisco. There, founders Brian Chesky and Joe Gebbia were doing what most San Franciscans do: struggling to pay rent. Their solution was a novel one; a solution fit for the endearing and enduring Bohemian culture pervasive in the City By the Bay. They decided to turn their living room into a bed and breakfast.
Armed with air mattresses, enough accommodations to provide for three guests at a time, and the promise of a home cooked meal, their business venture was born, and the website
airbedandbreakfast.com launched not long after. A combination of a slick platform and hip minded business practices earned the duo success. By 2009, the site was shortened to airbnb.com, and its purpose was expanded. Chesky and Gebbia had gone beyond bringing people to their own space. They were now interested in connecting guests and hosts the city over.
Today Airbnb 1.5 million listings all over the world. It works like this: a guest with an account does a quick, effortless search for a listing in a specified area. After a selection appears they can then shop around and make a choice based on price rates, location, the host’s reputation, and the description which includes pictures as well as the host’s reputation and reviews. After that, the guest simply has to make a reservation and check in. It’s not at all unlike a hotel service.
The difference being that listings on Airbnb tends to be much cheaper than what hotels are able to provide. Airbnb is peer to peer and it doesn’t cost anything which means that a group of ordinary people (i.e: everybody) can make a little extra money by offering up some or all of their home space. Meanwhile, travelers can skip the hotel room, potentially to the benefit of hundreds of dollars. Airbnb offers users a convenient way to provide each other the services they need that exists outside of the traditional channels.
If that business model sounds familiar to you, then you’ve probably taken a Lyft or Uber recently, or at least know people who have. Anyone with a smartphone can toss the taxi fare and order service from either company in a large chunk of cities all around the U.S. and the globe. App uses enjoy the benefit of being able to see how many drivers are in their area in addition to being able to track their progress and their ETA in real time. And, of course, rides tend to be much cheaper. Becoming a Lyft driver, meanwhile, requires passing a few regulations. The driver simply hops in their car, flips on the app, and begins accumulating fares.
Ride sharing apps like these are all the rage, and they very much have the same benefits as the housing sharing approach of Airbnb. They also have many of the same problems.
Uber and Lyft tread tricky ground because the vast majority of their drivers aren’t licensed taxi drivers. That alone is enough to make their services the target of claims of illegality from local and state officials from across the country. The lack of regulation has also brought up a number of safety concerns, and many high profile crimes committed by drivers onto passengers certainly did nothing to ease fears. A similar lack of regulation is what has critics of Airbnb calling foul.
The crux of the issue revolves around defining what, exactly, a host of Airbnb and other similar services is. Most municipalities have specific laws that regulate the process of renting, subletting, or offering hotel services. Airbnb exists in a strange middle ground of all three, yet the service asks very little of a host in order to create a listing; usually nothing by way of licensing. San Francisco, which is currently locked in a housing crisis, took the matter to the ballot recently even.
Chicago officials believe that there are at least 4,500 Airbnb listings in the area, but that only 200 of them are licensed to operate. Meanwhile, hosts have found themselves on the wrong end of a lawsuit for offering a room in an apartment that they were renting from a landlord, or for not going through the right tax motions if they were homeowners.
Money might actually be the biggest threat to Airbnb. The American Hotel & Lodging Association, likely one of the service’s largest opponents, and is one that isn’t happy about watching traditional hotels lose customers to a legally dubious home sharing platform. Adding to the fray are city officials who are adamant that Airbnb and their hosts are eluding tax codes, and should be taxed as a hotel service. It’s telling that in San Francisco, the birthplace of Airbnb, home sharing apps were made illegal until 2014 several years after it became fully operational. It was only when Airbnb agreed to require that hosts carry liability insurance and as well as pay the city standard as well as pay the city standard 14% that the city changed its tune.
In the app age, Lyft, Uber, and Airbnb might just be the inevitable wave of the future. It’s not difficult to make the argument that, increasingly, technology disrupts the status quo, and that it’s not always for the better. Labor activists can’t help but notice that Uber, a service that customers love, gives their drivers the shaft by providing bottom barrel wages and avoiding benefits by listing them as independent contractors, for example. Everyone wants to cut out the middleman. But it’s worth asking about the price.