Is This the End of Airbnb? | Hacker News Reader

Is This the End of Airbnb?

wired.co.uk

78 pointsbrunoluiz58 comments

Clearly they're spending a lot of money, and maybe they'll need to do layoffs and/or other budget cuts to make it through this, but I imagine Airbnb will actually come out of this even stronger relative to the rest of the hotel industry.

They don't own or lease buildings the way other hotel chains do, or have their own maintenance or cleaning staff, so they've got to be losing less money per unit right now while everything is shut down. If some hosts over-extended themselves on mortgages for their rental properties and get foreclosed on, that's not really Airbnb's problem. They may even get bailed out by the government, which then directly benefits Airbnb.

And in the medium term, I think their booking rates might bounce back quicker than other hotels. In a world where the lockdowns have lifted but we're still recommending/enforcing social distancing in most places, which could last years, I imagine the demand to go and stay in a traditional, crowded hotel in Paris or NYC is still going to be pretty low. Business travel may not pick back up very quickly, as companies cut costs in the recession plus they've seen how meetings can mostly be done fine remotely. Massive conferences with thousands of people seem unlikely to happen for a very long time.

But people will still want some kind of leisure and vacation. Renting a house or cottage a couple hours away on a lake or in a small vacation town is a relatively safe thing to do where you can maintain social distancing pretty well, which is the scenario where I'm most likely to use Airbnb instead of a hotel.

On top of that, local governments have bigger problems to worry about than short-term rentals right now, so Airbnb may also get a couple years break from their constant legal battles with various cities.

Agreed. Where do you want to be, in a hotel around a bunch of strangers? Or in a house where you can keep distance from other families? We tried to rent a house down south (SC, GA, FL) where we could have a pool and our kids could swim, but most states have no short term rental orders in effect. As soon as those lift I think you will see certain properties bounce back. No hotels for us until this thing clears up.

This makes sense, but honestly I thought about post-COVID airbnb and my trust of hosts or other guests - and that trust is pretty dang low.

The fact that anyone hosting an airbnb may be more likely to be one of those reckless "open up America" folks is more likely than a properly organized hotel chain that can enforce cleanliness and social distance.

It's sad - I can't foresee staying anywhere other than my home anytime in the medium term.

I totally agree with you. I think for the foreseeable future, people will be very risk averse. Going with a larger organization that is regulated, likely has more standards in place for safety, better training, etc. will be a natural choice for people.

A similar example that I've seen recently is the restaurant industry. I have been trying to support a local restaurant that switched to take-out. They really are trying, and I'm rooting for them, but... I've seen an employee almost use her mouth to pull the cap off a pen for a customer to sign their credit card receipt. I've been at the takeout window paying for my order while they called up another customer to come sign a credit card receipt - obviously negating any distancing we were observing in line.

Contrast that to Burger King, which I stopped at the other day on the way home from buying groceries. Their contactless drive thru game is much better, I'm sure because they have people in an office dedicated to creating new procedures, training staff, etc.

When things open back up, expect to see lots of hotels advertising and touting all of the cleaning precautions they are taking, new checkin procedures, etc. Airbnb will not be able to offer any of those assurances.

Kind of a tangent, but the fact that signing credit card receipts is still a thing during this pandemic is absurd. Doing this was useless enough during normal times.

I don't actually know the reason, but it does seem like small businesses are more likely to require signatures than chains. Why is that?

It probably has everything to do with fees from credit card processors.

A "card checked & signed" transaction has a lower fraudulence rating so has a lower fee associated.

What's the most surprising is that contactless payment isn't being pushed as a safety priority.

I've been going along the learning curve with Apple Pay, who has it, what state the the phone have to be in for it to work, learning not to press the glyph the UI presents me but instead press the actual fingerprint sensor. At some places they will be putting the terminal out towards my window so our hands are coming within a foot of each other. Once the terminal was afixed to a shelf within reach of the car window. The terminal has buttons and a card slot so it can't be behind glass for chipped credit cards, but I wonder if for NFC it could be.

