Airbnb
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Airbnb
Airbnb, Inc.
Airbnb Logo Bélo.svg
Type of site
Privately held company[1]
Available in 26 languages
Founded August 2008; 9 years ago (2008-08)
Headquarters San Francisco, California, U.S.
Area served Global
Founder(s) Brian Chesky
Joe Gebbia
Nathan Blecharczyk
Key people Brian Chesky (CEO)
Joe Gebbia (CPO)
Nathan Blecharczyk (CTO)
Laurence Tosi (CFO)[2]
Industry Travel, hospitality service
Services Homestay, vacation rental
Employees 3100[3]
Website www.airbnb.com
Users 150,000,000
Native client(s) on iOS, watchOS, tvOS, Android

Airbnb is an online marketplace and hospitality service, enabling people to lease or rent short-term lodging including vacation rentals, apartment rentals, homestays, hostel beds, or hotel rooms. The company does not own any lodging; it is merely a broker and receives percentage service fees (commissions) from both guests and hosts in conjunction with every booking.[4][5][6] It has over 3,000,000 lodging listings in 65,000 cities and 191 countries,[7] and the cost of lodging is set by the host.

How it works

Airbnb iPhone app screenshot

Airbnb can be accessed via either the Airbnb websites or mobile applications for iOS, Apple Watch, and Android.[8] Registration and account creation is free.[9] On each booking, the company charges guests a 6%-12% guest services fee and charges hosts a 3%-5% host service fee.[10] Hosts can also offer "experiences", such as excursions, to guests for an additional charge, of which Airbnb takes 20% as a commission.[10][11]

Users can search for lodging using a variety of filters including lodging type, dates, location, and price.[12] Before booking, users must provide a valid name, email address, telephone number, photo, payment information, and, if required by the host, a scan of a government-issued ID.[13][14] Guests also are required to agree to any house rules of the host.[13]

Offering lodging

Users can create a listing by selecting the "Host" menu after logging in.[15] A listing will not go live until the host is ready to publish.[15] Pricing is determined by the host, with recommendations from Airbnb.[15] Hosts can charge different prices for nightly, weekly, and monthly stays and can make adjustments for seasonal pricing.[15] Hosts add descriptions of the residence, amenities, available dates, cancellation policies, and any house rules[16] and hosts are advised to upload photos of the lodging that is offered.[17] For eligible hosts, Airbnb offers free professional photography.[18] Potential guests are required to message the host directly through Airbnb to ask questions regarding the property. Unless the host has enabled "instant book", in which case requests for stays are accepted automatically, a host has 24 hours to accept or decline a booking.[19][20] After the reservation, hosts coordinate meeting times and contact information with guests.[15]

Legality of offering lodging

Some cities have restrictions on subletting for a short period of time.[21] In some cities, collection of a transient occupancy tax by Airbnb is required.[21] In many cities, hosts must register with the government and obtain a permit or license.[21] Airbnb has published a list of regulations and requirements by city; however, only cities in the United States are included. In addition, many landlords or community associations also have restrictions on short term sublets.[22] Hosts may be required to pay income taxes on income received via Airbnb and, in the United States, Airbnb sends tax forms to hosts that have earned over $20,000 in rents and received over 200 reservations via Airbnb in a calendar year.[23]

Safety mechanisms

Airbnb had to overcome the obstacle of "stranger danger" to build a level of trust between hosts and guests and instill confidence in its platform. Airbnb did this by requiring user profiles so that members can learn about their hosts and guests ahead of time and by establishing a rating and review system. Founder Joe Gebbia has said that Airbnb is specifically "designed for trust".[24][25]

References and reviews

After the guest completes a stay, the host and guest have the option of leaving references for each other and reviews of their stay, which are posted publicly, providing for an online reputation.[26][27][28][29]

Insurance

Airbnb recommends that hosts obtain insurance which covers damages caused by guests.[30] Airbnb offers secondary insurance, called its "host guarantee".[31] The guarantee covers property loss and damage due to vandalism and theft. When first launched in August 2011, the program covered up to US$50,000.[32] However, the maximum was later increased to US$1,000,000.[33][34] The company also has a 24-hour customer service hotline and a task force to review suspicious activity.[35]

Logged private messaging system

The site provides a private messaging system as a channel for users to message one another privately before booking and accepting reservations.[36]

Decline or cancellation of reservations

Hosts are able to decline reservations if they are not comfortable with the guest, based on online correspondence, and cancel reservations, albeit with a penalty.[37][38]

