Sunday, May 22, 2016

AirBnB: The Good, the Bad, the Ugly, and Making it Pretty

Recently, I spent a five-day/four-night stint in Barcelona. While there, I stayed in apartment that we found on AirBnB. It wasn't my first time using them, but after this last stay, decent sample of how the service works. Based on our last experience, I'm ready to share my thoughts on AirBnB, what's good, what's bad, whats ugly and why it's not always the best choice when looking for a place to stay while traveling, as well as my suggestions to improve the service.  The breakdown continues after the jump. 


About AirBnB

For those of you not familiar with it, the concept is simple: AirBnB acts as an intermediary between people looking for places to stay for a short duration (guests) and property owners looking to rent out either part or the entirety of their properties(hosts). 

The range of units goes from beds in shared rooms to private bed rooms all the way to private apartments, homes and villas. The company itself owns no rental properties, and instead simply provides a website where hosts can list their units and guests can search and book them. AirBnB handles the payment and reservation system, all exchange for an 18% service fee split between the two parties.

The concept has taken off with hosts present all over the world. As a result, AirBnB is not only wildly successful, but is also the market leader in a sector it largely created by itself. Let's breakdown why. 

The Good

Plenty of options

Undoubtedly the largest contribution AirBnB has made to the hotel and lodging sector is the multitude of lodging options its created on the market. Prior to their founding in 2008, travelers were limited to either hotels or hostels, with short-term apartment and housing rents either unavailable or hard to access. 

Now, thanks to AirBnB, travelers can choose anywhere from a bed in a shared room to an entire villa, giving them an enormous range of choice in between. From a consumer-choice perspective, this new market segment is overwhelmingly positive. 

A Unique Experience

Unlike in hotels, where branding dictates that the product is standardized (or at least kept within a theme), AirBnB hosts are renting their own unique properties. Each host can customize their offering as they see fit. 

The guests in turn, get a much more authentic taste of the town they're visiting. Hotels, while functional, don't really represent the local make up. Staying in someone's house/apartment gives the visitor a much better idea of what local life is like. From the architecture of the region to just being in a typical neighborhood, guests get to have a personal experience with their surroundings. In the tourism world, these sorts of discoveries are golden. 

Ability to Build a More Personal Relationship with the Host

Contrary to traditional hotels where guests are limited in their interactions with the staff, AirBnB matches guests with hosts. Part of this experience entails direct communication between the two parties. From inquiring about the unit to checking-in all the way through check-out, guests and hosts work directly with each other, producing a couple of curious benefits.

For one, guests have a direct line of communication to the manager of the property. In theory, this helps build trust and better address any special requests. Of course, this might not always work in practice, but the idea there. Plus this building of a personal relationship can certainly help smooth over future issues, if any.

Second, since guests develop a working relationship with their host, they gain insider access to the place their staying in. Usually, the host knows the area very well and can make recommendations on where to eat, what to visit and how to get around that only a local would know. In a hotel, at least on the lower end of the price spectrum, you would be hard-pressed to get that sort of information out of the staff. 

Central payment processing platform

Perhaps one of the most useful features of AirBnB is its central payments platform. Prior to their inception, apartment and room rentals outside of the hotel sphere were a risky endeavor as there was no middleman to facilitate the transaction, leaving it ripe for fraud. By providing a common platform for payments, AirBnB effectively took out the risk associated with renting a a place to stay outside of the hotel-sphere. 

Here's how it works: once the two parties agree to make a booking, the guest simply enters his/her credit card details onto the website. AirBnB debits the guest's and credits the host's account 24-hours after check-in. That's it. 

As the process is centralized, the ability for fraud decreases dramatically. Additionally, AirBnB uses this common payment platform to take their booking fee directly. All-in-all, this system is practically painless and extremely efficient, reducing transaction costs and facilitating the faster movement of money.

The Bad

A Lack of Quality Control

AirBnB's biggest flaw, in my opinion, is it's inability to control the quality of the units it lists. Since the company merely acts as a broker between guests and hosts, it has either no desire or no operational capacity to verify that what hosts are listing reflects reality. This puts guests at a huge risk, where the unit that they booked on the website doesn't at all match the description. 

