What extent does airbnb support sustainable consumption

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CASE 8 Sharing is caring? Airbnb and the highs and lows of the sharing economy What is Airbnb? In its simplest form, Airbnb is a platform which connects travellers, or 'guests', with individuals, known on the platform as 'hosts', who have properties or rooms in their house to rent. Prospective guests enter a location, the dates they wish to stay, and the number of guests and, using this information, the website then provides profiles of possible hosts with detailed information, prices, amenities, and reviews by prior guests. This simple idea originated in San Francisco in 2007, when roommates Joe Gebbia and Brian Chesky, struggling to pay the rent, decided to rent out three airbeds on their living room floor during a busy period in the city's calendar. After this experimental success, the pair brought onboard Nathan Blecharczyk, and launched the website and business in 2008. The business snowballed, raising several rounds of investments, so much so that, by 2012, the company had reached 10 million bookings, employee numbers had reached 500, and it had opened offices across the world, reputedly earning the business a $1.3-billion-dollar valuation. Yet the success did not stop there. By 2018 the firm had 5 million lodging options in 81,000 cities across 191 countries, and over 150 million estimated annual bookings, generating over $2.5 billion in revenue. Given Airbnb's growth, it perhaps comes as little surprise that over the years it has courted-and continues to court- controversy. Discrimination by hosts on the grounds of race; sexual assaults; burglary and damage to hosts' homes; tax evasion by hosts; and claims that the company's operating model has displaced residents due to inflating rents and property prices are all accusations that have been levelled at the company. Nonetheless, there are those that argue that the benefits Airbnb brings largely outweigh these harms, and that Airbnb is merely a platform for connecting demand from travellers to a supply of properties. The moral responsibility, therefore, lies with hosts and guests and not the company. But with increasing complexity across the service delivery supply chain, where does the buck lie? Airbnb: cruising along at a high altitude As Airbnb grew in the early 2010s it seemed to be a 'win-win' scenario for everyone involved: consumers could get accommodation at the fraction of the price of a hotel stay, hosts could rent out a spare room or property for extra cash, and Airbnb sat in the middle, reaping commission on each stay. As the brand prospered, and more properties were added, cash-savvy consumers in particular appeared to love the brand, as well as the amenities that many Airbnb properties provide, such as kitchens, washing machines, and even, in some cases, swimming pools. Furthermore, the chance to meet locals, stay in their homes, and pick up tips appealed to travellers who were looking for an 'authentic' taste of a country and its culture. This is well evidenced by research that estimated that the presence of Airbnb over 12 months between 2014 and 2015 resulted in a direct loss to hotels in New York City of $451 million dollars, with two-thirds of Airbnb guests claiming to have used Airbnb as a hotel substitute when surveyed. Meanwhile, for those guests looking for a unique holiday experience, Airbnb began hosting a wide array of luxury and eccentric properties: houseboats in Amsterdam, castles in Tuscany, igloos in Greenland, and treehouses in Germany. At the same time, hosts were enjoying the benefits of renting out rooms and properties. In 2017, the typical Airbnb host in London made £3,500 per year, while in New York City, hosts made an average of $5,500, often a greater yield than that available on the long-term rentals market and up to three times more than the median long-term rent in some areas. Moreover, while many would presume that this extra income would flow only to affluent property owners, in fact, according to research by the firm, 52% of Airbnb hosts are on low to moderate income, with 53% of hosts saying that using Airbnb has helped them stay in their home. Airbnb even launched an initiative with a number of US mortgage lenders which allows hosts to use Airbnb income to help refinance their homes. CRICOS Provider No. 00103D Page 4 of 7 While both guests and hosts appeared satisfied, Airbnb too enjoyed substantial growth, a host of favourable publicity, and mounting commission. This allowed the business to expand its offering, and improve customer experience, through the acquisition of a number of other businesses, for instance a villa-rental company, 'Luxury Retreats International', social payment start-up 'Tilt', and travel accessibility start-up 'Accomable', as well as launching Airbnb Experiences, which offers tourism-related experiences such as walking tours, art classes, and restaurant reservations. Airbnb encounters turbulence Nevertheless, as Airbnb grew, so did complaints against the company, its hosts, and guests. Perhaps the most frequently levelled accusation against Airbnb is that the company pushes up rental and property prices in the cities in which it operates. A report on the effect of Airbnb on the New York property market suggests that between 7,000 