The problem isn’t that supply and demand doesn’t set prices properly (there may be market issues in this market, but that's not the complaint), the problem is that AirBnB doesn’t benefit from prices being set properly.
Indeed, Airbnb wants to maximize for booking volume and platform fees over hosts maximizing for revenue. Airbnb rode the covid travel/remote wave (even Chesky was astonished at their valuation at IPO [1], ~$100B), and with the global economy slowing and travelers starting to prefer hotels, they’re going to struggle to hold onto the revenue levels they might’ve (perhaps a bit unrealistically) become accustomed to.
Is it a $100B business at 5% interest rates and slower travel going forward? ¯\_(ツ)_/¯
AirBnB is too much hassle and risk. Sometimes it's seamless, sometimes it feels like you're being hosted by a landlord who's expecting to make their problems your problems and charge you for the privilege.
They do, supply and demand play a crucial role in influencing price transparency.
Now demand exceeds supply, hosts have less incentive to provide transparent pricing since their listings are more likely to be quickly booked due to the scarcity of available properties.
But, it's only when there's an oversupply of listings that competition among hosts intensifies, prompting them to adopt transparent pricing as a competitive advantage to attract potential guests.
That sounds like things are working as they should.
Prices for scarce resources should naturally go up, and down if there is lots of competition. If someone is charging too much, they won't sell as much as someone who sets a reasonable price. If hotels are cheaper, then hotels will outperform Airbnb.
I still don't see why you need to ask anyone to lower their prices. The market will force them to lower their prices... or it won't if the price is set properly.
Unless I'm missing something that prevents the market from doing what markets do. Which was why I asked the question.
Brian Chesky is not saying to lower their prices. He is asking for property suppliers to check the local prices. Business Insider is pretty much the daily-mail of faux business publications.
For markets to operate efficiently and quickly adjust prices based on supply and demand, you need transparent pricing. He is suggesting people actually compare local prices when setting their own.
What is not working, is people are not comparing all prices or they are not available. When they do, they won't rent at Air BnB. This will be his loss, when hotels claw back patronage from bullshitting Air BnBs.
> What is not working, is people are not comparing all prices or they are not available.
You're not hearing the argument. It's not my argument. It's the way markets are meant to operate. You don't need to ask anyone to check local prices. If people have something they want to sell, they will sell it at the proper price. If they set the wrong price, it will not sell.
So, in this case, they will get instant feedback that they've done something wrong, because their rental units, will not be rented. They will make no money from them. They will be compelled to lower their prices if they want to rent them. You don't need to ask them to do anything, they will discover for themselves, the market will force them to realize their mistake.
What i'm asking is why is the market insufficient in this case? Why is it not working?
But your argument is making me think it works fine, it's just not producing the results that some people would rather see.
In an inefficient market people get ripped off. Although I am sure that, some people would think, if someone rented some coastal shack with the same view as a five star hotel with all meals included, for three times the price, would be a great outcome for the shack owner, things like this will usually have the government step in.
As they have down here in Australia, by forcing some central price discovery for things like fuel and electricity.
AirBnB used to be a cheap stay. Now it's often not. Many hosts charge the equivalent of an extra night as a "service fee," pushing up the total price for the stay and making it harder to compare places on price.
We're booking a trip at the moment and finding in many locations we're better off booking a hotel - they're often cheaper, closer to public transport, we can leave bags at reception etc.
It still can be a great option in some places. I'm traveling in India, where unlike other parts of Asia, the budget hotels are not great.
Being able to book an Airbnb where people have reviewed the cleanliness and see pictures of the actual room is invaluable. For $30 a night (after fees) I have many nice apartments and small houses with kitchens and living areas to choose from. Higher end hotels with similar standards are either not available or closer to $100.
My mom runs her house as an Airbnb now. She puts a ton of work into the turnovers. So it's a similar amount of work whether guests stay for 2 nights or 7 nights. So yeah, it can be expensive and maybe it pushes people to do longer stays, but that actually makes sense for whole rentals.
But when you're searching for something, you just don't want the price to double once you get to the checkout page.
I wish they also had more options for just a place to crash for a night, like in a spare bedroom.
Hotels are certainly nicer for many cases. But Airbnb is worth it in some cases still.
> I wish they also had more options for just a place to crash for a night, like in a spare bedroom.
couchsurfing was a great option once upon a time. the customary 'fee' of paying the host for their takeout or dinner and drinks for the night was really worth it.
i guess this informal custom has gone the way of hitch-hiking?
You could learn Esperanto. They have a service where you can couch surf basically anywhere if you can speak with your host in Esperanto. Some countries like Japan have a lot of coverage.
Airbnb was cheap when it they were renting excess space. Empty nesters. People whose roommate moved out. People on extended vacations. People who lost their job and needed some extra cash and could live without an extra bedroom.
