EP128: This Week in the World of Airbnb

EP128: This Week in the World of Airbnb


Regulations and enforcement dominate the conversation today, as two big news stories out of NYC and London are making headlines.

Jasper is joined by Nicole Williams, VP of Strategy and Marketing for Hostfully, to chat about the property managers fined in NYC this week as well as the feasibility of enforcing the rules established in London.

Jasper and Nicole also cover the exponential growth of Airsorted, a management startup in the news and Jasper’s investment in Cali, Colombia.

Some of the topics covered

Article #1: Airsorted, a Fast-Growing Airbnb Management Startup, Raises £1.5M

  • Manages 1,000 properties in the UK, a four-fold increase in the past six months
  • Expanding to Sydney
  • CEO with banking background is focused on hosts’ profitability

Article #2: New York City Issues First Illegal Airbnb Fines

  • Two property managers fined for 17 violations
  • Each violation carries a $1,000 fine
  • Law against short-term apartment rentals went into effect in October
  • Listings were pulled from Airbnb to avoid even larger fines

Article #3: Airbnb Introduces 90-Day Annual Limit for London Hosts

  • Airbnb will ban hosts in London from renting homes for more than 90 days/year without official consent
  • Local councils in charge of enforcement
  • Hosts may list on other platforms to get around the rules

Article #4: Airbnb: $30 Billion Startup: This is What Wikipedia Can’t Tell You

  • Explains the genesis of Airbnb
  • Includes a breakdown of investment funding and an overview of acquisitions
  • Surprising statistics
  • 10% of Airbnb hosts are seniors
  • 54% of Airbnb guests are female
  • Airbnb has served 80,000,000+ guests in 34,000+ cities in 191+ countries
  • List of key competitors may be useful for hosts looking to diversify

Jasper’s Personal News

  • Investment in penthouse in Cali, Colombia
  • Latest blogpost outlines his decision-making process

Resources Mentioned

Article #1: techcrunch.com/2017/02/07/airsorted

Article #2: theverge.com/2017/2/7/14532388/nyc-airbnb-first-illegal-renting-fines-issued

Article #3: theguardian.com/technology/2016/dec/01/airbnb-introduces-90-day-a-year-limit-for-london-hosts

Article #4: valuewalk.com/2017/02/airbnb-30-billion-startup-wikipedia-cant-tell-infographic

Jasper’s Blogpost:getpaidforyourpad.com/blog/bought-penthouse-cali-colombia-rent-airbnb

Connect with Jasper

Email: [email protected]

Twitter: @GetPaidForUrPad

Instagram: @GetPaidForYourPad 

Facebook: www.facebook.com/getpaidforyourpad

This episode is sponsored by Aviva IQ. Aviva IQ automates messages to your Airbnb guests. It’s also free!

 To subscribe to the podcast, please use the links below

Click Here to Subscribe via iTunes

Click here to Subscribe via Stitcher (Android users)

If you like the show, please consider leaving the show a review in iTunes or Stitcher. A couple minutes of your time can help the show immensely! Thanks!

Complete Transcript for Get Paid for Your Pad Episode 128

Jasper:

Welcome to Get Paid For Your Pad, the definitive show on Airbnb hosting, featuring the best advice on how to maximize profits from your Airbnb listing, as well as real-life experiences from Airbnb hosts all over the world. Welcome.

I began using a really cool service from Aviva IQ, and it’s made my life so much easier. My guests love receiving all the important details about their stay exactly when they need it, and I love all the five-star reviews I’m getting on communication. Check them out at www.avivaiq.com.

Welcome to another news episode of Get Paid For Your Pad. As every Thursday, I’m discussing the news, and this week, I’m discussing it with Nicole Williams who is the VP of Strategy and Marketing for Hostfully. Nicole, how’s it going?

Nicole:

Great. Great, Jasper. Thanks for having me back. I’m excited to be here again.

Jasper:

Yeah, for sure. And the regular listeners probably recognize Nicole because she was on the show, I think, three or four weeks ago.

Nicole:

Yeah, yeah. We were talking about Chip Conley. Yes.

Jasper:

That’s right. That’s right. And today, we have another interesting episode with some cool news stories from the last week, and we’re going to get right into it. And we’re going to start with a company that’s in the Airbnb ecosystem. The Airbnb ecosystem is growing very, very fast, and this particular company’s called Airsorted, and it’s an Airbnb management start-up, and they’ve just raised $1.5 million, which is quite substantial. I think Pillow Homes is probably the only one who’s raised more. They raised about $2.65 million back in 2015.

