Airbnb executives acknowledge certain problems in the company's development 

10-10-23

• Brian Chesky, Airbnb's co-founder and CEO, has admitted that the company is not going through its best moments

The Airbnb model was born 15 years ago and, since its emergence and popularization, it has become one of the main enemies of the hotel industry. Many hoteliers have protested that the vast majority of accommodations offered through this platform play with an advantage because they compete directly with hotels, but do not face the same legislative obligations regarding aspects such as security or services offered.

This greater laxity in the regulations faced by tourist rentals - avoiding cases in which the accommodation is directly outside the law - allowed this model to offer cheaper prices, which was, to a large extent, central to its success. But everything points to the fact that the system is starting to fail if we take into account that Brian Chesky himself, co-founder and CEO of Airbnb has admitted in an interview with Bloomberg that the company is not going through its best moments.

Airbnb was born on the premise that homeowners could earn extra income by renting out empty rooms for short stays. Guests were willing to give up certain hotel-like amenities in exchange for paying less, location and the chance to immerse themselves in the local culture.

However, the growth in popularity has attracted many investors who want a quick return and has also been associated with the complexification of the concept and the emergence of professionals in charge of services such as check-in, cleaning and supervision. All this has resulted in an increase in prices and in the appearance of fees and surcharges that increase the final bill and that, on many occasions, cause prices to reach and even exceed those of hoteliers.

Among them, the one that stands out the most is the famous cleaning fee. Many hosts not only apply this surcharge (which can range from 80 to 200 euros), but also leave negative reviews in case the tenant has not made the beds or washed the dishes.

Given this and other services that hotels offer and that are included in the rate -without cheating- such as breakfast or 24-hour reception, many are considering that Airbnb's value for money is no longer an incentive.

From Airbnb itself they are aware of the importance of keeping rates under control and Chesky himself has appealed to hosts to lower the prices of their rentals.

There is a well-founded fear that the short-term rental market is suffering a standstill in the U.S. market as a result of excessive supply and very high rates, known as "Airbnbust". Earlier this summer, many voices predicted the slowdown and, although some are more alarmist than others, all agreed that there are downturns.

Analyst Nick Gerli, based on data from AllTheRooms, noted that landlord revenues in some major U.S. cities were seeing declines of up to 50% in the first half of 2023. Others, such as KeyData endorse the drop, but point to more moderate figures (an average revenue drop of 3%).

Beyond the purely economic aspect, the platform is also suffering from reputational erosion. Originally, it was perceived as a form of collaborative economy that brought fresh air to the accommodation industry. Today, it is seen by many as one of the main causes of gentrification - displacement of its original population by a more affluent one - and of the increase in price and shortage of residential rental supply.

In addition to the dissatisfaction of many, there are the problems of coexistence between the tourist and residential models, such as the noise caused by the parties, which the San Francisco company has tried to stop.

The dissatisfaction of the inhabitants has resulted in more restrictive regulations in many large cities such as Amsterdam (Netherlands), Paris (France) or, more recently, New York (United States), which have put the brakes on Airbnb.

On the other side of the scale are hotels, whose coexistence with residents is not without controversy, but is much more balanced and whose rates have grown, but maintain a high level of demand under the argument of quality. Are hotels winning the war in the long run?