Yes they will. Simple option which is Airbnb contracts with a local professional cleaner and every rental in that area provide an extra cleaning service if you want to pay for it.

I think you need to verify the property has good cleanliness scores and verify up front that they will in fact take the proper steps to clean the house. Yes, a bit more trust, but I think overall the likelihood of transmission will be less because you are "around" fewer people. My strategy would only go somewhere for a few weeks or more, I wouldn't be going to Airbnb's for a night here and there. And I would go into the property and spend an hour or so wiping down surfaces before the family enters.

Also, maybe use something like this? https://www.safespaceco.com/product/safespace-disinfectant-g... Does anyone know if these things are effective?

>Agreed. Where do you want to be, in a hotel around a bunch of strangers?

Personally in a hotel because I at least know that the hotel is going to be cleaned.

A hotel being cleaned is a person you don't know entering your room every day and breathing all over everything. I'd much rather a single house where you can do a deep clean yourself on the day you move in and then be sure nobody except yourselves have entered the house until you've left.

Same here. What if Airbnb has option where you pay extra for a deep clean before you check-in from approved vendors?

Do you trust that the housekeeper who gets paid $15/hour and prob cleans 50 rooms a shift is really going to clean your place throughly? Also the amount of traffic in the hotel, the check-in counter, the people in the elevator, the room service food that has gone through multiple sets of hands....yeah sure this is safer.

I rather have an Airbnb that does remote check-in. Once there I will do my own cleaning and not worry about unknown traffic in my place for rest of the stay. In addition I can buy my own groceries therefore reducing another vector point of transmission.

Seems like a better proposition then the hotel IMHO if you really are scared of getting infected.

I disagree. Do homeowners want to be renting out property on AirBnB if we still have social distancing in place? Professional AirBnB landlords are going to have serious financial trouble soon if they continue to have no or very low bookings. How long can they stay solvent? AirBnB could have a big supply problem before this is done.

I also think local governments will see a lot of the apartments re-enter the long-term rent market, helping fix some of the housing problem... And then make laws to make sure they don't leave it again.

I know they're already starting to re-enter the market in Dublin, where I'm currently in contact with people about housing as I'm looking at moving for school, and I don't think the populace would easily give those back up to let tourists come run them out of their town and Jack up prices again.

> I don't think the populace would easily give those back up to let tourists come run them out of their town and Jack up prices again.

This assumes people value having greater supply of housing, and low housing costs. If this were true, wouldn't they just support building more housing generally? Yet almost every city tends to oppose building lots of new housing.

It seems like it could easily go in exactly the opposite direction. People seeing how hard the local economy has been hit, and wanting the tourism to pick back up at any cost. Homeowners see their property values have fallen, and want to reduce the housing supply to make them go back up. Of course, many people don't even believe in basic supply and demand at all when it comes to housing, so even this level of analysis may be applying too much logic to how the average person will react.

> This assumes people value having a greater supply of housing... If this were true, wouldn't they just support building more housing generally?

I’m not sure most people (or most cities) are saying they want a greater supply of housing. I suspect most people want to keep the character of a city and keep prices reasonable by mitigating against vampiric tendencies of some landowners/horders.

Yeah. From my experience, they're saying the want the housing in their city to go to them, not to tourists who are going to go and leave it in a few days.

I actually think they will have a MORE inventory. The economic devastation of Covid will have people want to drive additional revenue stream and thus securitize their unused space.

So ironically it could bring AirBnb back to their roots which is grow with unused and extra rooms by individual homeowners/renters.

I agree 100% as well. A couple things:

1. They already own the short-term rental market. Why not expand to the long-term rental market and undercut the broker fee that currently occur right now.

2. Pent up demand for travel: Reality is that once/if vaccine hit you can bet consumers are going to travel like crazy due to pent-up demand after being stuck at home for months.

