Airbnb is tooting its own horn this week with the release of a report boasting the positive economic impacts of the platform in the US. The press release aligns with the company’s strategy to work with municipalities as they implement regulations on short-term rentals.
Hostfully Director of Marketing, Glenn Carter, joins Jasper this week to review the economic benefits outlined in the report as well as other upgrades to the platform in the news this week, including a pilot program that allows guests to split payments and a premium tier program designed to appeal to the luxury rental market.
They also discuss another startup in the space that is expanding its services as Pillow raises funds to launch a building management platform, and the story of a property owner in Barcelona who was forced to squat in her own flat! Finally, Jasper and Glenn answer your questions about cancelling bookings due to a family emergency. Don’t forget to email your questions to firstname.lastname@example.org!
Article #1: With $13.5M in New Funds, Pillow Partners with Building Owners to Make Rentals Airbnb-Friendly
- Funding to launch Pillow Residential
- Platform gives building owners more transparency, allows to share in money generated
- Ensures owners, renters comply with local regulations
- Building owners know which units being rented and by whom (safety)
Article #2: Airbnb Readies a Premium Tier to Compete More with Hotels, Sources Say
- Launch new service in luxury rental market
- Select hosts in pilot program
- Airbnb inspectors verify quality standards
- Hosts receive consultation with interior decorator, professional photography for listing
Article #3: Airbnb is Testing a Feature That Would Let You Split the Cost with Friends
- Allows guests to split cost among multiple people
- Makes booking easier, more accessible
- Part of larger game to simplify, streamline experience
Article #4: Woman Forced to Squat in Her Own Barcelona Flat After ‘Fake Tenant’ Lists Property on Airbnb
- Long-term tenant listed apartment on Airbnb
- Owner booked property to reoccupy flat, change lock
- Reported ‘fake tenant’ to Barcelona council
- Faces fines between €60,000 and €600,000
Article #5: Airbnb Steps Up Lobbying Pitch to Mayors with New Economic Boast
- Airbnb report re: economic impact
- Claims $14B in economic output last year
- Facilitated 130,000 jobs in US, predicts half a million by 2020
- Opponents label report as biased, but economic benefits obvious
- Part of ‘play nice’ strategy to appease municipalities
Q: I have a booking, but a family emergency has arisen. What do I do?
- Negative consequences usually associated with cancellation (penalties, ineligible for Superhost status, note on reviews)
- Extenuating Circumstances Policy allows for cancellation without consequence in situations out of host’s control (i.e.: unexpected death or serious illness, natural disaster, severe property damage, etc.)
- Contact Airbnb to explain, be open and honest with platform and guest
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Complete Transcript for Get Paid for Your Pad Episode 166
Jasper: Welcome to Get Paid for Your Pad, a 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.
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Jasper: Welcome back everybody to this week’s news episode. I’m hosting this with Glenn Carter, Director of Marketing at Hostfully. Glenn, how’s it going?
Glenn: It’s going well Jasper, how are you? I hear you have a flight in a couple of hours
Jasper: I do. It’s early morning here in Taipei, I might sound a little sleepy. I woke up ten minutes ago. So, If I confuse a few things here and there, I hope that you will keep me accountable for saying the right things.
Glenn: Well, just so all the listeners know, Jasper hasn’t had his coffee yet, so we’re going to take it easy on him.
Jasper: I’m very excited to be going to Sri Lanka in a few hours. I’ve never been and I started kitesurfing a while ago and Sri Lanka has a place that’s well known for kite surfing. I looked at some pictures, it looks pretty awesome. It’s a couple hours north of Columbo. I’m going with a friend there, so, it should be pretty exciting.
Glenn: I don’t know, kitesurfing, that sounds a little dangerous
Jasper: You know, it’s funny, it’s actually very safe as long as you don’t get too close to the coast. As long as you’re on the water, not much can happen unless you crash into another kite surfer. There’s not a lot of accidents. That’s the first thing I thought in Holland, a couple of people died, they got taken by the wind and they jumped a little too far and they landed on the road. That’s when they started implemented rules about where you’re allowed to kitesurf. You have to be a little careful with wind strength—if it’s too windy, you might want to stay home unless you’re a professional. There’s a guy in Holland who goes onto the ocean when they’re stormy weather and he makes incredible jumps – he literally jumps like 100 yards, it’s pretty crazy.
Glenn: Wow, we’ll be safe and make sure you share some photos with the Get Paid for Your Pad Community. I’m excited to see what it looks like.
Jasper: Absolutely, I’ll post some pictures on my Instagram. Anyway, let’s get into the news. There’s a lot of stuff that came out. Let’s start with a pretty significant investment that Pillow has arranged. We’re talking about 13.5 million dollars, that’s probably the biggest investment I’ve seen for a startup that operates in the Airbnb niche, except for Airbnb of course. They raised these funds to partner with building owners to make rentals Airbnb friendly. What do you think, Glenn?