and 13,500 units have been removed from the city's long-term rental market, driving a 1.4% median increase in long-term rental prices over three years, from 2014 to 2017. This is not an isolated incident, but a story familiar to many cities around the world including London, Berlin, Madrid, Tokyo, and San Francisco. Alongside increasing property prices, according to local residents in Amsterdam, the abundance of Airbnb lettings has led to 'over-tourism', precipitating a weakening of community ties, a supplanting of local shops by businesses aimed at Airbnb guests, and the catalysing of gentrification, causing the displacement of local residents. In Barcelona, a study of residents found evidence of tenant expulsions, harassment, and daily disruptions as a result of Airbnb's presence. This perceived overabundance of Airbnb properties in some cities has led to increased regulation of short-term rental lettings, designed to dissuade landlords and property owners from converting long-term lets into short lets. For instance, in Paris, short-term rentals are limited to 120 days a year, while in New York City it is typically illegal for flats to be rented for 30 consecutive days or fewer, unless the host is present. Perhaps the most surprising result of this regulation is the instances of defiance emanating from hosts. In London, where short-term rentals for whole properties are now limited to 90 days a year, Airbnb has enforced these regulatory limits; yet, reports suggest the contrary, with hosts findings loopholes to circumvent such rules. For instance, evidence has been found of commercial landlords registering properties multiple times with the site, to make it look as though one property was in fact three or four. Furthermore, disregard for regulation by hosts does not appear to be unique to London, with widespread reports throughout Europe and the US of hosts ignoring local regulation regarding short-term rentals, as well as, in some cases, engaging in tax evasion and dismissing safety regulations. For example, in the UK in 2018 the All-Party Parliamentary Group on Tourism, Leisure, and the Hospitality Industry warned that many Airbnb lets may be unsafe as fire safety regulation checks by fire authorities, a requirement for hotels and traditional B&Bs, are frequently circumvented. Such regulatory noncompliance by the Airbnb community has led, in some circumstances, to penalties being imposed on the company, such as in 2016 when Airbnb was fined €600,000 by Barcelona city council for continuing to advertise unlicensed properties. Back down to earth with a bump This lack of concern for adhering to regulations and rules is often accompanied by a blatant disregard for moral responsibility, with both hosts and guests becoming involved in anti-social, antagonizing, dangerous, and illegal behaviour. Indeed, guests have reported every conceivable inconvenience and negative experience at the hands of hosts: cockroach, ant, and frog infestations; leaking walls and ceilings; unclean properties; properties bearing little resemblance to adverts; broken facilities; and last-minute cancellations. Equally, hosts have described incidents of guests breaking furniture, holding parties, disturbing neighbours, taking illegal substances, as well as of intimidation and personal threats. For instance, in one case, a host in Oakland, California, after renting his apartment on Airbnb, came home to find that the guests had battered holes in his doors and closet with an axe, stolen his computer and birth certificate, and left significant evidence of drug taking. CRICOS Provider No. 00103D Page 5 of 7 These problems have occurred despite the fact that both guests and hosts are able to leave ratings and feedback about one another following Airbnb rentals. Yet accusations of unsavoury behaviour by both guests and hosts do not end there. Research by Harvard University concluded that individuals with African-Americansounding names were being discriminated against by hosts, who often reject their bookings. Further accusations also emerged regarding discrimination on grounds of age, gender, and a number of other factors. In addition, both guests and hosts have disclosed incidents of becoming victims of burglary, violence, and assault as a result of letting or renting via Airbnb. Such are the volume of negative experiences of guests and hosts, a website devoted entirely to the topic has been spawned: https://www.airbnbhell.com. Meanwhile, the company has not been idle in attempting to combat these problems. For example, Airbnb has taken steps to tighten restrictions to combat fake listings, improve transparency through asking guests and hosts to provide photos of themselves when registering, provide background checking of hosts and guests, and the provision of a secure payment platform. Although such initiatives have helped to alleviate some of the aforementioned issues, many of the problems still endure. Therefore, the question must be asked-could Airbnb be doing more to combat ethical issues in the sharing economy?

QUESTIONS

Question A1 Where do you think moral responsibility lies for the bad experiences of guests and hosts? Explain your response.

Question A2 To what extent does Airbnb support sustainable consumption?

Reference no: EM132909779

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