These people were not trying to pay a mortgage and professional housekeepers and turn a profit. They were just trying to recover some sunk costs.
If you look at hotels vs. apartments or houses, the maintanence and cleaning costs of residential housing are very high because you don’t have the economies of scale you need. The hotel cleaners push their cart down the hall 20 feet while the airbnb cleaners drive all over town, and that’s just one of the many ways hotels are more efficient.
Airbnb hosts should charge less. It's not a coincidence that every single standalone unit has a combination of water damage and teflon pans in the kitchen that are scratched to hell.
Hosts always act surprised when you tell them about the issues, but there's no recompense for a person who finds themselves in yet another mildewy house.
As a former Scottish person I'm familiar with mildew. But never come across it in countless Airbnb and Vrbo rentals. I do carefully read reviews, and I don't rent places with no or very few reviews. Never rent a place that has no picture of the toilet.
I am not sure if I would ever touch it again, I work all year and want a vacation to be a vacation, I got some hosts on a power trip who didn’t understand what hotels have mastered along the years, to get out of guests way
We booked a handful of airbnbs before covid, but since covid it's simply too expensive for what you get. We choose extended stay hotels instead (mini kitchen, pool, and always a receptionist during normal hours), though they are more difficult to find.
AirBNB went way down hill... last two experiences were awful, and I had many great ones before when they had a little more free money it seems. Hotels are a better value now.
My property near JTNP is surrounded by AirBnB VHRs. The place immediately next door regularly has guests, and from what I've seen they're often quite messy and outright abusive to the property. It doesn't surprise me one iota that prices are high / loaded with stiff cleaning costs. People suck, and people on vacation using other people's stuff suck even more.
What if Airbnb used their immense capital to build their own buildings to rent out? They could use economies of scale to keep the prices reasonable while also making sure that each room was up to a certain level of quality. They could call them "Hotels", hostels without the shite.
I mean doesn’t that defeat the whole purpose of Airbnb? They wanted to be hotels but without the real estate liabilities on their books. It’s profitable to be the middle man.
Airbnb is completely unusable for me now: I can't use my credit card because Airbnb wants to use Plaid for "verification" that requires my bank username and password (never going to happen), and the only other offered alternative, PayPal, just gets denied outright.
Does Airbnb truly get enough fraud that it's worth doing things this ridiculous?
I feel the same way. The first time years ago Mint asked for my login and promised to keep it safe, although providing no accountability if they were breached, I noped out and thought their product was doomed.
Now tons of places use it.
The privacy policy I read for plaid is interesting in that it would allow for things like monitoring my balances and velocity of cash flow and then selling that data, at least to plaid partners, which is pretty much everyone.
I cynically think the push to “authenticate” with these financial deep inspection tools is to be able to identify more lucrative customers.
I do have a zero dollar checking account that I give out and just push cash into to pay bills that I can use. The biggest risk of losing those account credentials is to mess up bill pay or to have them apply for credit or something.
I went to sign up for Netflix a couple times and had this problem. They wouldn't take my money. I live in NYC. Go figure. But they did me a favor as I would have wasted time and money.
I went back to hotels years ago; airbnbs here are so expensive and that’s without the 24/7 service, actual breakfast (b&b…), security, daily cleaning etc. They usually have more space, but we usually look for somewhere comfortable to sleep, not a space to hang.
I booked an AirBnB once in a location where hotels were scarce (tending towards resort style) and expensive. It was convenient and nice--and was a situation where a screened porch to hang out was nice.
But, in general, I'll take the predictability of hotels. And, as someone else mentioned, if you don't have a car, hotel features like being able to leave your bag at reception can be really useful. Yes, you can sometimes find luggage storage (rare in most places) or take advantage of some hotel's luggage storage but again you're getting into friction.
I originally started using and recommending AirBNB for visiting cities where hotel prices were ridiculous. Friends and family coming to visit me in my city (Austin) frequently found it was cheaper to rent a whole house in a desirable neighborhood than to book a dark, drab room in a mid-range hotel chain. Now that hotel prices are more in line with other cities, thanks to a boom in new hotels, AirBNB seems like it fills more of a luxury/party niche. I no longer recommend it to people who are just looking for an affordable place to stay.
Airbnb was fun when they were new and small. It took a few smart people to make money from this and essentially sell their method to others through places like Bigger Pockets.
Now that every blue collar worker is following this method, there are too many renters on Airbnb and they’ve essentially priced themselves out of business.
I know a few people who rented from an owner and sub-leased to long term renters (traveling nurses, tech consultants) and they’re hurting lately because there’s too much competition. They don’t want to lower prices because they are already on the hook for rent to the owner and they don’t want to lower their profit. So it’s this “who blinks first” situation or renters breaking leases because their Airbnb model doesn’t work anymore.
I followed this process for almost a year but had to break lease for unrelated reasons.