But, there’s a very large number of Airbnb management start-ups all over the world. They’re really popping up everywhere, it seems. So, it’s quite interesting that this one has managed to raise such a significant amount of money.

Nicole:

Yeah, I’m excited to read stories like this and see the growth of the Airbnb home-sharing ecosystem because, as much as you see that there’s governments and city organizations trying to fight the process, then you see rounds of funding like this, big rounds. And I think this company actually opened when Pillow, the year that Pillow got that big funding, so they haven’t been around too long, since 2015, but they’re big in Europe. It says they have 1,000 properties just in the UK, and this round of funding is going to help them start in other markets. So, that’s exciting to see.

Jasper:

Right. I think they’re planning to expand into Sydney, Australia, and they manage over 1,000 homes, which is a fourfold increase in the past six months.

Nicole:

Yeah, that’s incredible growth. I was looking to see the background of the CEO. His name’s James Jenkins-Yates, and this is his first start-up, but he has a banking background, and apparently, it’s for him, is the income generated from the properties is where they get their money, a percentage of that, and the interests are aligned with the hosts. So, he’s all about the bottom line and focused on hosts’ profitability, which, that kind of supports his background, and not surprising that they got the funding with that kind of background.

Jasper:

Right, and I think it’s really smart for these types of companies to really focus on helping the hosts make more money because that kind of ensures that they will be on Airbnb for longer and they will make more money, so their percentage also goes up.

Nicole:

Yeah, absolutely. Apparently, they also have some proprietary software that the company, that the investment firm that led this round of funding was very interested in, that kind of combines the pricing, marketing, and management, and makes an optimal blend for the rental yielding customer service, which was interesting. I’m trying to see what sets this company apart. There’s so many property management companies out there, and how this one’s standing out from all the others.

Jasper:

Right. And a few weeks ago, I interviewed the largest management company in Amsterdam. It’s called iamb&b. I interviewed the founder, and there’s two things that are interesting.

First of all, I was surprised that they have their own software to manage everything, because the first thing that I told him, I was like, you know, “You must be using a lot of apps, you know, things like Beyond Pricing and Smartbnb, to send automatic messages and calculate prices,” but he actually developed all that stuff in-house, which I was kind of surprised by.

Nicole:

Yeah, yeah. They’re taking up on their own, not relying on others, taking it in-house.

Jasper:

Exactly. But, the other interesting thing is that he was actually fined by the city of Amsterdam. Or, not him, but the company, and they’re fighting the fine right now, because they were managing a house with, I believe, 12 apartments or so, 11 or 12, and the owner of that building was fined. I believe it was €13,000 per listing, times 11, so it was quite a substantial amount of money. And because his company, iamb&b, was managing the listings, they also fined the management company.

Nicole:

Oh, double fines, wow.

Jasper:

Yeah. You know, this is interesting because if cities are going to not only go after the hosts but they’re also going to fine the companies that, you know, enable the hosts to list, that manage the listings, then that’s a pretty big risk and sort of liability that these companies have to take into account.

Nicole:

Right, yeah, it is. And it seems like if they’re going to follow anything like New Yorkers do, which I know is in store, we’re going to be talking about, that that’s what they’re going to do because that’s what New York is doing. It’s finding those property managers, and it’s a big liability. I don’t know how… We’ll have to see how they get around it and what kind of concessions that they can, you know, negotiation and agreement they can come to.

Jasper:

Yeah, so I’ll definitely be updating people once the court has decided, because they’re actually fighting the fine because, you know, iamb&b has always said that they only facilitate hosts who are applying to the rules, who are following the rules. So, you know, it’s interesting he actually looked into the building and he figured that it would be allowed to do Airbnb there. So, yeah, to be continued.

Nicole:

Yeah, that’ll be interesting, to hear how that plays out because everybody is watching what everyone else is doing to decide, since this is such an unprecedented space.

Jasper:

Exactly. And that kind of leads us into the next topic, which is the fines that New York City has given to, I think it is, they’re talking about 17 violations for two hosts, and each violation came with a $1,000 fine. So, there was a total of 17 violations, so I imagine that these two hosts had a combined number of 17 listings.

Nicole:

Right. I think one had 5, and the other had 12, and they gave them the minimum fine, which was $1,000 each, and they both took off the listings from Airbnb. They took all 17 properties off, and motivated, probably, by the fact that if they get caught again, it’s a $5,000 per violation, and then up to $7,500 per violation, is what the state can fine them.

