AIRBNB – The eBay of Vacation Rentals

BASICALLY HOME SHARING, AIRBNB IS SO HOT RIGHT NOW. Connecting hosts and travellers globally via the internet, it is the eBay of vacation rentals. A multimillion U.S. dollar business, it offers 2,500,000 accommodation listings, in 31 cities, in 192 countries worldwide.

It took a while for the Caribbean to become an Airbnb player with the Dominican Republic, Puerto Rico, Guadeloupe
and Jamaica emerging as the dominant players. Cuba joined Airbnb last year and it is already the favourite
Airbnb Caribbean destination. This year there are 25,000 Caribbean listings, with 1500 in Jamaica. The majority are
located in Kingston and Portmore, as well as Montego Bay, Ocho Rios, Negril, Port Antonio, Treasure Beach and Mandeville. Offerings range from basic lodgings to high end villas. In the mix are interesting stay options: log cabins and cottages high in the Blue Mountains; coastal villas and beach houses; historic buildings; urban townhouses and apartments; rural farmsteads as well as camping sites. Nightly rates range from US$10, for basically a pitched tent on the beach or a hammock, to over US$4,000 for a beachfront mansion. Jamaican Airbnb hosts cater not just to tourists and backpackers but Jamaicans vacationing back home, as well as business travellers. The Marketplace for Spaces The initial concept for Airbnb was two-fold: to enhance the travel experience for travellers by offering basic, affordable, shared living space from which the host could earn an income. The traveller was encouraged to connect and engage with locals to experience an ‘authentic’ stay. Today the Airbnb inventory Includes some of the most exotic, off-the-grid places to stay including million dollar estates, private islands, castles, and even yachts. Humble Beginnings

The Airbnb story is fascinating. The timing was right, and it was a perfect example of turning a problem into an opportunity. It was started by three thirty-something university students living in San Francisco. Near broke and trying to make ends meet, they came up with the idea of renting out air beds and providing breakfast to people who were looking for short term lodgings while attending an industrial design conference in the city. Soon realizing that this was a unique networking oppportunity they developed a business model whereby people could earn an income from shared space in their homes by hosting paying guests at affordable rates. They developed a website and Airbnb began its incubation. Initially they focused on high profile events, when traditional accommodation, such as hotels and motels, would be booked out and lodgings would be scarce. By 2010, fifteen employees were working out of the small apartment. Airbnb led the way for the next generation of multi-million dollar startups and its founders became billionaires.

Branching outside the United States to ramp up growth andaggressively target the international market, the Company opened offices in19 cities with headquarters in Paris, Milan, Barcelona, Copenhagen, Moscow, Sao Paulo, Hamburg, Berlin, London and Dublin. In 2012 the focus turned to the Pacific region and Australia became a huge market (second to the United States), and an office was opened in Sydney. The Asian market soon opened up, and Thailand, Singapore and Hong Kong became popular destinations. Cuba is the newest Airbnb host in the Caribbean, and the fastest growing. Although Cubans have been hosting guests in their homes, ‘casa particulares’ for decades, Airbnb has opened the doors to thousands more. There are currently 4,000 Airbnb casas in 40 different cities in Cuba. The average earning is US$250 per booking. Among the major attractions are the nine UNESCO heritage sites in Cuba (there are 22 in the Caribbean, and Jamaica has one, the Blue and John Crow Mountains).

With several new rounds of private funding, plus mergers and aquisitions the Company grew rapidly and is currently
valued at over US430 million, making it the second highest valued start-up in the U.S., after Uber, the ride-sharing service. Financial analysts predict a staggering growth of Airbnb by2020 with 500 million bookings a day; and by 2025 earnings are expected to exceed US1billion. With hospitality at its core, the Airbnb culture has captured the millennial market. Described as one of the ‘coolest’ companies, the business model is sophisticated, welldesigned and user-friendly. Even though there have been many competitors such as Crash Padder and Accolei out of Germany, Airbnb has surpassed all. Without a doubt the home-sharing empire has emerged as a new accommodation sector, and has had a profound impact on the travel industry creating new sources of supply, with ripple effects throughout the economy. It has been described as the most disruptive innovative business, and critics say it has destabilized the hotel industry. Others see Airbnb as the great equalizer, democracing tourism and opening it up to the wider public. It dwarfs the biggest hotel chains in the number of rooms rented and some hoteliers are getting nervous. As more people try Airbnb and enjoy the experience, it is felt that they are unlikely to stay at a traditional hotel in the future. Hoteliers also complain that Airbnb undercuts hotel prices, and it is not regulated or contributing to taxes. However many feel that it only affects the smaller hotels and guest houses, and that there will always be guests who prefer the hotel experience.

There are claims that it is creating a shortage of affordable housing for rental in the major cities. It has become a
big issue particularly for condos, and several apartment associations cite that subletting rooms for use as an Airbnb
is a breach of tenancy, and are prohibiting it in their buildings. There has also been a lot of negative feedback from the tourism sector, and destinations in Europe, such as Florence and Venice, are saying that sites are becoming too overcrowded with Airbnb tourists. In its defence Airbnb say that its impact is positive as it is turning surplus housing into an economic asset and diversifying tourism. Their statistics show that Airbnb guests stay longer, (on average 5.5 days compared to 3.5 days at a hotel), and they also spend more, supporting local businesses.

Despite offering a 24-hour customer service, Airbnb has not gone without its own internal problems. There have been nightmare stories of all sorts of violations from guests trashing homes, to throwing out of control parties. There have been reports of privacy issues and identity theft, and critics say the system is easily gamed by scammers. Airbnb
has also been accused of racial discrimination against Blacks and refusing to rent to the LGBT community.
As Airbnb works on solving these issues, business is booming for some operators who have branched out, offering a variety of services. For some, Airbnb is a full time job, and there are mega-operators who own several properties with multiple listings. There are now Airbnb management companies, such as ‘Beyond Stays,’ as well as independent Airbnb managers who handle the day-to-day operations of several properties. They provide concierge service, airport pick-up, transportation, and even arrange tours. An App has also been developed specifically for Airbnb properties, with security features controlled remotely.

A growing segment in the Airbnb market is business travel and extended stays. Company employees can charge accommodation directly to Airbnb and even receive coupons and gift cards on future stays. The requirements for a business traveller host are more detailed and specific: the property must be in a convenient and central location, and amenities must include lap-top friendly work stations, internet, smoke detectors, essentials such as irons and blow dryers, and no pets are allowed on the property. In some instances large villas and multi-unit condos are used to host large corporate groups and retreats. Airbnb is also tapping into the travel guide business, providing curated city and neighbourhood guides for travellers with information on nightlife, events, dining and other activities. Some Airbnb hosts cater to niche markets and offerings are centred around activities such cultural events; food and cooking, including farm stays; health and fitness, such as yoga retreats; even music, providing studio recording facilities. Airbud and Breakfast, is a novel, independent spin-off of Airbnb, offering ganja-friendly stays, which are now popular in Columbia, Uruguay and Jamaica.