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Reacting to Airbnb Really Is Different Now Article by The Atlantic Transcript

(00:00):

Everyone John here from Vacation Rentals with John. So there’s an article that just came out by the Atlantic. I’ve read The Atlantic forever now, and it’s titled Airbnb really is Different now. Subheading says at this point the company hardly seems part of the gig economy at all. It’s a pretty good writeup by journalist Kate Lindsay. So what I’m going to do in this short episode is running through it and give my thoughts. So the premise of the article is Airbnb has gone more corporate and the experience is not as guest friendly as it once. It was because 30% of listings on the platform are run by big corporate players, large property managers, and most Airbnbs have actually lost that human touch that brought guests to Airbnb in the very first place. It lists things like high cleaning fees, which we know about from other outrage articles talking about how cleaning’s gotten more expensive.

(00:54):

And it even goes onto how the interactions with the host are just not very friendly anymore. Many hosts are just scraping by not making much money, and that in turn is impacting the hospitality and the total guest experience that’s going on right now. So all of these thoughts, they’re actually legitimate. I actually agree with a lot of them because in my main market, Orlando, Florida, there’s tons of supply hosts are not making much money, and my interactions with many hosts have not been as positive lately because it’s not as hot of an investment as it was last year. And as people see their monthly statements as they see their payout history, they’re just not very happy. So I’ve also seen more hostility, especially in the Facebook groups, that every time a guest doesn’t leave the place so clean or if they leave the place not in perfect condition, hosts are just talking smack about them in the Facebook groups and even putting weird pictures of their ring camera watching guests.

(01:54):

It’s just really weird because most hosts, you used to just let the guest be and provide a good experience. Now host gossip about guests on Facebook and they talk bad about them on Facebook. So what was a marketplace platform is now becoming something else. Yeah, it’s still a marketplace platform, but the beauty that was with Airbnb when it started, it’s starting not to be so beautiful anymore. It’s not as sexy as it was when it started, and all of us hosts that love doing this, we’re still going to continue doing it. This kind of news doesn’t scare any host who’s doing this for the long-term, playing on a long-term time horizon. But the public is now seeing that some of what made Airbnb so shiny in the past is rearing its ugly head, and there’s a lot of bad that comes with the platform too. So as host, we just want to make sure that we’re actually putting our best into one our home. And two, our guest experience because as publicity continues to get worse and worse for Airbnb, it

(02:59):

All of us hosts that are involved because guests will lose that trust that they have in the platform and go back to hotels, and we just don’t want that as business owners. So the article also states that the difference between Airbnb and hotels, it’s become smaller, smaller, and smaller because the standard Airbnb host has about one and a half listings. So basically one or two, right? And mega host, which she calls larger companies or wealthy individuals with 21 or more properties make up 30% of active listings. So now hotels are saying, Hey, if I can’t beat them, let me join them. And they’re actually listing on Airbnb. Airbnb, if they’re a boutique hotel, they’re allowed and they’re listing their rooms as well. So Airbnb has grown. I’m sure you’ve seen lots of those ads for masterclasses teaching you Airbnb, how to make your first a hundred thousand dollars on Airbnb, how someone can teach you how to be great at Airbnb.

(03:52):

They’re all over Facebook and just the existence of those consultants. The article is saying that Airbnb’s grown massive and it doesn’t look like what’s a traditional gig economy company at all. Now, it’s corporate at this point. So it still is a marketplace. I mean, we have hosts involved, we have guests involved, they’re the middleman. So I still believe this is a marketplace company and it still is part of the gig economy. It’s just more advanced. It’s in that advanced stage where yeah, there’s more structured rules, there’s more structured policies, there’s more fees because it’s a public company, but I believe it’s actually still a gig economy company. The article saying it hardly looks like one, but it still actually is a marketplace. I know there’s a lot. Airbnb’s created an ecosystem. You have cleaning companies, you have management companies, you have co-host, you have pool cleaning companies, you have furniture and interior design companies.

(04:45):

There’s an ecosystem. And Airbnb has actually made that ecosystem for short-term rentals much bigger because it has that just huge company effect, but it doesn’t mean it’s not a marketplace company like the article is saying. So the article does tackle cleaning fees. Again, it talks about the little trick where people have a low nightly rate, but they try to make up for it with a high cleaning fee using a cleaning fee as a profit center. So there is some truth to that. Like most property managers I spoke to, they don’t charge exactly what they pay the cleaner. I’m sure some of you do, you just charge what it takes to clean the place. But a lot of hosts may be paying a hundred dollars for cleaning and they’re charging $180 clean fee so they can restock supplies, pay for linens and profit a little bit.

(05:24):

And that actually makes it more unaffordable. And that’s why guests are turned off because that nightly rate they see when they actually check out or they filter showing the total price including the clean fee, it’s way higher. So this article is just calling that out again, showing that hosts want to show up higher in search results. So they’ve taken to lower the listings daily rate and increasing the cleaning fee to cover the difference. One of the homeowners described this as a race to the bottom saying it’s not really a great experience, but that’s the only way hosts feel they can get booked. So there is some truth to this. Most hosts I’ve talked to, they do lower the nightly rate and they add a pretty big clean fee because they want to be seen on the algorithm which prioritizes price. So this is something that’s always happened, but it’s definitely not good for the guest side of things because it does feel like hidden pricing.