Secure payments

Airbnb facilitates online payments from guest to host through its Security Payments feature, which processes payment transactions 24 hours after check-in.[39]

Security deposits and cleaning fees

At the option of the host, Airbnb facilitates security deposits and mandatory non-refundable cleaning fees, the former of which is held until the property is vacated.[40]

Verification of identity

Any Airbnb host can require their prospective guests to obtain "Verified IDs" before booking, meaning that they are required to scan a government-issued ID to verify their identity.[41]

Linking to social network accounts

An Airbnb account can be linked to accounts on social networking services such as Facebook, thus providing the host with data on common friends and interests.[42][43][44]

Wish list feature

In June 2012, Airbnb launched a wish list feature, offering users the ability to create a curated catalog of desired lodgings that they would like to visit.[45] Co-Founder and Chief Product Officer, Joe Gebbia and his team conceived the idea of changing the website from an online marketplace to a source for inspiration. Users can organise their favorite destinations into organized lists and share these lists with other users.[46]

Neighborhoods travel guide

"Neighborhoods" is a travel guide that provides in-depth information for selected neighborhoods in 23 major cities through photos, essays, maps, tags from locals, and assessments of various criteria that would be of interest to guests such as public transportation, dining, peace & quiet, nightlife, tourist attractions, and shopping, thereby helping travelers choose the ideal neighborhood to stay in via collaborative filtering.[47][48][49][50] The Airbnb product team hand-mapped hundreds of neighborhoods within these 23 cities and had local editors curate content for each neighborhood. Airbnb also added 70 street photographers who generated 40,000 photographs for the project.[51]

History

Airbnb founder Joe Gebbia (right)

Shortly after moving to San Francisco in October 2007, roommates and former schoolmates Brian Chesky and Joe Gebbia could not afford the rent for their loft apartment. Chesky and Gebbia came up with the idea of putting an air mattress in their living room and turning it into a bed and breakfast.[52][53][54] The goal at first was just "to make a few bucks".[55][56] In February 2008, Nathan Blecharczyk, Chesky's former roommate, joined as the Chief Technology Officer and the third co-founder of the new venture, called AirBed & Breakfast.[54][57] This is also where the name "Airbnb" originates from. They put together a website which offered short-term living quarters, breakfast, and a unique business networking opportunity for those who were unable to book a hotel in the saturated market.[58] The site Airbedandbreakfast.com officially launched on August 11, 2008.[59][60] The founders had their first customers in town in the summer of 2008, during the Industrial Design Conference held by Industrial Designers Society of America, where travelers had a hard time finding lodging in the city.[54][61]

To help fund the site, the founders created special edition breakfast cereals, with presidential candidates Barack Obama and John McCain as the inspiration for "Obama O's" and "Cap'n McCains".[62] In two months, 800 boxes of cereal were sold at $40 each, which generated more than $30,000 for the company's incubation.[63][64] It also got the company noticed by computer programmer Paul Graham, who invited the founders to the January 2009 winter training session of his startup incubator, Y Combinator, which provided them with training and $20,000 in funding in exchange for a small interest in the company.[55][65][66] With the website already built, they used the $20,000 Y-Combinator investment to fly to New York City to meet users and promote the site.[67] They returned to San Francisco with a profitable business model to present to West Coast investors. By March 2009, the site had 10,000 users and 2,500 listings.[66]

In March 2009, the name of the company was changed to Airbnb.com, and the site's content had expanded from air beds and shared spaces to a variety of properties including entire homes and apartments, private rooms, castles, boats, manors, tree houses, tipis, igloos, private islands and other properties.[68]

One year later, there were 15 people working from Chesky and Gebbia's loft apartment on Rausch Street in San Francisco. To make room for employees, Brian Chesky gave up his bedroom and lived at lodging booked via the Airbnb service until the company moved into its first office space,[69][55] and in April 2009, the company received $600,000 in seed money from Sequoia Capital.[55] In November 2010, the company raised $7.2 million in financing from Greylock Partners and again from Sequoia Capital in a Series A round and announced that out of 700,000 nights booked, 80% had occurred in the past six months.[70]

In February 2011, Airbnb announced its 1 millionth booking since its inception in August 2008.[71][72] In January 2012, the company announced its 5 millionth night booked internationally. In June 2012, Airbnb announced 10 million nights booked, doubling business in the previous 5 months.[73][74] Of these bookings, 75% of the business came from markets outside of the continental United States.