There are a few factors behind this mismatch: unscrupulous hosts trying to maximize return in a competitive market; property owners who simply let their property fall into disarray; and maybe most importantly, hosts who have no real objective point of reference in terms of measuring quality. 

We humans are subjective creatures and the way we evaluate almost every aspect of the world around us is unique to each individual. While this trait is useful individually, it doesn't always translate well when it come to self-critique. 

Look no further than the debate surrounding TripAdvisor, Yelp! and other online, user-generated review services. For those of you not familiar, there is growing outcry among tourism professionals who bemoan the fact that amateur reviewers simply the expertise to properly and objectively evaluate hotels and restaurants. The result is that armchair hotel inspectors and pocket food critics leave reviews based on personal bias instead of professional evaluation, unfairly skewing hospitality products worldwide. AirBnB, by not instituting internal quality and control standards, is leaving both hosts and guests exposed to unfair evaluation. 

From the guest's perspective, it's easy to see this ambiguity in action; simply search for a room or apartment for rent and you'll no doubt run across the phrases "nice","well equipped", "charming", and "great location" countless times. But what exactly do those words mean? What constitutes nice and how do you define "well equipped?" 

The place I was staying in with my wife in Barcelona claimed to have a "well equipped kitchen." At first glace, the description seemed accurate: there was a brand new full-sized refrigerator/freezer along with a gas range. Upon closer inspection, realized that "well equipped kitchen" according to our host did not include a cutting board, knife, pan, bowls (either to cook with or eat say, cereal out of), no bottle opener or a coffee machine. We did have two plates and two sets of forks and knives, but oddly, the unit boasts that it can hold six people so I'm not sure how it would've worked out for a bigger group. 

Even with these obvious deficiencies, "well equipped kitchen" still passed AirBnB's review, mainly account for the fact that such controls don't currently exist. I can't fully fault the host for this, even though she should know better. I researched on the website and nowhere did I find any guidelines on how to to properly list your amenities for your property. 

The same subjectivity issues exist for the host, too. After checking out, guests are invited to review the host and the listing. While honesty is usually practiced, there are still some reviews that are completely off base, with the guest griping that the unit lacked the comforts more associated with a luxury penthouse even though he stayed in a perfectly presentable studio apartment.

Disconnect on Various Platforms

AirBnB has experienced explosive growth over the past few years. According to their own figures, since 2014, the number of new units listed in the United States alone has jumped 45% from 2014 to 2015. While this is great news for the business, it seems that the software running the booking engine across various platforms hasn't kept up with the growth. 

I've noticed that depending on what device I'm using, my search results would consistently be different. Browsing on the AirBnB website from my laptop would yield one set of prices while performing the same search from their app on our phone would result in another. Even more perplexing was that opening the website in my tablet's browser would produce yet another different outcome, sometimes omitting the dates I had entered. In the end. I've always been able to find the listing I needed, it just felt unnecessarily frustrating at times to do so. 

The Building of a Personal Relationship between Hosts and Guests can Prevent Honest Feedback

Central to the social aspect of AirBnB is that it allows hosts and guests to develop personal relationships. Owing to the nature of traditional hotels, guests and staff maintain a limited, professional relationship. By contrast, the AirBnB business model is based on hosts renting out single, self-owned units, creating a much more intimate interaction with their guests. Although this method has its benefits, there are certainly a couple of disadvantages.

As mentioned above, guests and hosts are invited to review each other after checkout. In theory, this seems like an optimal conclusion to social-based transaction. However, blending the lines between professional and personal relationships can potentially limit the objectivity of feedback. It's entirely possible that the host is a decent, well-intentioned individual but that doesn't always mean that they should be in the hospitality business, and it'd take a very strong willed individual to tell another person that their house sucks, which would be the case seeing that the host is renting theirs.

Conversely, hosts can abuse this system too. By posting negative feedback about a guest, other hosts will be reluctant to work with them in the future. Regardless if this done out of spite, the damage will be hard to reverse. 

The Ugly

No Actual Requirements to Conform to Laws and Regulations.

In the hotel industry, standards are set by the local/regional/national government in conjunction with the local version of the hospitality trade association. These rules govern a wide range of facets including health codes, building regulations and guest rights. 

AirBnB, acting as a broker for amateur hoteliers, does not actually require their hosts to meet these standards. During the renter agreement process, AirBnB only asks that the host to make sure that they comply with local rules; there is never any follow up to see if these rules are being respected. This, in my opinion, is a huge risk for all parties involved. 