3. Movement to WFH: The movement to WFH will only become more pronounce after Covid. If this is the case you will see a bunch of consumers ask why bother staying in the city I was working at if I can WFH anywhere in the world? Thus AirBnb rentals would be the key to doing this.

4. Fear of the crowds: If you had a choice of staying in a crowded hotel where perhaps the cleaning is slightly better vs. staying at a home where minimal crowd what would you chose in a world with Covid? In fact what they should do is offer an extra add-on for guest to pay for a more deep clean of the unit prior to rental.

5. Hotels with fixed cost are going to drop like flies: Means less hotel inventory globally as they go out of business.

6. Due to loss of jobs/income: More folks will need to securize their fix assets meaning house for additional income which means more inventory for Airbnb

Anyway this all assumes that a vaccine comes out and in the near-term it is going to be pretty brutal for them.

I still can't wrap my head around the fact that they have 14,000 employees. Fourteen thousand. For a company that owns no hotels or motels, no real-estate (other than their offices, of course). The website is decent (but no amazeballs), which is all there is to AirBnB (other than customer service, of course). I don't understand why this all can't be done by, say, 1000 or so employees.

They operate in 191 countries.

Have you ever built a business that operates in that many countries?

90% of the employees are not engineers. There's probably tons of customer service people, marketing, legal.

Every single time there's a thread about a company like Airbnb, there is a comment like yours. I am genuinely curious why you are so surprised that a company of their size would be that big? Particularly with a high touch business that works with so many businesses - between sales and support alone this number seems reasonable.

Google had 5000 employees in 2005 [1]. And no, in 2005, Google was not just a start-up, it was the same search juggernaut that it is now. There was no youtube yet, google maps was less than 1 year old, and android was 3 years in the future. But in terms of search, it was the only game in town. Their revenue was $6 BN [2]. Airbnb's revenue in 2019 was around $4 BN. Now, Google is and was an exceptional company, and it's not totally fair to compare a business to Google, but still, people who wonder why AirBnB has so many employees have a point.

[1] https://medium.com/gabor/timeline-employee-count-growth-for-...

[2] https://www.statista.com/statistics/266206/googles-annual-gl...

Larry Page famously said at some point that he doesn't believe in customer support.

I believe a large number of the AirBnB employees are support related (either for hosts or guests).

It's an apples-oranges kind of comparison.

Google has notoriously bad customer support which I believe you can get away with for digital products but not for short-term lets.

You answered your own question there. Back then, Google was primarily a search juggernaut. They didn't have many real life situations that they needed to resolve or take care of.

They didn't need to deal with any sort of insurance for their clients (like AirBnB does for their hosts), they didn't have nearly as many tricky questionable real life situations to resolve (the host cancels your housing reservation a couple of days before your have your already reserved flight, what do you do).

Google was just providing search results, and almost all their work was limited to the virtual space. Pretty much a pure software company providing only virtual space services. You don't usually get a complicated real life situation to resolve every time there is an incorrect search result, almost every issue is resolved by making a simple code change.

Due to the inherent nature of AirBnb, it just has magnitudes more non-purely-technical problems to deal with. And you will also need technical work to resolve them too, but it is just a small component of those. For example, how do you deal with verifying hosts? You need to build some verification mechanism, but it will almost always need a human in the loop. So not only you have to implement the technical flow for it (like a verification portal or whatever), but you also need to pay people to process all of this and resolve any issues arising. And I expect that with every heavily human-centric problem, you will need a lot of human resources to deal with it effectively.

Add the fact that AirBnB has to deal with those "physical world" problems in 191 countries (all with wildly different legalities that come with short-term rentals, which is the core of their business), it doesn't seem to have such a large number of employees at all.

