Airbnb's Chickens Coming Home To Roost

Airbnb's Chickens Coming Home To Roost

Extremely troubling developments for Airbnb in the light of the impending IPO. For several years now, the company has actively and deliberately sought to keep hidden the true scale of the takeover of the platform by professional property managers and commercial entities, preferring instead to sell itself on its increasingly mythical 'live like a local' image. However, with full disclosure being a key and critical element of US Securities Laws, it appears that it may now finally be compelled to lay bare the real data. 

 

The truth always comes out in the end. 

 

"Dozens of affordable housing groups and community organizations that have long accused Airbnb of exacerbating housing shortages are taking their grievances to U.S. financial regulators just as the short-term rental giant prepares to go public.

 

In a letter to the U.S. Securities and Exchange Commission viewed by The Information, the groups complain that Airbnb hasn’t complied with rules limiting short-term rentals in many cities. They contend that Airbnb should be required to disclose more information to investors about how many rentals on its site are run by professional property managers"

 

https://www.theinformation.com/articles/airbnb-opponents-take-fight-to-sec-ahead-of-ipo

 

Penelope
90 Replies 90

Meanwhile, trouble looming in Europe too, as 22 European cities press for full disclosure and tougher laws governing Airbnb rentals. Regulatory issues also a major concern for the company's IPO prospects

 

https://www.barrons.com/articles/cities-press-eu-for-tougher-laws-governing-airbnb-rentals-016003443...

Penelope

Apologies, I forgot that the article in my OP link is behind a paywall. Below are some further relevant extracts from the piece.

 

Dozens of affordable housing groups and community organizations that have long accused Airbnb of exacerbating housing shortages are taking their grievances to U.S. financial regulators just as the short-term rental giant prepares to go public.

 

In a letter to the U.S. Securities and Exchange Commission viewed by The Information, the groups complain that Airbnb hasn’t complied with rules limiting short-term rentals in many cities. They contend that Airbnb should be required to disclose more information to investors about how many rentals on its site are run by professional property managers. The groups claim these managers are siphoning apartments from residential housing markets in Paris, New York and other big cities. 

 

THE TAKEAWAY
• Housing groups send letter to SEC about Airbnb practices
• Complaint marks new salvo in fight against rental site
• Letter seeks more disclosure related to regulatory vulnerability

 

While housing activists have battled with Airbnb for years over the travel site’s impact on urban rental markets, Airbnb’s upcoming initial public offering has given the groups a new avenue for protest. They argue that regulatory constraints on Airbnb pose risks to its business that should be disclosed comprehensively to prospective investors in the public markets.  

 

Airbnb didn’t comment for this article.

 

The letter’s signatories include more than 40 groups from cities in Europe, North America and Australia. The letter, which is being sent today, calls on regulators to require Airbnb to disclose how much revenue it derives from commercial operators—the hosts who are more likely to run large groups of listings. The data could show how much of Airbnb’s inventory might be affected if more cities change their rules or vigorously enforce existing ones.

 

The letter comes at a sensitive time for the company, serving as a reminder that the risks to Airbnb’s business go beyond the impact of the coronavirus pandemic on global tourism. Last month, Airbnb said it had filed confidentially to go public, putting it on track for an IPO this fall. 

 

The company is bound to lay out the regulatory risk factors in its financial filings ahead of the IPO, and could provide the information the letter’s signatories are looking for. Airbnb has managed to fend off many proposed local rules that would be onerous to its business, such as outright bans of short-term rentals or strict enforcement of limits on the number of nights people can list their homes.

 

The company has resolved, for the moment, a long-running dispute in New York when it settled a lawsuit with the city in June. The agreement could have a hit on Airbnb’s business there, at least in the short term. Airbnb and other short-term rental platforms will have to share information with city authorities about many hosts’ addresses and how many nights are booked, allowing regulators to more easily clamp down on full-time rentals of apartments that violate the rules.

 

But more trouble could lie ahead. Cities including Boston, Los Angeles and San Diego have recently enacted laws that make it easier to police illegal rentals. European cities like Prague, a popular travel destination, also have moved to curb short-term rentals recently.

 

Airbnb, meanwhile, has been trying to demonstrate to regulators that it is more willing to share data, remove illegal listings and block hosts from taking new reservations if government authorities say so. The company is preparing to roll out new technology to give cities access to data on short-term rental activity, a person familiar with the matter said. The exact nature of the product couldn’t be learned. 

 

Penelope
Mike-And-Jane0
Level 10
England, United Kingdom

@Super47 I am interested to know what you hope to achieve by these posts?

