28 Feb 2017

Air rage: the rise of Airbnb

From Nine To Noon, 9:34 am on 28 February 2017

Having grown from a small home share service in the US, Airbnb has become the largest provider of accommodation in the world.

Fortune business journalist Leigh Gallagher has written a book on Airbnb, detailing its success, the challenges it faces and its critics.

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Photo: Supplied

Now valued at $30 billion with 3 million listings, Airbnb has drawn criticism for exacerbating the lack of affordable housing facing many major cities around the world.

But Gallagher told Nine to Noon the company wasn’t necessarily the main cause of housing shortages in these cities.

She says when Airbnb first began operating in New York, it was technically illegal to rent out a home for less than 30 days, if the owner wasn’t going to be there.

But Airbnb just operated anyway – and at first no one really cared.

“They seemed like a speck, they were ‘Oh, these crazy kids’, well guess what, then they got really big and then they started to see all kinds of push back.”

She says those opposed to the company decided to criticise Airbnb’s impact on ‘affordable’ housing. 

But she says while units used full time for Airbnb take accommodation away from the long term market, there are many other factors that have an impact on affordable housing.

“In New York it’s cost of land and other kinds of regulation that actually have a bigger impact in keeping housing from being built.”

She says affordable housing is an issue that polls well, and that’s why it’s been used by Airbnb’s critics.

“The Airbnb units are usually not a sizable percentage of the housing units in any given city, but the fear is that they’re just going to keep growing.”

Gallagher says Airbnb doesn’t want people using ‘commercial units’ – where the property owner is not living there or the accommodation is used solely for Airbnb - in markets with housing constraints.

But she says it is happening more often, and Airbnb is working with regulators to try and curb it.

“Some cities have instituted nightly limits, per year, so maybe you can only do it 90 days per year.

“Anyone who’s trying to turn that unit into a full time commercial business is going to be hampered if they can only do it 90 days per year.”

Ms Gallagher says Airbnb is growing beyond the millennial market and has plans to operate as a full scale travel company.

That includes offering customers ‘experiences’ such as a tour of fire spinners in Miami, by a real fire spinner.

“A world that you normally wouldn’t have access to.

“That is a big part of what their future is going to be – whether it will work still remains to be seen.”