Airbnb, scourge of the hotel industry?

In a castle or a van? Or are you more the cave type? Airbnb offers thousands of alternatives for spending the night: 390,000 in over 192 countries, to be precise, and at lower prices than you would find at regular hotels. And that is precisely the problem with Airbnb, a website founded seven years ago to help friends find a place to crash and which has since booked 10 million nights.

A judge in New York State recently ruled that an Airbnb “host” who rented out his East Village apartment for less than a week violated a 2010 state law prohibiting rentals of under 29 days. In the Canadian province of Quebec, authorities have drafted a law to set limits on these kinds of rentals. And hotel owners in Madrid, Barcelona and Amsterdam are also starting to worry about the success of Airbnb among individuals. Not to mention the tax authorities, who suspect tax evasion.

In 2007, Joe Gebbia and Brian Chesky decided to create a website to let people rent out their rooms after successfully renting out space in their own shared apartment. After enlisting a third partner, Nathan Blecharczyk, they called it Air after airbeds and Bnb after bed and breakfast.

David Hantman, of Airbnb’s legal team, denies that the activity is illegal. “Eighty-seven percent of Airbnb hosts in New York only list a home they live in, and they carefully choose who they let in. It’s a private relationship. That extra money helps them make ends meet.” Airbnb also insists that paying taxes is a matter between citizens and authorities.

Airbnb is not a black market. If collecting taxes is what they want, we make it easier"

Interestingly, the same people who are complaining about Airbnb are also turning to it for help- A few weeks ago, the mayor of Barcelona dropped by the offices there. “During the Mobile World Congress or festivals like Sonar, we notice increased interest from travelers since hotels are full,” says Molly Turner, the site’s chief legal counsel.

Rio de Janeiro also turned to Airbnb for assistance. “It is very likely that they will not have the necessary infrastructure in time for the World Cup and the Olympic Games, and so they turned to us,” says Kay Kuehne, head of the Spain, Portugal and Latin America divisions.

Airbnb is not the only website offering peer-to-peer rental listings, but it does specialize more than others in one-or-two day stays.

“It doesn't make sense in the present situation to strangle citizens even more, especially considering how much housing is sitting empty,” explains Kuehne. “The economic situation has made many people open up to the idea of renting out their house. They view us as a tool to make ends meet.” This executive goes even further. “Airbnb is not a black market. On the contrary, we formalize a relationship that was already there. If collecting taxes is what they want, we make it easier.”

The average Airbnb traveler is 35 years old, while the average host is 38. This is a far cry from the young backpacker experience and suggests that people are not just looking for low-cost accommodation, but rather for something different from your typical hotel. “We’ve turned tourism on its head. We are bypassing the cold experience of asking for the key in the lobby and instead offering a home with its pets, its decoration, its books... It’s about living like a local resident,” says John Zadeh, another young company exec.

Airbnb keeps between six and 12 percent of each booking. Turner insists that the service brings nothing but benefits to the tourism industry: “We can prove that wealth is getting distributed. On average, our travelers spend two days more at their destination than if they were staying at a hotel; they spend more in cafeterias, stores and services in the neighborhood.”

Airbnb keeps between six and 12 percent of each booking

Airbnb is part of a new wave of online sites promoting collaborative consumption. “We think that homes are for living in,” says Kuehne. Other similar initiatives are the car-pooling sites Zipcar and Lyft, or the co-working sites where offices and resources are shared.

But a booming business on the internet means stepping on some traditional bricks-and-mortar toes. The attack on Airbnb is no different to the assaults on online tobacco sales or currency exchange.

But the atmosphere at Airbnb’s San Francisco headquarters is one of complete calm. The meeting rooms boast images of some of their most popular rentals, from a shed some Californians built for their kids to a vintage East Berlin apartment. These offices are already too crowded for the more than 200 employees who work here, and Airbnb itself is now looking for a new place to stay, too.

Perhaps because of the cramped space, employees only need to drop by the cafeteria once a week. Eating together creates a good vibe, says Kerr. Every three months workers get 388 euros to spend on Airbnb rentals. Typically, they get together to rent a vineyard in Napa Valley or a castle in Provence. And because over half of employees go to work on their bikes, once a month an Airbnb mechanic checks them for free. Hotel owners of the world, beware!