Glenn: This is probably one of the most significant investments in the startup operating in the space. I think Pillow saw their customers biggest challenge were landlords, condo boards, municipalities that were not allowing short term rentals and that launched Pillow Residential is a new management platform for short term rentals and monthly family apartment buildings. This new platform would give building owners more transparency for what’s happening on their properties and allow them to share their profits – it’s a profit sharing platform.
Jasper: It also allows building managers to see what’s going on their platform. See the people that are booking the Airbnb. I think it’s an interesting move. I’m kind of curious if it’s going to work out. It’s one of the larger challenges in the Airbnb space. Obviously, most of the contracts when you’re renting a place in the condo building, it will usually state you’re not allowed to sublet for 30 days. If you want to do it, you have to go around our building manger. Obviously, that’s not ideal. If you get caught, you might get in trouble, all sorts of penalties. It’s one of the bigger challenges. They’re already working with some of the bigger apartment groups, they’ve been preparing this move for a while. If they’re getting traction with it, it could be a pretty big development. It’s interesting to see if they’re going to be successful.
Glenn: Well, it creates a bit of certainty in an uncertain world. Right now, the platform is trying to ensure that apartment owners and renters are complying with local regulations, as you know, they completely differ between municipalities. Airbnb has negotiated now with 250 municipalities with short term regulations. Ensuring compliance with these complex and shifting bylaws, that’s definitely going to be a welcome development in a space I think.
Jasper: Absolutely. Well, I definitely want to invite Sean Conway, the CEO of Pillow to come on the podcast. I’d love to hear his thoughts on this new move by pillow. Hopefully we’ll have him on pretty soon. Let’s move on to another item. Airbnb readies a premium tier to compete with more hotels. I think this is a move that’s been going on for a while where Airbnb is trying to appeal to different types of travelers. With the latest move, they’re targeting the wealthy travelers, people expecting hotel like amenities. Airbnb purchased a luxury rental company earlier this year, or last year, on that move to have a broader audience for their website.
Glenn: Like you said, this announcement is no surprise for anyone who watches the industry. A couple months ago, Airbnb acquired Luxury Retreats, which is from my hometown, Montreal. They were making it fairly clear they wanted to enter the short-term luxury market. Now they’re launching their own program, they’re going to label some of the home and apartments on their platform as premium rentals and those properties are going to be equipped with luxury furniture and other amenities are going to be featured in another section of the Airbnb site. It’s going to send actual physical Airbnb inspectors into the homes to make sure that the homes meet the inspection, if they pass, they’ll be eligible to be featured in the luxury section of Airbnb website. I think it’s pretty cool. I heard a rumor they’re going to call it Airbnb Select, the name might change, so. I think it’s a good development and I think Airbnb signaled this direction with the purchase of Luxury Retreats a few months back.
Jasper: Absolutely, and they also going to help hosts with making a space look nicer. They’re going to send a professional photographer and an interior decorator to the house. These people are going to get some help in order to decorate their home in a more appealing way and take some new, professional pictures. All in all, I think it will be a pretty good thing for those who get invited.
Glenn: I think it’s not going to just be a sticker they slap on your listing. I think there’s some value add there. I think its important Airbnb provides that to legitimize this type of program.
Jasper: Another interesting move that they’re making this week, this was also something expected. Airbnb bought a startup called Tilt and what Tilt did was they have technology to allow people to split payments. So, when you book an Airbnb, a lot of times you travel with friends, then one person has to be pay for it and other people have to pay you back. Tilt technology allows you to split the payment. You can have a few people pay together, just like Uber has this technology as well. When you order Uber, you can split the fare with your friends. It’s taken Airbnb a long time, because it’s a pretty obvious step. I had guests have trouble booking my place, from Russia, they wanted it for two weeks, it was a pretty substantial payment. The credit card company wouldn’t allow the payment because it was large, so she asked if she could do split payment with her friends. Other than convenience, I think it would make the platform more successful to certain people who don’t have large credit limits.
Glenn: It’s not a huge surprise especially with the acquisition early this year. It’s about Airbnb hopped on this split payment bandwagon. It makes their website a lot easier and streamlined. It’s part of a large streamlined process. A couple weeks ago they announced standardizing the check-in process. I think it’s part of a larger game on Airbnb’s part to make the whole process more streamlined. It’s a lot more accessible. I think it’s a great move.
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Jasper: There’s a pretty funny story that came out about a woman in Barcelona. She was forced to squat in her own flat after a fake tenant listed the property on Airbnb. This lady was renting out her apartment to a long-term tenant, but that tenant wasn’t staying there. The tenant immediately created an Airbnb listing. So, the woman got wind of what was going on and found the property on Airbnb and what she did was she booked the property and she changed the locks and she didn’t move out.
Glenn: I hadn’t heard this story until just now. That’s absolutely hilarious. That’s a clever way of overcoming that issue. We’ve heard about that problem. It’s not widespread. But of people putting up fake listings and Airbnb is going to combat that. Here you have a property owner fighting back on their own. It’s not a good situation, but good for her for thinking outside of the box.
Jasper: Yeah, it’s a pretty bold move. She also reported the person to the Barcelona council. They assured her that her fake tenant will be pursued and will face a fine between 60,000-600,000 euros, which is quite a large amount of money. This guy is going to regret his decision to get into this Airbnb rental.