(06:15):

And with the new administration rules trying to challenge junk fees, I don’t know if that’s actually going to challenge clean fees, but people are putting the spotlight on, Hey, the price that I see is not the price of checkout and we just don’t want to create a bad guest experience as host because that just turns people off. So I know we have to cover our costs too, but there’s a way to be in the middle of that. You don’t need to charge an exorbitant clean fee and have a super low nightly rate. It just doesn’t make sense If your nightly rate is 90 and you’re charging a clean fee of two 50, you may think that sounds crazy, but several hosts in my area, they do it. Guests look at the property, they see it for $90, they’re like, wow, this is affordable. I can book this.

(06:56):

Once you get to that checkout screen, whoa, $250 clean fee. I’m not booking this. So this happens a lot and it’s not a great guest experience, it’s not a good checkout experience. And I know Airbnb’s trying to take steps to combat this. I know we are the host and we have control over pricing, but at the same time, we sometimes have to put ourselves in the shoes of the shopper. Yet we do have cost to cover for cleaners and cleaning companies. They charge a lot. However, if our nightly rate’s so much lower than the cost of cleaning the place, it just doesn’t look right from a guests shopper perspective. So maybe if your nightly rate’s a hundred dollars, your clean fee at most could be 1.5 times that, but it should really match the nightly rate. Even if you have to eat the cost, it looks better to the guest if it matches a nightly rate, if it’s much more than a nightly rate, it just turns people off.

(07:47):

Now, the article also speaks to a guest experience of this software engineer Tracy, who actually paid $160 cleaning fee in France, and then she was confronted over the host on WhatsApp, not showing a bare minimum of respect when they left garbage bags in an empty wine bottle in the kitchen. So she’s saying, Hey, I looked at the reviews. I was expecting a five star experience and this was a horrible experience I was getting yelled at by the host and it was terrible, so I’m probably not going to do this again. Right? So that’s happening a lot. Like yeah, there’s a clean fee and guests are looking at it like, if I’m paying this high clean fee, I shouldn’t have to clean and host are saying no because my cleaner’s going to charge me more if the place is really dirty. So that’s where this being a middleman marketplace kind of thing really shows shortcomings.

(08:33):

But if guests are paying that high of a cleaning fee, it doesn’t give anyone the right to be a pig or leave things really dirty. But at the end of the day, how much cleaning should someone really do if they’re paying more than the nightly rate and the cleaning fee, you can’t really ask them to do many chores. So this article is touching on that phenomenon we’ve seen in many articles prior to this one. And it also talks about the boom also resulting in regulation. So we all know about New York City’s cracked down, how New York City really laid the hammer down. They’re not allowing short-term rentals like they used to, unless it’s like one room in somebody’s shared apartment. There’s a lot of rules. And now licensing fees that go along with that. Washington DC put its own restrictions. La San Francisco also require registration.

(09:17):

So this industry is getting regulated. It’s happening more in the urban markets, but it’s going to get regulated everywhere. Just a matter of how is it going to be regulated, it’s something we need to see in the future. So the article concludes that Airbnb’s not broken. You could still find a rental that’s cheaper and better than a hotel room, especially if you have a large group. The average Airbnb is actually 60 a person compared to $89 a person for a hotel. But the company does seem to understand that something fundamental has changed. So in May, the toggle has changed and that search includes the total price. That’s because people were on sticker shock seeing that the total price was way different than the nightly rate, and they launched Airbnb rooms. That’s an update to the original rent the room model that Airbnb had when they started.

(10:06):

And they’re focused on building new tools to ensure the platform stays competitively priced. Now, what is going to be interesting to see that the article concludes with is Etsy sellers went on strike last year. Uber drivers are going to strike in January. So it’s not saying hosts are going on strike, but hosts are getting fed up with the platform’s lack of performance for their individual renters. Even though this is free market, even though it’s a marketplace, hosts are going to be more vocal because they’re not happy. So it’s going to be interesting to see how hosts react to changes Airbnb’s making and is going to continue to make because it’s not the same platform it was when it started. Now all companies mature and go through changes. The reason this is so sensitive is because the product is, it belongs to someone else. The product belongs to the host.

(10:59):

Airbnb’s a way to search through listings, and it’s really a marketing company. They have a search engine where you could search through listings, and they’re marketing for hosts and bringing guests and hosts together, but the product’s ultimately the listing, and it’s ultimately the host that is responsible for that. So there’s always going to be a disconnect. And as the industry evolves, we will start to see the shortcomings in the business model, and Airbnb will continue to adapt, change and overcome some of those things. But some of the moves that they make are going to either turn off guests or turn off host because they are in a middleman position. So I’m going to link to this article in the show notes if you want to read it through it in its entirety. It’s a pretty good read. It only took me 10 minutes to read through it. I do encourage you to read it. And if you like this show and you want to help me create more content, please leave a review or rating on Apple Podcasts, on Spotify, subscribe. And if you haven’t joined a Facebook group yet, I made that so we can connect, we can network, and we could help level up each other’s vacation rental game. So hope to see you there. And until next time, friends, take care.

Vacation Rentals With John is one of the fastest growing short term rental podcasts. The show has been growing in popularity because of its no BS, to the point lessons on how to grow and operate a vacation rental. Join the facebook group. To listen to any of the past episodes, check out this page.