@Mike-And-Jane0

Are you actually serious?? This is highly pertinent information that will potentially impact every single host on the platform - possibly as soon as in the coming months. (And the content relating to the often illegal listings run by so-called professional operators that have flooded every major market - and many secondary ones too - is something that's already having deeply negative and often disastrous consequences for hosts operating in those markets) 

 

This is inforrmation that every host should know, and be fully aware of, because sooner rather than later, it will affect every one of us, and our hosting abilities, businesses and freedoms to operate. 

 

But perhaps you'd prefer to talk about frustrated contracts and King Edward V11's coronation in 1902. Again. 

 

Penelope

Mike-And-Jane0 Oh, Dear, It's a free world, every Airbnb user can post any comment. like it or not as you wish.  🙈

Mike-And-Jane0
Level 10
England, United Kingdom

@Super47 The key coronation is the non-coronation of Edward VIII . This case law is, believe me, far more relevant to hosts today in the UK than the Airbnb IPO.

@Mike-And-Jane0

It may come as a shock to you to learn that there's actually life - and hundreds of thousands of hosts - outside the UK. And that there's very little more relevant to any host's future on the platform right now than Airbnb’s IPO - whether they realise it yet, or not. 

Penelope
Kelly149
Level 10
Austin, TX

I’m (juuuust outside) a city with purportedly strict guidelines. By my very unscientific estimate about 80%+ of all listings do not meet the regulatory standards. ABB’s refusal to deal with this & actively harbor it does harm all of us in the end. I do hope they’re called to account at some point. 

That's why this information is so important for all regular hosts @Kelly149. There are lots of perfectly decent, legitimate professional operators out there -  but there are far, far too many irresponsible, reckless reprobates freely operating in the majority of markets now, providing substandard service, ripping guests off, flouting the regulations, allowing their guests to run riot and terrorise neighbours and ultimately, leaving authorities with no options but to introduce tighter and tighter restrictions and/or bans on everyone. 

 

Every host who is living in an over-saturated market is painfully aware that the claims of Airbnb exacerbating housing crises and spiralling rents, fuelling gentrification and displacement of local residents and causing spikes in anti-social behaviour and neighbourhood disruptions are absolutely true, and not just a figment of the imaginations of the hotel lobbies or the media or bitter local haters. And yes, the truth - whether some want to hear it or not - is that Airbnb is knowingly harbouring, facilitating and enabling vast numbers of unscrupulous, scamming chancers who are doing all hosts serious, often irreparable damage. 

 

The fact that the SEC has now been made aware of the scale of the issue is actually excellent news for regular local hosts because it potentially means that Airbnb will finally be forced to clean up the speedier, sleazier side of its business model, and once again level the playing ground for those who consistently provide great service and great hosting. We can only hope. 

Penelope

@Kelly149@Super47 

 

I am a professional host but really just a normal person who ended up having lots of local people ask me to handle their reservations because they know me and trust me... I wanted to chime in and say I personally have seen how hard it is to remove an ad that is illegal on Airbnb EVEN IF YOU OWN THE HOUSE, for some reason Airbnb makes you totally helpless in that scenario. You can send in proof it is your home and they ignore you. Basically it is easier to flag a fake CL ad than to get an ad off Airbnb that is fraudulent. To be clear I have had two specific instances, and more tangential ones. The two specifics were:

 

1. My clients who owned a home with 2 satellite short term rental apartments and had long ago fired the previous manager and hired me but prior manager kept "accidentally" on purpose letting her ads go live again. All complaints to Airbnb about these ads for the same place but by someone who no longer had the right to rent it out fell on deaf ears at Airbnb,  owners were told to send snail mail to legal department, also told Airbnb does not intervene in contract disputes etc. which is maddening when it is a time sensitive issue.

 

2. Then after that it was an apartment in a building I personally own. The long term renter who I graciously allowed to stay at her very low monthly rate after I bought the building was illegally doing short term rental without my knowledge and without a license and I got a citation because our city pays someone to identify actual addresses by their photos.  I was shocked to realize she was using my good service as a landlord to get good reviews and my generous lease rate to earn a profit on her lease by subletting to guests. I tried to tell Airbnb to take her ad for MY PROPERTY offline after I got a $500 citation from my city but got no help ever. The tenant herself eventually removed her ad once she saw the city citation, all of my legal correspondence etc. but it took weeks. 

 

I think this is actually a really big side effect of Airbnb being "list for free" and only using service fees as income. Fraud is easy here. Other sites which I probably cannot name under censorship of the CS but we all know the old ones, starts with V or H they either charge you annually to be independent as a merchant or they give you a free pay per booking ad yet can delete you at the first whisper of it being not your actual property or otherwise fraudulent or false advertising. They DO get involved in that. But the do not get involved in scrutinizing photos of roaches or flies. They do not force 50% refunds on the home owner after seeing a fuzzy photo of a fly on the wall. So. Which is more important for the platform to micro manage? Full on illegal rentals? Or a house fly on the wall? 

