Canada's Condominium Magazine
The thing about Airbnb is, it’s big and it’s here to stay. The short-term rental company, which the New York Times reported in June was in investment talks with the aim of increasing its market value to $30 billion, is growing at a phenomenal rate. Chinese travelers alone accounted for a 700 per cent increase in its business last year. The Times reported that Airbnb had also secured a $1 billion debt facility with some of America’s biggest banks: JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp, and Morgan Stanley. That money will allow it to expand the business even faster and add alternative lines of revenue. Of the start-ups in the United States, only Uber, which is now valued at $62.5 billion, is worth more than Airbnb. Airbnb is now worth more than most of the leading hotel chains in the world.
How did Airbnb get so big, so fast? Basically, because people like it. Writing in the Harvard Business Review, author and business traveller Karen Dillon explained Airbnb’s success by referring to the theory of “jobs to be done,” a marketing concept that seeks to explain why customers make the choices they do. People, the theory holds, do not simply buy products or services: rather, they “hire” them to do a specific job. The job is not merely a function, like a ride in a cab or a bed in a room, but a constellation of emotional and social components that make up an experience. The experience is what we’re really after, not the function. Staying in a nice flat in a nice part of London and feeling like you live there for a few days is a better experience for many than checking in at a big, impersonal hotel and feeling like a tourist.
Nor is it simply a matter of being cheaper than the competition. That alone won’t guarantee that people will choose your product or service over others. You have to know what “job” the customer is hiring you to do before you can create that perfect solution, that satisfying experience. Before launching, Airbnb apparently identified and storyboarded forty-five different “emotional moments” for its hosts, exploring their psychology and attitudes: why were they interested in hosting, where did they live, how old were they, were they nervous about it? All of this was intended to help hosts understand how to do the job they were being hired for, creating a great experience for the guests.
Airbnb is so big now that celebrities like Kylie Jenner get to stay for free in a Turks and Caicos mansion that usually rents out for $10,000 a night, just because she generates favourable publicity for the operation. Sister Kim Kardashian and husband Kanye West reportedly want a similar deal in New York City, with Airbnb putting them up in a luxury, $30 million apartment for several months, in exchange for some nice tweets and photos of the place from the happy couple.
Celebrities aside, Airbnb is reportedly going after the global business traveller in a big way. It has entered into client information-sharing agreements with several large travel management companies such as American Express, Global Business Travel, and Carlson Wagonlit Travel. With this information, employers of business travelers will be able to monitor their spending and track them down if necessary.
None of this sounds anything like what we see in the local news, of course. The local Airbnb operation just looks like a handy way for somebody with a spare room or an empty apartment to make a little extra money. People who live in Toronto condos complain bitterly that all the short-term Airbnb renters make their lives miserable, knocking on residents’ doors, asking to borrow things, complaining and generally acting as if they were in a hotel. The CBC reported that more and more condo owners want the city to step in and regulate the business, as has happened in New York City. There, owners can’t rent their condos for less than thirty days at a time.
The city councillor for Ward 23, however, says it’s a problem for condo owners and their boards to solve, not the city. John Filion says there are just too many condo units in Toronto to police them all. Most condo corporations already have rules about short-term rentals and such, and if they do not, they can easily introduce them with owners’ consent.
Airbnb is not going away. People, even condo owners, will have to learn to live with it one way or another.