Disclaimer: I am not saying that AirBnB is NOT overblown in terms of employment numbers. They very well could be, I cannot tell without understanding the entirety of their business. But I can definitely say that it makes perfect sense in my head that AirBnB in 2020 would need significantly more employees than Google did in 2005.

Airbnb is a successful company but why are you comparing it to a company that is literally printing money? Have you worked at a big company before?

Besides it being an often-repeated cliche, how certain are we that airbnb has no real-estate ? It would have actually make alot of sense for them to long-term lease or even buy some in popular destinations through intermediaries or large residential real estate companies.

This question gets asked a lot because it’s a good question, and the popular explanations, for why big co’s get big, aren’t very satisfying.

I thought this thread was pretty insightful, for a change: https://news.ycombinator.com/item?id=22822995

TL;DR - big co’s get big because hiring is an optimization problem, and each new hire gets you closer to a local maximum. E.g. if we hire an engineer to improve load times by x%, they’ll pay for themselves. More successful companies have more opportunities for positive-ROI hires, so headcount tends to scale with revenue. (And because the company is making a series of local optimizations, it may actually be worse off due to the drawbacks of being a big org.)

(other than customer service, of course)

You actually wrote what is probably a large part of the answer, and then passed right over it as if for a multi-national corporation customer service would be a trivial expense and staffing problem.

There's got to be a "logical fallacy" Wikipedia page for something along the lines of "why did the Hindenburg burn so quickly (other than the large bag of hydrogen, of course)?" :-)

The type of customer service you’re thinking of would be outsourced to call centers by AirBNB. When you call a 1-800 number those aren’t actually employees of the bank/service/website usually unless the company if huge. Most of them outsource. I bet AirBNb really does have all those employees but they’re probably doing things like Compliance, Financial/Payment operations (chargebacks, disputes, fraud, etc) and a lot more manual stuff than people realize.

It's a market cap of around 2 million per employee at the $30b valuation they've been at the past year. Of course, higher is 'better' as in more efficient.

Here's some context: https://craft.co/reports/s-p-500-market-value-per-employee-p...

To be fair, I do agree, it's higher than I think is right. It's absolutely not abnormal, IT companies are at 2.4m on average, and companies like Facebook (19m) or Netflix (11m), Apple (5.5m) or Microsoft (4m) are much higher.

But I also think we quickly get into apples/oranges comparisons, and it's hard to really make fair comparisons. For one, Airbnb has a very strong non-IT component, and 100% of its revenue comes from real-world transactions with very strong human behavioural elements of non-employees, i.e. complete strangers, that need to be managed. Selling a phone to a customer is pretty straightforward. Connecting a stranger to let another stranger into their home and treat it well, is a transaction with much more friction.

Second, it's not at all clear how employees are counted. Foxcon employs a million people and manufactures the majority of Apple's revenue. If Apple bought all its shares and let it operate independently, its valuation would not change radically (if it was purchased at market value), yet its market cap per employee would drop by huge amounts.

Employee figures alone don't say much. If anything they're a reflection of the company's (supply chain) structure. If Airbnb outsourced all its customer service, you'd see far fewer employees, but a far larger outsourcing bill. One or the other isn't necessarily better. Context matters, without it 14 thousand is a pretty meaningless number.

But again, on average, 2m is not a weird number, its very normal, quite average.

Current employee here. The employee count is actually 7000, half of what you stated. Not sure where you got 14,000.

and a big chunck is contractors or low-level customer support right?

Yes, most is non-tech

Well, maybe you should fix your Wikipedia entry[0] then, which claims ~13,000 employees as of last year?

[0] https://en.wikipedia.org/wiki/Airbnb

But why it's burning hole in the finances? AirBnB is all marketing. Scale down your cloud instances and don't spend on ads? What exactly burning money at the rate of 1B per month? It's not clear from the article at all.

