Why Airbnb wants you to know how much its users are spending


Airbnb.com

Few young tech startups have publicly ruminated on their economic impact quite like Airbnb has. The five-year-old peer-to-peer accommodation company has now released studies on its effect on nine cities -- surveying the share of "guests" in Barcelona who've used the service to visit the city for the first time (61 percent), or the amount of money the average visitor to Berlin spends in the neighborhood where he or she stays (the equivalent of $409).

Now the site is pulling all of those studies into a single roundup on the service's economic impact, with numbers that Airbnb will no doubt be touting regularly: Between these nine cities, Airbnb says, the site's users are staying on average nearly twice as long as typical tourists, and spending about $300 more per trip – figures the company has illustrated for mass consumption here.

Why the emphasis on economic ripple effects and neighborhood-level spending? Most Internet-era startups aren't quite as concerned with proving their broader benefit to complementary businesses and the labor force at large (in Paris, Airbnb says, it has supported 1,100 jobs).

Part of the answer is that startups like Airbnb in the "sharing economy" have explicitly staked their brand on the idea that they're fostering consumption and economic activity that are hard to see but that can produce vital income for people who maybe haven't found a full-time job. And so, they have to prove it. In these nine cities, for instance, Airbnb's survey results suggest that 47 percent of hosts have used the income from the service to subsidize their rents and "stay in their homes." That's not a data point that typically appears on an economic impact assessment.

"It couldn’t be your typical economic impact study for tourism, which basically says, 'This industry creates X jobs and generated X million dollars in the city,''" says Molly Turner, Airbnb's director of public policy, explaining how the company has conceived these studies. "While we do that – and that’s important – it’s not about necessarily the relative impact of Aribnb to other tourism sectors in the city. It's really about what is the impact on individual residents in the city, on local businesses in their neighborhood, on the neighborhoods themselves."

The other part of what's going on here is that Airbnb belongs to a particular class of new companies that is reinventing a familiar and heavily regulated industry – in this case, hotels – while extending the reach of an Internet company deep into the very complicated real world. That means that the bigger Airbnb becomes, the more likely hotels are to cry foul, cities are to crack down, and new regulations are to crop up. Similar conflict is growing between Internet-based transportation companies like Uber and Lyft on one side and traditional taxis on the other.

Airbnb must justify how it benefits communities more broadly in answering some critical questions: Are its hosts cutting into hotel revenues without paying hospitality taxes? Is Airbnb creating new tourism demand or simply shifting business from hotels that already exist?

"The real point is not ‘What is our impact on hotels?’" Turner says. "The point is how is this distributing spending across the city differently than the traditional tourism industry does? It’s going to local households directly; it’s being spent in more neighborhoods at those local businesses. If the same amount of money was spent in the traditional tourism industry, that would impact the city very differently than how it’s being spent on Airbnb."

But the service's impact on hyper-local neighborhoods has prompted another criticism of the company's model – that it's driving up rents in neighborhoods where landlords have realized they can make money buying up properties for the sole purpose of renting them out on Airbnb. So far there's no proof that  lots of people are actually using the service in this way. Still, Airbnb commissioned Ken Rosen, a consultant and chairman of the Fisher Center for Real Estate and Urban Economics Research at UC Berkeley, to look into the question in San Francisco.

Rosen concluded that there's little evidence of this happening in San Francisco. The number of properties involved in short-term rentals in the city is just too small to have much impact on the larger housing market. And rents are so high there that it wouldn't make economic sense for a landlord to repeatedly rent a property to short-term tourists instead of long-term tenants. "If rents were $1,000 a month, and you could get $2,000 by renting it out through Airbnb," Rosen says, "that would be a different story."

Still, this concern is part of the reason why Airbnb is working to tell its own economic story. According to this latest data, 82 percent of people share only the home in which they live, implying that they clearly can't be speculators (76 percent of properties for rent are also "outside of the main hotel district," implying that they're not direct competition). If anything, Airbnb believes that it's making cities more affordable by putting $1,500 apartments within the reach of someone who only has $1,200 to spend but a spare couch to rent out.

All of these questions surrounding the company's impact are fascinating precisely because it's not clear yet how the benefits (as Airbnb identifies them) and the costs (as others do) net out. And the answer has a lot to do with how cities should regulate this type of service -- fostering or constraining it.

We need impartial arbiters to figure this out. But Airbnb is savvy enough to get its own numbers out there now.

Emily Badger is a reporter for Wonkblog covering urban policy. She was previously a staff writer at The Atlantic Cities.
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