What alternatives to Airbnb are there if you want a kitchen? That is the principal reason I rent Airbnbs instead of hotels, as the prices are more than made up for by cooking in the local area.
Most hotels that are mid-tier or better have some rooms or suites with kitchenettes if not full kitchens. Also any of the "extended stay" oriented hotels, many hotels in tourist areas where people are likely to stay for a week or more, will usually have kitchens in at least some of the rooms.
One thing I love when going on holiday is paying the equivalent of a hotel for the privilege of doing my own dishes and cleaning the place afterwards.
And having to sneak out the guiltily because you know everyone else in the apartment block hates the owner for turning their apartment into an Airbnb without their consent.
I used to be a big fan of Airbnb, but have gone back to hotels. Cost is one thing, but honestly, the entire Airbnb experience is shit now:
- Used to be very personal/unique. You’d stay in someone’s house while they were camping/whatever for the weekend, they’d meet you to handover keys, give you tips about the area, etc. Now it’s just some landlord with 17 properties that you never see
- You almost always have to go to some random storefront far from the apartment to pick up the keys
- When things go wrong, there’s no front desk to help you out. For example, I stayed at an Airbnb with very sketchy wiring, power went out in a snow storm and the place became freezing cold, took a full day before the host would do anything
- Hosts often try sketchy things, like making you pay off platform damage deposits
- Not only are there no cleaners, if you don’t clean to their satisfaction, they charge you extra
- Hotels offer so many things that Airbnbs generally don’t: late checkout, watch your bags, gym, pool, etc.
- And yeah, it’s very, very often more expensive than a hotel
I also don’t like that it’s contributing to making longterm rental markets worse worldwide, by eating up already scarce rental properties. I’m very, very bearish on Airbnb longterm.
The place I most like Airbnb is when traveling in a group. There’s a different dynamic to having my family or friends together in the ‘unscheduled’ times when traveling.
Most hotels I've stayed in have more floors and smaller living spaces than most apartments, and so utilize the land they take up more. I think it's only fair that the average cost of staying there should be lower. See: https://gameofrent.com/content/is-land-a-big-deal
Well that was extremely suspicious. New thread, on the first page of HN, getting tonnes of comments very quickly. Almost all of them very negative about Airbnb, a HN company, and then the thread magically disappears from the front page? Went through the first 5 pages and still can’t find it.
First time I’ve seen this, I’m sure there will be some excuse, but I find it hard to believe that’s a coincidence.
It set off the flamewar detector. That's not "extremely suspicious", that's one of the most common things that happens on HN and has been for 15 years.
The problem with this sort of observation is that certain data points leap out at you (I don't mean you personally, but all of us) because of your priors. (For example, you're much more likely to notice something that you disagree with or dislike.) They then appear to have a lot more significance than they would if you had noticed all the equivalent data points equally. Past explanations in case helpful: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que....
As for Airbnb, the HN threads have been predominantly negative for many years, as anyone can verify with a minute or two on HN Search.
70 comments
[ 2.7 ms ] story [ 225 ms ] threadIs it a $100B business at 5% interest rates and slower travel going forward? ¯\_(ツ)_/¯
[1] https://archive.ph/2020.12.13-031305/https://www.nytimes.com...
Now demand exceeds supply, hosts have less incentive to provide transparent pricing since their listings are more likely to be quickly booked due to the scarcity of available properties.
But, it's only when there's an oversupply of listings that competition among hosts intensifies, prompting them to adopt transparent pricing as a competitive advantage to attract potential guests.
Prices for scarce resources should naturally go up, and down if there is lots of competition. If someone is charging too much, they won't sell as much as someone who sets a reasonable price. If hotels are cheaper, then hotels will outperform Airbnb.
I still don't see why you need to ask anyone to lower their prices. The market will force them to lower their prices... or it won't if the price is set properly.
Unless I'm missing something that prevents the market from doing what markets do. Which was why I asked the question.
For markets to operate efficiently and quickly adjust prices based on supply and demand, you need transparent pricing. He is suggesting people actually compare local prices when setting their own.
What is not working, is people are not comparing all prices or they are not available. When they do, they won't rent at Air BnB. This will be his loss, when hotels claw back patronage from bullshitting Air BnBs.
You're not hearing the argument. It's not my argument. It's the way markets are meant to operate. You don't need to ask anyone to check local prices. If people have something they want to sell, they will sell it at the proper price. If they set the wrong price, it will not sell.
So, in this case, they will get instant feedback that they've done something wrong, because their rental units, will not be rented. They will make no money from them. They will be compelled to lower their prices if they want to rent them. You don't need to ask them to do anything, they will discover for themselves, the market will force them to realize their mistake.
What i'm asking is why is the market insufficient in this case? Why is it not working?
But your argument is making me think it works fine, it's just not producing the results that some people would rather see.