Glenn: Even on the lower end of that, having to pay 60,000 euros, that’s pretty steep.
Jasper: Absolutely. I think this person made that much money on the platform. That’s a good way to send a warning message. If you’re going to do Airbnb, other ways to do it, there’s ways to do it in a legal way without breaking laws or rules. Check out the local laws and regulations so you don’t do anything illegal. What else is out there? Airbnb started lobbying pitches to mayors with economic boost.
Glenn: I read this and this is an Airbnb report. Many opponents label it as bias, but there’s many undeniable realities labeled in the numbers in the report. Anyone familiar with the short-term markets like Airbnb, like myself and yourself, are aware of these positive economic impacts it has on these markets. This report really bolsters that. For example, this report says last year had delivered over $14 billion in economic output to cities across the United States. That’s astounding. They claimed to have supported 130,000 jobs last year, and they claim that number could rise to half a million by 2020, which isn’t far off. The report also says between San Diego and Los Angeles alone, Airbnb supported 20,000 jobs in 2016, and on top of that, Airbnb hosting guests helped contribute to $1.2 billion in economic impact in Los Angeles alone. So, you know, it’s part of Airbnb ongoing plan to play nice strategy sort of the anti-Uber strategy in a better effort to integrate itself with local governments. They’ve come to some 250 agreements in the US to collect hotel and tourist tax on behalf of the host. They’re trying to place nice. This is another PR move, but I fully trust these numbers. The realities and benefits of short-term rentals and Airbnb is obvious. But this is just part of that ongoing effort to play nice and figure out the whole debate concerning taxation and regulation.
Jasper: Awesome, let’s move to the question section of this episode. This week I got a question from Mike. Mike is saying “hey, Jasper, I need help. I have a booking but a family emergency has arisen. What do I do? I don’t want to get a negative start, but this is an unavoidable family matter.” So, Mike recently started out on Airbnb and now he has to cancel a booking because of family circumstances. This is how this works on Airbnb. You can cancel a booking, but normally if you cancel a booking, there are some negative consequences. You won’t be eligible for super host program for a year, and if you cancel more than a few times you will get penalties and you in your review section there will be a statement that says you’ve canceled a booking. All in all, it’s not recommended to cancel, but sometimes there can be circumstances that don’t give you a choice. Airbnb has an extenuating circumstance policy, it allows you to cancel bookings without negative consequences. TH way you go about this, you contact Airbnb, you explain the situation, they may or may not help you out with it. In my experience, they tend to help hosts facing challenges. Recently I interviewed someone in Venice who had bed bugs and he had to cancel, and Airbnb was very helpful, the host didn’t face any negative consequences. What other things could be covered? Unexpected death or serious illness of the host, or guest or immediate family member. Serious injury that directly restricts guests’ ability to travel or hosts ability to host. Natural disasters are included. Urgent travel restrictions. Endemic diseases. If there’s any severe property damage or unforeseen maintenance issues where you can’t host safely. Also, government mandated obligations issued after the time of the booking. There’s a number of different categories. It’s a case to case matter, you contact Airbnb and you kind of hope they’re sympathetic to your situation and help you out. Have you had an experience canceling bookings, Glenn?
Glenn: I haven’t, but I’ve heard of people who have. I do know Airbnb allows it. Up here in Canada we have things like flooding or forest fires that have forced Airbnb to cancel prior to guests arriving or even when the guest is staying. These things happen and Airbnb is aware of that. My advice is to be as open and honest as possible with Airbnb and the guest and hopefully it works out. You know, stuff happens, there’s a process and place to sort of manage that, like you mentioned.
Jasper: The most important thing to do is contact Airbnb as soon as possible. If you listened to my episode on Monday with Natalie, coincidentally, she had to cancel three bookings in her place in New Zealand and this was because of a mistake that she made. She accidentally made her place available for a time period where she wasn’t able to host and Airbnb actually helped her cancel three bookings and she didn’t face any negative consequences. Even if you don’t officially qualify for the extenuating circumstances policy, Airbnb might give you a break. You’ll probably be okay with an urgent family matter. Mike, I hope that answers your question. For the listeners out there, if you have any questions about Airbnb hosting, feel free to send me an email, Jasper@getpaidforyourpad.com. Maybe we’ll be discussing your question next week. Glenn, it was a pleasure hosting this episode with you. Is there anything else you’d like to mention?
Glenn: No Jasper, thanks for having me! I’m looking at pictures of kitesurfing, this looks like a lot of fun. Stay safe and make sure you keep us updated, enjoy Sri Lanka!
Jasper: Will do, for sure. If you want to be updated on what’s going on in the world of Airbnb, if you want to be updated on Airbnb news, I post items in the Facebook group Airbnb News, you can find it easily, it’s an open group, so anyone can join. I’ll be posting news items as they come out during the week. The group is getting pretty active, people are commenting on the news stories and stuff, it’s interesting to see what other people think and a great way to keep updated. Feel free to join the group Airbnb news and of course we’ll be back next week. Looking forward to seeing you again!