On May 25, 2011, actor and partner at A-Grade Investments Ashton Kutcher announced a significant investment in the company and his role as a strategic brand advisor for the company.[75]

In May 2011, Airbnb acquired a German competitor, Accoleo. This takeover, as well as other similar acquisitions, launched the first international Airbnb office, in Hamburg.[76] In October 2011, Airbnb established its second international office in London.[77][78] Due to the growth of international users, in early 2012, Airbnb opened offices in Paris, Milan, Barcelona, Copenhagen, Moscow, and São Paulo.[79] These openings were in addition to existing offices in San Francisco, London, Hamburg, and Berlin.[80] Airbnb announced in September 2013 that its European headquarters would be located in Dublin.[81] Prior to the 2012 Summer Olympics, Airbnb acquired London-based rival CrashPadder, subsequently adding 6,000 international listings to its existing inventory. This acquisition made Airbnb the largest lodging website in the United Kingdom.[82]

In November 2012, in the aftermath of Hurricane Sandy, Airbnb partnered with New York City Mayor Michael Bloomberg to offer free housing for persons displaced by the storm.[83] Airbnb built a microsite for this effort alone where victims register for housing and meet property owners with free housing.[84] Additionally, Airbnb waived all service fees associated with these listings while maintaining the Host Guarantee for all properties listed.[85]

In November 2012, Airbnb opened an office in Sydney, Australia, its 11th office location, and announced plans to launch the service in Thailand and Indonesia,[86] At that time, Australian consumers accounted for 10% of the Airbnb user base.[87] and in December that same year, Airbnb announced its strategy to move more aggressively into the Asian market with the launch of an office in Singapore.[88]

In November 2012, Airbnb acquired NabeWise, a city guide that aggregates curated information for specified locations.[89] The acquisition shifted the company focus toward offering hyperlocal recommendations to travelers.[90] In December 2012, Airbnb announced the acquisition of Localmind.[91] Localmind is a location-based question and answer platform that allows users to post questions about specific locations online. These questions are then answered in real-time by experts on the specified territories.[92]

By October 2013, Airbnb had served 9 million guests since its founding in August 2008,[93] and in December 2013, the company reported it had over 6 million new guests in 2013, and nearly 250,000 properties were added in 2013.[94]

In July 2014, Airbnb revealed design revisions to the site and mobile app and introduced a new logo.[95] Some considered the new logo to be visually similar to genitalia,[55][96] but a consumer survey by Survata showed only a minority of respondents thought this was the case.[97]

In April 2015, following the Obama administration's easing of restrictions on U.S. businesses to operate in Cuba, Airbnb expanded to Cuba, making it one of the first U.S. companies to do so.[98][99]

In June 2015, Airbnb sponsored the Manor F1 Team and the Airbnb logo appeared on the front nose of the cars and on team wear including the drivers' overalls.[100]

In August 2015, Airbnb partnered with Tesla Motors to provide chargers at certain host houses.[101]

In the summer of 2016, the Federal Trade Commission started investigating how Airbnb affected housing costs per the request from three US senators. In October that same year, New York Gov. signed a bill charging Airbnb fines for violations of local housing laws. The New York Times reported that these events were related and part of a "plan that the hotel association started in early 2016 to thwart Airbnb".[102]

In January 2017, Brian Chesky, CEO of Airbnb, tweeted that the company will give free housing to refugees and any others not allowed into the United States as a result of Donald Trump's Executive Order 13769, which temporarily banned refugees from the United States.[103][104] Airbnb also led an investment in reservation-booking app, Resy, along with serial entrepreneurs Gary Vaynerchuk, Ben Leventhal and Mike Montero.[105]

Airbnb first became profitable during the second half of 2016. Airbnb's revenue grew more than 80% from 2015 to 2016.[106]

In February 2017, Airbnb acquired Luxury Retreats International, a Canadian-based villa rental company, in its largest acquisition to date.[107]

In November 2017, Airbnb acquired London-based company Accomable.[108]

Corporate information

Airbnb office in Toronto, Ontario, Canada

Office locations

Airbnb North American headquarters at 888 Brannan St, San Francisco, CA.

Airbnb has 20 offices in:

  • Amsterdam (Netherlands)
  • Barcelona (Spain)
  • Berlin (Germany)
  • Beijing (China)
  • Copenhagen (Denmark)
  • Dublin (Ireland)
  • London (UK)
  • Miami (Florida, USA)
  • Milan (Italy)
  • Montreal (Canada)
  • New Delhi (India)
  • Paris (France)
  • Portland (Oregon, USA)
  • San Francisco (California, USA)
  • São Paulo (Brazil)
  • Seoul (South Korea)
  • Singapore
  • Sydney (Australia)
  • Tokyo (Japan)
  • Toronto (Canada).[109]

Funding

Through July 2011, the company had raised US$119.8 million in venture funding from Y Combinator, Greylock Partners, Sequoia Capital, Andreessen Horowitz, Digital Sky Technologies, General Catalyst Partners[110][111] and undisclosed amounts from Youniversity Ventures partners Jawed Karim, Keith Rabois, and Kevin Hartz,[112] and from A Grade Investments partners Ashton Kutcher and Guy Oseary.