For the guest, it opens up the door to uncertainties. You can never be 100% certain that the unit you are renting is adequately equipped to handle guests. Anywhere from building code requirements (think ventilation and fire evacuation) to the actual legality of your stay cannot be verified via the platform. In contrast to hotels, private residences aren't regularly inspected by safety officials. 

There are many examples renting tenants decide to put their unit or extra bedroom up on AirBnB even though their rental agreement specifically forbids it. Landlords, seeing this as a breach of contract, have evicted the tenant, leaving the unknowing guest SOL and out on the street. 

Since AirBnB doesn't actually own or manage the property, they take a very hands off approach in helping the guest in these situations. Given this limited involvement, potential users are at huge personal liability should something go awry. 

A Lack of Arbitration

Speaking of which, AirBnB takes a hands-off approach to to dealing with complaints. Browsing through AirBnB Hell, a website dedicated to room-sharing horror stories, it's not hard to find stories of both hosts and guests abusing AirBnB's lack of adequate complaint follow-up. 

Dishonest guests can falsely claim that the host's unit did not represent the description. AirBnB, instead of properly investigating the claim, simply refunds half the booking fees to the guest. Guests have also been known to trash their units then claim that it was like that when they got there, leaving frustrated hosts to foot the bill as their AirBnB renters' insurance doesn't cover the damage. 

On the other side, malicious hosts can leverage any criticism directed at them, constructive or otherwise, against their guests. By leaving negative feedback on guests, other hosts will be reluctant to accept them in the future (the host can approve guests before finalizing the booking), effectively locking them out from the better units on the market. 

Since AirBnB has no real mechanism in place to mediate these disputes, all three parties involved stand to lose by money and reputation from the deceitful actions of others. 
Possibility to be Scammed

As AirBnB acts as a broker and not a property owner, they have no surefire way of monitoring the validity of their users. This leaves the service ripe for scamming and unfortunately, it can go both ways. 

Due to a combination of loopholes, social engineering and the malicious preying on the vulnerable, AirBnB is ripe for fraud. Dishonest hosts can game their properties by providing bogus photos and fake amenities. They can also cancel on guests largely without notice leaving them out of luck. 

Guests can make phony claims about the cleanliness of unit (again, this comes down to subjectivity). If they claim they saw insects or rodents, then AirBnB will refund them 50% of the value of the booking, no questions asked. Of course, this comes out of the host's account with little recourse for them to prove otherwise. 

Con artists have been known to create fake listings, offering luxury accommodation at prices lower then their market value. When an unsuspecting guest reaches out to the pretend host, they'll ask to take the conversation out of AirBnB. 

The scammer send the victim a link to a real-looking but fake website often resembling the AirBnB listing. They then ask the would-be guest to secure the deal by wiring a deposit payment to a bank account. Everything seems good for the guest except that the property in question doesn't exist and the money has disappeared, never to be seen again. 

Sadly, these cases happen way too often. While the company is responsive to reports that fraud is taking place and takes these cases seriously, the fact that fraud is being committed in the guise of AirBnB is concerning.

Making it Pretty

Given these inefficiencies, there are a few tweaks and strategic moves that AirBnB can undertake to not only improve their service, but to help it grow into a much more mature product. 

Align the User Experience (UX) Across All Platforms To Remove Confusion

The differences in pricing and availability between the app, the mobile web browser and the official website can be frustrating. One of the main draws of AirBnB is that it helps correct the information imbalance that hotels hold over clients. However, if it's not possible to get accurate and consistent information across all platforms, it will only lead to frustration among potential guests, chasing them off towards competitors in the process. 

It would make sense if AirBnB analyzed why these different search parameters seemingly randomly appear and then provide a fix so that UX is standardized across the board. Doing this would go a long way to add ease of use for guests. 

Create Anonymous Feedback for Guests and Hosts 

To help counter the interpersonal relationship effect between guest and host that distorts objective feedback, I propose that AirBnB implement an anonymous review system. 

For the guest reviewing the host, this would mean that the website would essentially mask the guest's identity during the review. AirBnB would still invite the guest to do the review after their stay but instead of their name showing up, it would say something along the lines of "verified recent guest." This would protect the guest from getting unfairly disadvantaged for future bookings should a host act maliciously. 