Jasper:

Right. And this law went into effect in October, in New York, but this is the first time that they enforced it, I believe.

Nicole:

And Airbnb, you know, that was their condition for dropping their lawsuit, is fine the host, don’t fine us, which, it’s not really hosts, these are property managers that the state seems to be going after. I mean, I’d be surprised if they’re going to devote resources to going after individual hosts. It’s really the managers who have multiple properties, and they see them as a threat to affordable housing, or what people consider affordable housing in Manhattan and Brooklyn, Queens, all the boroughs. That really seems to be where they’re focused.

Jasper:

Yeah, that makes a lot of sense. I mean, they obviously have limited resources, and you could think about, like, how much does it cost them to find one host, right. If they fine somebody $1,000, then it probably doesn’t make sense for them to spend over $1,000 in expenses in order to find these people. So, it definitely makes a lot of sense that they go for the bigger fish first.

Nicole:

Right, right, and just to make an example of them and, hopefully, that will deter others. I mean, hopefully for them, that will deter others from following suit and picking up property management as their new career.

Jasper:

Yeah. Also, you know, around the world, it seems like some of these cities are actually stepping up their game a little bit and starting to enforce a lot of the rules that are in place. You know, over the last few years, there’s a lot of places where the rules have been popping up, but there has been very little enforcement. I remember, a while ago, last year in July, a buddy of mine, the founder of AirDNA, he was actually fined $3,500 in Santa Monica, and I believe he was the first one to be fined in that particular city.

Nicole:

Yeah, this is definitely a case study that, you know, where this has been a hot topic in Amsterdam, your city, and also in Miami and New Orleans, where this has been very contentious, that they’re going to be watching and we might see more of this happening.

Jasper:

Absolutely. And that leads us into the next topic, which is the regulations that have been in place in London. So, there, hosts are allowed to rent out for 90 days, and as opposed to some of the other cities, the way that London does it, they’ve actually given the councils, the local councils, the responsibility to go after the hosts and take care of the enforcement.

Nicole:

Yeah. I mean, I think I can see why this could be a big fail, is that if Airbnb says that they’re going to help with this enforcement, they’re really the only ones on board, the only platform that’s really saying that. They have competition out there, but what’s going to motivate the rest of them to do that, and even Airbnb at that point? And, you know, these hosts can just go and list on another platform after the 90 days. So, I can see why this could be a big bust.

Jasper:

Yeah, absolutely. And, you know, I think, like right now, that Airbnb isn’t actually enforcing it yet. They’re going to start doing that in the spring or in the summer. So, right now, there’s a counter on the listings that shows how many days you’ve rented out and how many days you’re allowed to rent out, but it doesn’t yet actually stop you from renting out. So, at this point, the only way for the councils to stop the hosts is to actually track them down and stop them, but the thing is, there’s a lot of councils in the city of London. I can’t tell how many there are, maybe they mention it somewhere in the article, but I know they’re pretty small.

Oh, there’s 28 of them. So, there’s 28 councils that responded to the BBC, who did this research, so you can imagine, these councils are much smaller than the city and they have fewer resources, right. And so, the question is, what are they going to use their resources for? I mean, I’m sure they have plenty of other stuff to spend their money on than trying to track down a bunch of Airbnb hosts. So, I’m sure they kind of rely on Airbnb to put this enforcement in place, but then, like you mentioned, there’s all these other platforms that are not following suit. At least, as of yet, they’re not following suit. So, people can still do 90 days on Airbnb, do 90 days on TripAdvisor, on booking.com, on Wimdu, or any other short-stay rental platform.

Nicole:

Yeah, I think this is a matter of, when push comes to shove, it’s going to be where there’s some housing alliance or some organization that has some money to start making a big stink and maybe protesting or whatever, or there’s one case that they can make an example of in one of the councils. So, I think it’s something that they might just… They’ve done this counter, they’ve done the 90-day rule, but I don’t see any enforcement until there’s a case to be had.

Jasper:

Yeah. There might be some hosts who will stop on platforms. I mean, I’m an example, you know. I just don’t want to be bothered with all these different platforms, and also, I’m kind of tired of doing something that’s officially not allowed. You know, I’d kind of prefer to do something that’s legal so I can sleep well at night, I don’t have to worry about anything. But, there’s definitely ways around it.

But, in any case, I’ve already interviewed a property manager in New York and one in London, and I’ve talked to them about the regulations, and about what the enforcement is like, and how this all works in practice, so in the next couple weeks these interviews are going to be published on Mondays. So, for those who are interested, be sure to keep an eye out for those.