In April 2014, the company closed on an investment of $450 million by TPG Capital at a company valuation of approximately $10 billion.[113] Additional funding was provided by Andreessen Horowitz, Sequoia Capital, Dragoneer Investment Group, T. Rowe Price and Sherpa Capital.[114][115][116]

In March 2015, Airbnb raised funding at a $20 billion company valuation.[117]

In 2015, Airbnb raised $1.5 billion in funding led by growth equity firm General Atlantic, and joined by Hillhouse Capital Group, Tiger Management, Kleiner Perkins Caufield & Byers, GGV Capital, China Broadband Capital, and Horizons Ventures.[118]

In September 2016, Airbnb raised at least $555 million in new funding from Google Capital and Technology Crossover Ventures, valuing the company at $30 billion.[119]

In March 2017, Airbnb raised $1 billion in additional funding, bringing their total funding raised to date to more than $3 billion and valuing the company at $31 billion.[120]

Benefits

Many people who were on the brink of losing their homes through foreclosure due to financial hardship, have come to depend on Airbnb for additional income.[121]

Sponsorships

In 2014, Airbnb was the official jersey sponsor for the Australia men's national basketball team at the 2014 Basketball World Cup.[122]

Airbnb has sponsored the New York City Marathon since 2014.[123]

Criticism

Fair housing implications and discrimination

In July 2016, former Attorney General Eric Holder was hired to help craft an anti-discrimination policy for Airbnb after the company faced many complaints related to racism, including a study by Harvard Business School that showed widespread discrimination by hosts against guests whose names suggested that they were black.[124]

Privacy and terms of use

Airbnb's identity verification system "Verified ID"[125] has been perceived by many customers as excessively intrusive.[126][127][128] It requires three layers of customer identification: telephone, photo of ID (such as passport or driver's license), and verification of Facebook, Linkedin or Google+ account.

Linguist Mark Liberman has criticized the extreme length of the legal agreements that Airbnb members are required to accept, with the site's terms of service, privacy policy, and other policies amounting to "55081 words, or about the size of a short novel, though much less readable".[129]

Despite having no explicit ban on hosts filming guests, Airbnb updated its terms of use in November 2014 to require that hosts fully disclose the use of surveillance equipment and security cameras to guests.[130] Previously, no such disclosure was required.[131]

Pricing transparency

When customers search for lodging, Airbnb displays per-night prices that exclude its own per-night service charges as well as possible additional costs such as cleaning fees. The total price is not revealed until the customer selects an individual property and is ready to book.[132]

In late 2015, the Australian Competition and Consumer Commission took action against Airbnb for this form of drip pricing. Consequently, users of Airbnb's Australian web site now see the total price of a stay including all unavoidable charges at every stage of the booking process.[133][134]

Boycott over Israeli settlements

Airbnb is on the Boycott, Divestment and Sanctions list of companies.[135] The company was added following media reports that lodging listings included settlements in the occupied Palestinian territories that are advertised as being in Israel or in Israeli neighborhoods.[136][137]

Housing affordability

In San Francisco, protesters accused Airbnb of contributing to rising rental rates, as landlords keep properties off the longer term rental market and instead get higher rental rates for short term housing via Airbnb.[138] Similar problems have been raised in other parts of the world, such as Scotland. [139] In 2017, San Francisco passed a law requiring Airbnb hosts to register with the city before they can rent units; units can't be rented for more than 90 days a year.[140]

Tax avoidance by Airbnb

The company has been accused of avoiding taxes by setting up a double Irish arrangement through subsidiaries in Ireland and Jersey.[141][142]

Tax avoidance by hosts

In 2016, the Spanish treasury department sent letters to property owners that have not declared income associated with Airbnb,[143] and in Australia, insiders said in 2016 that the hosts of the 75,000 properties listed on Airbnb would likely face increased chances of being audited.[144]

Awards and accolades

Airbnb won the "app" award at the 2011 South by Southwest conference.[145]

Airbnb has been deemed the "best place to work" by the 8th annual Glassdoor 2016 Employees' Choice Awards. [146]

See also

References

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