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Posted 16/03/2022 in All things rugby by Host a Fan

Fairbnb? Why an IPO is the final nail in the community-based coffin


Fairbnb? Why an IPO is the final nail in the community-based coffin

Why the peer-to-peer rental website’s IPO is the final nail in its community-based coffin. 


Remember when Facebook used to be just about your friends? 

When Instagram stories were things that you were actually interested in and not sponsored posts from takeaway delivery companies? 

No, Insta, I didn’t just say Just Eat, thank you. 



Those were the days. The days when Facebook was a ‘cool’ place to meet, as insisted on by founder, Mark Zuckerberg. The days when Instagram stuck religiously to its mission of sharing the world in images, before being swallowed by the Facebook juggernaut. 


So why did both platforms become cluttered with ads? In short, profit before purpose. The pressure of Facebook’s 2012 IPO (that’s Initial Public Offering if you’re not familiar with the parlance) and ensuing commitment to shareholder returns means companies mercilessly chase profits, often at the expense of their core values and vision. 


This is particularly true for technology companies as investors look to solidify the commercial rationale of their often overhyped and overpriced investments. 


Yesterday’s Airbnb IPO comes at the end of a very tough year for many of its hosts, visitors You only have to scroll through some of the comments on its Instagram to see the backlash that the brand has faced from irate users on both sides. Despite raising billions from the IPO, employees have were laid off as Airbnb shedded its workload by 25% this year.↟


An IPO is only the tipping edge in the platform’s evolution away from its community-focused, low-price USP into a fully-fledged service provider, via an incredible 22 funding rounds. 


From it’s low-cost, culturally-focused and very authentic beginnings, Airbnb has increasingly been beset by regulatory issues and ‘hijacked’ by micro-entrepreneurs buying several properties and employing cleaning companies to manage their numerous lets. The platform has encouraged this by introducing a ‘cleaning fee’ additional charge and ‘booking fees’. 


This incessant and rapid expansion of visitors hotspots has upset local governments including Barcelona, NYC and more. Airbnb even faced a regulatory attack from their home city of San Francisco, where hotels are cheaper than Airbnb listings. 


More importantly, it’s also increased prices for guests. In a wide 2013 study, Airbnbs were on average, only 21% cheaper than hotels (without accounting for cleaning and booking fees)↟. A decent saving you might say, enough to get a couple of souvenirs from your trip. 


By 2016, bottom-line prices had risen again, thanks in part to a guest-service fee which can be up to 20% and its 2015 ‘Smart Pricing’ feature that algorithmically adapts a host’s charge depending on the local demand. 

Price increases are not only a result of airbnb's own policies but partially due to regulatory measures as local authorities, under pressure from major hotel chains, impose additional taxes on short-term rental hosts.  

A study of short-term rental options in Barcelona found that Airbnbs were, on average, a staggering $140 higher than hotel rooms, while several American cities were also found to be anywhere between more expensive.↟


Meanwhile, hotels are not only flexing their considerable muscles at a regulatory level but at a consumer level too, bringing down their prices as they desperately attempt to attract guests and fight the dual pandemic and Airbnb threat. 


So what’s the future? 

Airbnb has undoubtedly done an incredible job in democratising the travel industry and creating new opportunities for hosts and visitors alike. It is no exaggeration to say that a simple started by two friends in an apartment in San Francisco has revolutionised a multi-billion dollar industry. The IPO is a landmark moment in that journey and the company’s valuation is certainly splitting investor opinion with some remarking that it’s still nothing more than a ‘loss-making website’ 


By moving away from its core roots and further into a full-service travel operator, in my opinion, Airbnb has left a blindspot in the market for more community-focused, less manipulative niche platforms. 


The old fashioned, paying-it-forward mentality of people to genuinely be kind and offer up their homes, spare rooms or couches will see a renaissance. 


Of course, platforms such as this need an income and a revenue stream to survive and I’m not trying to shy away from the motivation to make a living but PASA and other community-based solutions must never lose sight of what is most important - the customer nor why they started their mission. 


If you do, there’s only one way to go and that’s down. 


Sources: npr.org https://www.npr.org/sections/coronavirus-live-updates/2020/05/05/850986054/airbnb-cuts-1-900-jobs-25-of-its-workforce-as-pandemic-freezes-travel?t=1607692086080

https://priceonomics.com/hotels/

https://www.busbud.com/blog/airbnb-vs-hotel-rates/







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