As they have down here in Australia, by forcing some central price discovery for things like fuel and electricity.
Why do you oppose big business making more money off of you? ;)
We're booking a trip at the moment and finding in many locations we're better off booking a hotel - they're often cheaper, closer to public transport, we can leave bags at reception etc.
Being able to book an Airbnb where people have reviewed the cleanliness and see pictures of the actual room is invaluable. For $30 a night (after fees) I have many nice apartments and small houses with kitchens and living areas to choose from. Higher end hotels with similar standards are either not available or closer to $100.
My mom runs her house as an Airbnb now. She puts a ton of work into the turnovers. So it's a similar amount of work whether guests stay for 2 nights or 7 nights. So yeah, it can be expensive and maybe it pushes people to do longer stays, but that actually makes sense for whole rentals.
But when you're searching for something, you just don't want the price to double once you get to the checkout page.
I wish they also had more options for just a place to crash for a night, like in a spare bedroom.
Hotels are certainly nicer for many cases. But Airbnb is worth it in some cases still.
couchsurfing was a great option once upon a time. the customary 'fee' of paying the host for their takeout or dinner and drinks for the night was really worth it.
i guess this informal custom has gone the way of hitch-hiking?
These people were not trying to pay a mortgage and professional housekeepers and turn a profit. They were just trying to recover some sunk costs.
If you look at hotels vs. apartments or houses, the maintanence and cleaning costs of residential housing are very high because you don’t have the economies of scale you need. The hotel cleaners push their cart down the hall 20 feet while the airbnb cleaners drive all over town, and that’s just one of the many ways hotels are more efficient.
Hosts always act surprised when you tell them about the issues, but there's no recompense for a person who finds themselves in yet another mildewy house.
Does Airbnb truly get enough fraud that it's worth doing things this ridiculous?
Now tons of places use it.
The privacy policy I read for plaid is interesting in that it would allow for things like monitoring my balances and velocity of cash flow and then selling that data, at least to plaid partners, which is pretty much everyone.
I cynically think the push to “authenticate” with these financial deep inspection tools is to be able to identify more lucrative customers.
I do have a zero dollar checking account that I give out and just push cash into to pay bills that I can use. The biggest risk of losing those account credentials is to mess up bill pay or to have them apply for credit or something.
But, in general, I'll take the predictability of hotels. And, as someone else mentioned, if you don't have a car, hotel features like being able to leave your bag at reception can be really useful. Yes, you can sometimes find luggage storage (rare in most places) or take advantage of some hotel's luggage storage but again you're getting into friction.
Now that every blue collar worker is following this method, there are too many renters on Airbnb and they’ve essentially priced themselves out of business.
I know a few people who rented from an owner and sub-leased to long term renters (traveling nurses, tech consultants) and they’re hurting lately because there’s too much competition. They don’t want to lower prices because they are already on the hook for rent to the owner and they don’t want to lower their profit. So it’s this “who blinks first” situation or renters breaking leases because their Airbnb model doesn’t work anymore.
I followed this process for almost a year but had to break lease for unrelated reasons.
And having to sneak out the guiltily because you know everyone else in the apartment block hates the owner for turning their apartment into an Airbnb without their consent.
What's not to like?
- Used to be very personal/unique. You’d stay in someone’s house while they were camping/whatever for the weekend, they’d meet you to handover keys, give you tips about the area, etc. Now it’s just some landlord with 17 properties that you never see
- You almost always have to go to some random storefront far from the apartment to pick up the keys
- When things go wrong, there’s no front desk to help you out. For example, I stayed at an Airbnb with very sketchy wiring, power went out in a snow storm and the place became freezing cold, took a full day before the host would do anything
- Hosts often try sketchy things, like making you pay off platform damage deposits
- Not only are there no cleaners, if you don’t clean to their satisfaction, they charge you extra
- Hotels offer so many things that Airbnbs generally don’t: late checkout, watch your bags, gym, pool, etc.
- And yeah, it’s very, very often more expensive than a hotel
I also don’t like that it’s contributing to making longterm rental markets worse worldwide, by eating up already scarce rental properties. I’m very, very bearish on Airbnb longterm.
First time I’ve seen this, I’m sure there will be some excuse, but I find it hard to believe that’s a coincidence.
The problem with this sort of observation is that certain data points leap out at you (I don't mean you personally, but all of us) because of your priors. (For example, you're much more likely to notice something that you disagree with or dislike.) They then appear to have a lot more significance than they would if you had noticed all the equivalent data points equally. Past explanations in case helpful: https://hn.algolia.com/?dateRange=all&page=0&prefix=true&que....
As for Airbnb, the HN threads have been predominantly negative for many years, as anyone can verify with a minute or two on HN Search.
Like offer a platnium tier where to sign up you can't make guests clean up the house themselves or sign any ridiculous additional contracts?