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Comment by ping_pong | Hacker News Reader

I would too, but the thing holding me back is if the shit hits the fan, and I need to do something like buy a freezer to store extra food, I can't conveniently do that in an Airbnb. And if I somehow get sick, I'm at the mercy of the doctors and hospitals in this foreign land. I'd rather be in my own home with the doctors and hospital system that I'm familiar with. I think more than 50% of people feel this way, which is why I think a 50% cut in revenue is too little, I would say its more like an 80-85% cut in revenue. This is catastrophic for Airbnb.

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> This is catastrophic for Airbnb.

They have a functional system. If they can maintain it going on the cheap, they can pull themselves back up. Still, this gives times for alternatives to come and drink their milkshake.

They do have functional infrastructure but their business is suffering a catstrophic shift. As I mention, a lot of the hosts are either going to go into foreclosure or they will convert to long term rentals. A lot of people were buying condos and converting them to Airbnb because the revenues were so predictable. That won't happen in 2020 and 2021. It will take many years for inventory to come back up to 2019 levels and less inventory means less revenues, even if people started to travel again, which also is unlikely in the next couple of years.

I think it’s highly unlikely that an upstart is going to steal a noticeable amount of market share from AirBnb during this pandemic. It would be hard enough during normal times when travel volume is much higher.

If shit hits the fan, there won't be freezers to be bought... they'll get panic purchased instantaneously and, if you did manage to find one for sale, expect it to cost multiple times what you otherwise might have paid.

FYI - They're already gone.

Yep. Ordered a freezer in March from Costco, delivery scheduled for June.

Jeebus how is this possible - is our supply chain that fragile that things like hand sanitizer (that you can make with alcohol + aloe gel) and freezers run out?

Why is there no increased demand-driven supply on these things?

There are plenty of places where you can buy hand sanitizer currently. Any sort of manufacturing takes time to ramp up. There’s a usual demand for freezers and that’s how much is typically made. If everyone decides they want a freezer there’s not enough. Why is this surprising? Sure they may start manufacturing more freezers now, but it’s going to take time and it’s not clear if demand will stay high, so who knows how much will be made. These things continue to be made, so our supply chain is not breaking, it just can’t massively scale up production instantly. I don’t know why this would be surprising.

>Why is there no increased demand-driven supply on these things?

Most American states prohibit price hikes during a disaster, which prevents companies from producing more during high demand.

> Most American states prohibit price hikes during a disaster, which prevents companies from producing more during high demand.

Sorry, but how exactly does that follow?

It's basic microeconomics. Firms produce widgets until the marginal profit they get from the widgets goes down to 0. The marginal profit is based on the marginal cost of producing a widget and the current price of the widget. If the price goes up, the firm can now afford to produce more widgets. If the state introduces price controls to keep the price fixed during increased demand, the company cannot afford to produce more to meet this demand and shortages will result.

Normally shortages lead to increased price in the short term and in the long term lead to increased production and movement to the price equilibrium.

Scenario:

-oil shortage.

-Price is capped at $50/barrel to prevent “price gouging”.

-A bunch of shut down wells that are only profitable at $70+ stay shut down.

Do you see how price caps prevent supply with higher production cost from entering the market?

I think you're missing my point.

To my mind, a freezer is a pretty low priority item if you are trying to mitigate “shit hits the fan” tail risk. You can easily survive without a freezer, and a dependency on a freezer isn’t a good thing in that scenario. Then you just have a bunch of food that’s doing to go bad if the power goes out.

> I’m at the mercy of the doctors and hospitals in this foreign land

That’s where you can carefully pick the foreign land whose medical system you trust more than your own home country

That would mean that a lot of people would avoid going to the US or other countries where health care is complicated and/or expensive. And I would harbor a guess that travel insurance companies will put in anti-pandemic clauses going forward. That has already started by the way, so who knows what insurers will cover in late 2020.

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