 

@Mary419

Thanks for your comment. I can see why the local owners trust you - you're obviously doing a fantastic job of managing their homes there in Georgia. If I'm ever lucky enough to visit Savannah, I'll absolutely be looking you up!

 

Your point about the other platforms taking swift, direct action on fraudulent advertising and illegal rentals - rather than squandering everyone's time, energy and patience micro-managing petty and inconsequential matters - is a crucial one, and highlights Airbnb’s complete lack of accountability and responsibility in ensuring it runs a clean and honest shop. Hiding behind plausible deniability is an exceptionally risky and unwise strategy for any business, and only ever ends one way.

 

Both the situations you describe in your post are far more common on Airbnb than people realise. A similar scenario was covered just 2 days ago in a consumer piece in The Guardian.

 

I'm sure you can identify with the writer's words.. 

 

"Airbnb was mighty circumspect. It told me that its community support team is available 24/7 to help with such “isolated incidents”. “Where possible, we encourage parties to resolve private disputes directly with each other. Where it’s not possible, we forward communications from parties to hosts, so issues can be resolved,” said a spokesperson, seemingly cutting and pasting advice for guest and hosts which is irrelevant to you situation. After I contacted the press office, it did muster the energy to contact the hosts and get your home removed from its site"

 

Help – my new home still seems to be listed on Airbnb | Money | The Guardian
https://www.theguardian.com/money/2020/sep/17/help-my-new-home-still-seems-to-be-listed-on-airbnb

 

Penelope

@Mary419  Good post. There's no good reason whatsoever that Airbnb couldn't require hosts to submit either their ownership papers, or if they are a tenant or manager, permission from the owner to list. It's outrageous to me that they don't and equally outrageous that a homeowner is ignored when someone is illegally listing their property. 

 

I dealt with something similar when my neighbors (who are also friends) left the country and rented their place out for 6 months to a couple of young women. They had several meetings with them, had them over to dinner, totally trusted them. Within 2 weeks of them leaving, it was obvious they had rented the place out, as 6 carloads of people showed up for a holiday weekend just after the girls had told the other neighbor they were going away for the week. I right away looked online, and found their Airbnb ad, although it just showed up on a Google search, they'd obviously closed the Airbnb ad as soon as they got a booking.

 

I called the owners, who called the girls, who claimed all those people were their "friends", which was total BS. They were told never to do that again, but they continued to do it. When I talked to the girls, telling them I had found the ad, they brushed it off, saying "Oh, that was never an active listing", which it had to have been, or it wouldn't have appeared on a Google search, and which doesn't explain why they would even make a listing draft, when they had no permission to sublet. I subsequently found out these girls do this all over town- rent out big houses, then list on Airbnb without the owners' knowledge.

 

BTW, you can mention the other platforms here. Airbnb CS doesn't monitor this forum, the forum moderators do, and they aren't really even Airbnb employees, they work for Standing on Giants, which contracts out moderating services. Posts really only get removed or censored for profanity, personal attacks, discriminatory comments (i.e. racist), if they are advertising spam, political rants, or have personal info like email addresses, phone numbers or embedded links.

@Sarah977 @Mary419

Following the Orinda tragedies and the Vice scamming article last Halloween, in an attempt to bolster public confidence and restore trust in the platform, Brian Chesky publicly pledged that Airbnb would verify all '7 million' listings by December 15 2020.

 

“We’re going to make sure that we can stand behind every single listing, every single host to make sure that every single listing is accurate,” he said. “The information’s accurate, the photos are what you say they are, the addresses are accurate, they meet minimum standards, they meet basic safety protocol and the host is who they say they are.”

 

Strange thing is, even though the bait and switch scam (in which the guests were redirected by the scammer hosts to completely different (typically substandard) listings at completely different addresses than they had booked) was the central part of the Vice exposé, many hosts are reporting that there have been no requirements at all by Airbnb to verify their addresses as part of the 'virtual walkthrough' pilot zoom calls they've been conducting in recent months, as part of their listing verification efforts.

 

Under the circumstances, one would have assumed that the listing address would be the very first and most important factor they'd clarify before verification could be granted. But it appears not to be the case. 

Penelope

@Super47  Not only that, but the reports I've read on hosting forums of these Zoom verification calls were from hosts with high ratings and a long string of good reviews. If Airbnb was really trying to eliminate bad listings from their platform, they would start with the places that have bad ratings and bad reviews which talk about being scammed or the place being filthy and in disrepair.

 

Instead they're asking 5* hosts to open the utensil drawer to verify that they provide cutlery. What a sham.