Nicole:

Yeah, I will. I’m interested to hear what they say.

Jasper:

Yeah, actually, they both had some pretty good insights, so these were good…

Nicole:

I don’t want you to spoil it here.

Jasper:

Exactly.

Nicole:

It was a good tease.

Jasper:

Right.

Hosts, does it feel like you’re spending way too much time responding to questions from your Airbnb guests? Is the fear of a possible bad review keeping you up at night? I recently learned about a really helpful service called Aviva IQ. With Aviva IQ, my workload and worries have reduced dramatically. All I had to do was link my Airbnb listings to Aviva IQ, create my messages, and schedule delivery times. That’s it! I can’t believe how easy it was to set up. Now I can sit back and relax, knowing that my guests receive all the important details on time every time. Everybody sleeps better. Check them out at www.avivaiq.com.

All right, let’s move on to another interesting news article that came out, and this one is on valuewalk.com, and it’s an article with lots of interesting information that’s put together in a really nice way in an infographic. And the headline of the article is “This Is What Wikipedia Can’t Tell You about Airbnb, the $30 Billion Start-up”, and this article has a lot of interesting information. What do you think?

Nicole:

Yeah, fascinating, just the demographics that they break down. I mean, there’s a lot of discussion on how many seniors are doing Airbnb now, as far as hosts, to bring in more income in neighborhoods where the cost of living is rising, so I thought that was interesting. It’s actually, they’re saying, only 10%. I guess you could say 10% is a big number, too.

But also, the 30 days, staying 30 days, about 20% of people staying with Airbnb are staying more than 30 days, which, that actually seemed big to me. I always think of it as 99% of it is short-term. I was surprised by that number.

But, this is fascinating information, just companies that they’ve acquired, as well.

Jasper:

Yeah, absolutely. That number surprised me, too. You know, I thought the long-term stays were really a much smaller part.

Nicole:

Yeah. I mean, it’s good, it supports them in their discussions with some of these city councils and governments, where they can say, 20% actually are staying more than 30 days. That’s good for Airbnb in those situations.

Jasper:

Absolutely. Now, they also, other than the story of how Airbnb was founded, and they’ve done a really good job, making it very visually attractive, how the guys had their first guests, and then how Nathan Blecharczyk joined, how they renamed the site and they raised some money by selling Obama O’s and Cap’n McCain’s, the cereals, when it was the presidential election in 2008, and how they sort of expanded. And now, they’ve had over 80 million guests, they’re in 34,000 cities, 191 countries, and over 2.5 million listings worldwide.

Nicole:

Right, the stats at the top are great. It’s very impressive. But just, yeah, you’re right, the visual, everything, it’s just a good resource for anyone who is a host, I think, especially a host on Airbnb, just to know more about the company and the inside workings. Yeah, it’s just good. I don’t know how long it took them to put all this together, but maybe they’ve had a database going for a while and finally decided to make it look pretty.

Jasper:

Yeah, they definitely spent a lot of work on this article, which I can appreciate. As a content creator, myself, I know that a good article, some good content, takes a long time to create, and definitely, the visuals just add so much more extra time to it.

They also give a really cool overview of all the acquisitions that have been made. Some of these companies, I’ve never heard of, but they’ve acquired quite a lot of companies.

Nicole:

Yeah, yeah. I wonder what their role is in some of these, like how active they are, because you’re right, I haven’t heard of a lot of them. Trip4real, obviously, I know that one, but some of these unknowns, I wonder if they’re going to grow them or not.

Jasper:

Right. And they also show the investment funding. They’ve raised almost $4 billion and, you know, what’s interesting, their original seed investment was only $20,000 in January 2009. So, can you imagine, you know, putting $5,000 in Airbnb in 2009?

Nicole:

Yeah, and what it’s worth today.

Jasper:

That’s like, you’d probably get… I don’t know what percentage of the company they sold for that $20,000, but I imagine it could be something around 10% or so.

Nicole:

Yeah, yeah. It’s incredible.

Jasper:

For like $5,000, you have 2.5%, which would be worth… If it’s worth $30 billion now, then the 2.5% could be worth… I have to do some calculations. So, it’s $300 million times 2.5, so $750 million. Wow, that’s a pretty good…

Nicole:

Yeah, good business move.

Jasper:

Yeah. I mean, there would be some, obviously, it would be a little bit less because there’s extra shares being created with the other investment rounds, but still, that would have been like the investment of the century.