On the flip side, hosts should only be able to rate guests based on a scale. This meter could include politeness, usage of the unit (i.e. how was the place when they left? Was there normal wear and tear on the furniture during their stay? etc), communication on arrival departure, autonomy (i.e. did they need your assistance more than average or were they fine on their own?), etc. While this wouldn't be as in-depth as a written review, it would solve two problems: 

It helps remove subjectivity linked to using ambiguous writing styles and review criteria 
It provides a universal ratings system that is understood by other hosts no matter what language they speak 

The simple fact of the matter is that in the professional hospitality business, it takes a lot to get blacklisted from a hotel. Hosts need to accept that the hotel industry isn't A+B=$$ and that things can and do go wrong. The difference in how a host handles this is a matter of perspective and professionalism.

You can never tell if another host is being honest in their feedback or if they're simply attacking a guest out of malice. Creating a more objective way of measuring guest behavior would help both parties involved. 

Enact Legitimate Quality Control

Hotels have one major point going for them that AirBnB doesn't: peer-reviewed, well-established quality control. This system helps define quality within a price range and in turn gives consumers tempered expectations when making a booking. Unfortunately, this doesn't carry over in AirBnB, leaving guests to be at their hosts' imagination when it comes defining what makes their unit attractive. 

To remedy this, I propose that AirBnB implement a control system. This tool would both define quality standards and then rank units based within them. This is easier said than done. AirBnB tries to be as hands-off with their hosts as their allowed. From what I've gathered, this goes down to a matter of legal liability. However, it doesn't mean that they cannot create an "AirBnB verified" service that would help confirm the product they are listing. 

It would probably need to start small and inside one of their bigger markets. In a town like London, for example there are over 33,000 units available for renting. They could create a physical team that deals with verification. While this would initially be time consuming, it would ultimately be beneficial to the brand. Thanks to the high commission AirBnB takes, the money is there to make it happen. 

Additionally, they could push this cost onto the host by charging a fee for a verified review. Hosts who use this service could benefit through higher search rankings and having a verified property 'sticker' on their listing. This 'sticker' could in turn let the host charge a higher premium for their unit.

Work With Local Governments To Minimize Conflict

The gig economy, which AirBnB is a major player in, is extremely disruptive. Technology has opened the doors to a world of service-on-demand. While there are plenty of benefits of this system, it's rapid rise has come into conflict with the old establishment. AirBnB is no stranger to this having entered into a legal grey area in regards to who can operate a hotel. City councils across the planet have raised concern with the service over how it operates and the effects it has on their local hotel industry. 

In order to ensure that the gig-economy keeps peacefully moving forward, it would make sense that AirBnB works with both the hotel industry and local governments. I would suggest that they start charging local hotel tax in the towns where they are listing properties. This cost can be easily calculated at the time of sale and charged directly to the guest at the time of booking. Then the company would simply need to transfer that balance to the local tax authorities. And let's be blunt, giving the local government another steady stream of revenue would only help AirBnB's cause. 

Checking Out

AirBnB certainly holds lots of potential. My experiences, other than this last one, have been overwhelmingly positive. In a lot of ways, I'm thankful for this last stay I had, as it gave me both perspective and lot to think about (as witnessed by this admittedly long post). 

Interestingly enough, while I was in SE Asia last year with my wife, we rarely stayed in an AirBnB. Out of the 180+ nights in over 50 different hotels/units, we spent 22 nights short-term renting someone's apartment. Each time we did, it was in a major city (Kuala Lumpur, Malaysia and on the outskirts of Kathu, Phuket, Thailand). 

I will say that back in August, I went to Istanbul, Turkey with some friends for a wedding. Five of us rented a house in the city via AirBnB and in general, that worked out great, as we had the space for all of us along with a kitchen and balcony. On that note, short-term rental services hold a distinctive edge over hotels. 

Will I continue to look for AirBnB units in the future? For sure. However, in the meantime, I'm also going to look at some of their direct competitors such as Wimdu and VRBO along with searching for hotels. Hopefully, we'll see AirBnB others continue to evolve as they mature into mainstays of the global hospitality industry.

Have you ever stayed in an AirBnB? What were your experiences? Let me know in the comments!

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