I'm sure it doesn't account for 1B a month, but paying employees is really expensive and airbnb has a lot of them

1B a month just in employees is over 100k employees making 100k a year. i know the tech ones make more but i assume the customer support makes less. that's a lotttt of employees

it's not quite that simple. if an employee makes 100k a year in salary, they cost much more than that to the company - the company has to pay for payroll taxes, health insurance, any benefits like PTO or free food, not to mention all the infrastructure the employee uses like the office building, electricity, air conditioning, etc. according to a comment above, airbnb has 14,000 employees. that's a lot of office space and benefits to be paying for. and that's just the employee costs, not counting anything else

then the next question would be why in gods name have they so many employees. I just checked wikipedia and they have apparently twelve thousand workers? What do all these people do? I don't understand these sharing companies.

The Wikipedia number is incorrect. Actual number is ~7K with most being non-tech employees. About 1K engineers. If you break down the functions, the numbers start making sense. For example, Airbnb has a global payment processing platform, which is basically like mini-Stripe. That org is probably ~100 eng. Then there’s Homes, Experiences, Transportation, Lux, Plus, experimental projects etc. Each team owns a particular page in the flow. Each team needs a backend, frontend, iOS, Android person. Designer, PM, data scientist etc

My guess would be employees since we haven't heard of any large layoffs from them. The facade is that Air BnB is an engineering/technology company and the second they start cutting into that they "lose their magic".

They must pay lawyers an astronomical amount to help them skirt the law?

Current employee here. The burn rate is ~$100M/mo, not 1B/mo, after cutting marketing and reduced CS costs due to fewer bookings. You can see this in publicly available data from the WSJ and The Information. Not sure where people get these wildly inaccurate numbers.

The question they should be asking is will this kill Marriott and Hilton's recently launched AirBnB competitors?

While I'm sure Marriott and Hilton will get a ton of federal money they've got a ton of real estate mortgages to deal with right now. It would be pretty easy (especially if these efforts don't have a lot of traction and are costing a lot of money to keep afloat) to just shut them down.

Airbnb

If infection does not confer immunity could we be looking at the end of:

Hotels, Shopping Malls, Eat in restaurants, Bars, Amusement Parks, Move Theaters, Clubs, Theaters, Public swimming pools, State and National parks, Beaches, Air travel, Train Travel, Bus Travel, Recirculating HVAC systems, Office buildings, Pro sports, college sports, high school sports, sports in general, gyms, parties, funerals,

Just to name a few.

Just remember why they started, a bloke could not afford to pay his rent. There was a popular conference and he offered to let someone stay at his house sleeping on an airbed.

It was a hack. If the economy stays bad for a period of time both travellers and host will need an Airbnb or similar. Travellers want cheaper accommodation and host will need the money.

airbnb is not a bad business, as a localized venture. imagine each city had it's own version of airbnb run by the local city council. not some vc funded, destroy regulations & rental market at all costs, company. a city owned short term rental market would be both beneficial to cities, tourists n hosts. aye, if there's any salesperson out there wanna partna on to build a platform we can sell to cities, I"m open.

The hotels in any city would lobby to kill any sort of government intrusion into the private sector like that.

On top of that cities prefer nice compartmentalized systems, short term rentals are hotels, long term rentals are apartments. City planners designate different areas for different use cases, airbnb style rentals go against this and raise all sorts of problems. This is one of the major reasons why cities generally dislike airbnb.

I have an Airbnb booking for December 2020. Would it be best to cancel now when there is still a chance of a refund?

Let the invisible hand of the market sort it out. Don't bail, let them fail.

One can only hope.

The end? I could only wish.

That this social cancer was allowed to fester for so long means it will just raise it's ugly head once again when conditions are right.

I hope so. It's cancer on our society.

in bali, hotels are now offering 3,000,000 rupiahs for 30 days stay

that's about 6-7 usd / day

no breakfast / food / mineral water cleaning every 2 weeks

minimum airbnb price floor is like what? 10 usd / day?

that's 50% more expensive than hotel chains in bali for months to come

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