Nicole:

Yeah, it makes me want to go look at some start-ups right now, see if I can find the next Airbnb.

Jasper:

I know, right? It’s so fun to invest in start-ups, isn’t it?

Nicole:

Yeah, yeah.

Jasper:

I’ve invested in three of them and one’s gone bust already, but I have high hopes on the other two.

Nicole:

Awesome. We’ll have to talk after.

Jasper:

It’s just a matter of time until I can order my Ferrari.

Nicole:

There you go.

You know what else I thought was interesting, is they listed the key competitors of Airbnb. Or, maybe not interesting, but helpful, and I think that might be of interest to hosts, as well, who are maybe looking to diversify a little bit if they’re only listing on Airbnb. I’ve heard of probably half of them, but the others, I’m going to look into. They’re of interest. Had you heard of all of the competitors?

Jasper:

Well, I’ve heard of Wimdu. That’s one that’s very active in Europe. It’s an Airbnb clone by Rocket. I think the company’s Rocket. Rocket is a company that, they kind of clone good ideas and then they create their own.

Roomorama, I’ve heard of, VRBO of course, FlipKey, HomeAway. But then, there’s a few that I hadn’t heard of, which is Tripping, VaycayHero, HouseTrip, and Vaystays. I’ve never heard of those.

Nicole:

Yeah, I think Tripping is here in California. I have heard of that one, but the VaycayHero and Vaystays, HouseTrip, those three were new to me, so I’m going to take a look into those.

Jasper:

Right. And some interesting statistics: 54% or Airbnb guests are female. Did that surprise you?

Nicole:

Yeah, that did surprise me. Yeah, I was just surprised. I think it’s interesting that they would not want to stay in a hotel. I would think it’s more… I don’t know. That surprised me, and 46% are male.

Jasper:

Yeah, that’s right, and so you would think, because maybe of safety concerns, that it would be the other way around.

Nicole:

Yeah, I would, but maybe they’re looking to get the best bang for their buck, as well.

Jasper:

That could be true, yeah.

Nicole:

You know?

Jasper:

That could be true.

Nicole:

Yeah.

Jasper:

And the other interesting thing, I thought, was that more guests traveled on Airbnb in 2015 than the entire population of Greece, Sweden, or Switzerland. That’s kind of interesting.

Nicole:

Yeah, absolutely. It just puts it in perspective, how many people are using it.

Jasper:

Absolutely.

Nicole:

The size of medium-sized countries.

Jasper:

Yeah, yeah. Yeah, definitely. These are not the smallest countries.

Nicole:

No, they’re not. I mean, even though they’re small space-wise with land, they’re very populated, so it’s quite astounding.

Jasper:

Absolutely.

So, we’re getting to the end of this episode. I have a quick personal thing to share. As you may know, I’ve purchased a penthouse unit in Cali, Columbia, a few weeks ago, and I’ve been getting a lot of questions about it, so I decided to put together a pretty comprehensive blog post that you can find at getpaidforyourpad.com. It’s on the front page. You can see it’s a News post. It’s called “Why I Bought a Penthouse in Cali, Columbia to Rent on Airbnb”. I spent a lot of time on it, so it’s pretty lengthy, but I really wanted to include all details, you know, kind of everything about the decision-making process. So, yeah, if you’re interested in that, go check that out.

And, Nicole, do you have any final thoughts to share?

Nicole:

I’m excited to read that post. I read that Columbia’s one of the hot places to visit in 2017. So, I’m not sure I’m ready to go there because I do a lot of family trips, but I want to read the post, and then I’ll have some questions for you afterwards.

Jasper:

All right, sounds good.

Nicole:

Congratulations, by the way.

Jasper:

Yeah, thanks. I’m very excited. And in a few weeks, I’ll be going to Florianópolis in Brazil, which is one of my favorite places on the planet, and so I’ll be looking at some houses there. So, who knows? That could be my next one.

Nicole:

Awesome. You’re going to dominate South America.

Jasper:

Exactly, conquer South America first.

Nicole:

Awesome.

Jasper:

All right, Nicole. Thanks a lot for joining, and I’m sure we’ll be speaking again in a few weeks.

Nicole:

Thank you.

Jasper:

And, of course, listeners, thanks for listening, and you can find the show notes at getpaidforyourpad.com/podcast. And, of course, next Thursday I’ll be discussing next week’s news with another member of the Hostfully team, so I hope to see you then.

Leave a Reply

Your email address will not be published. Required fields are marked *