Is Airbnb Sustainable?

 

What is Airbnb?

Airbnb is a shared economy, “an online community marketplace that connects people looking to rent their homes with people who are looking for accommodations. Airbnb users include hosts and travelers: hosts list and rent out their unused spaces, and travelers search for and book accommodations in 192 countries worldwide.” (Folger) The options for lodging include “single rooms, a suite of rooms, apartments, moored yachts, yurts, houseboats, entire houses or even a castle.” (Folger) The unique variety of destinations and lodging choices is very appealing to travelers. Hosts have the opportunity to meet new people and “to create a beautiful space” for travelers while making a profit off of otherwise unused space. (Mattraw) This shared economy can benefit both Airbnb travelers and hosts, but is it sustainable economically, environmentally and socially?

Economic Sustainability

The economic impact and sustainability of Airbnb have been extensively reported on and scrutinized, ever since Airbnb became popular. In 2013, Molly Turner, Director of Policy at Airbnb at the time, commented, “There are surprising findings – first is our impact on our community and our hosts, who have real economic incentives to use Airbnb. They can’t afford to stay there [in their homes] because of rising rents or [their homes] are underwater. Whether they’ve just graduated from college or are empty nesters or are retired on fixed incomes, Airbnb enables them to use the assets they already own.” The argument is that Airbnb offers people the opportunity to supplement their income.

To cover the costs of running Airbnb, hosts are charged a “3% service fee every time a reservation is completed” that is calculated from the reservation subtotal before fees and taxes. They also charge guests a “guest service fee.” The amount of this service fee, also based on the reservation subtotal, varies but is typically between 6-12% of the cost to rent the Airbnb. (Airbnb) As Airbnb provides an avenue to reasonably priced lodging and a way to earn extra income, it is fair for them to charge fees in order to maintain a successful, profitable business. The fees don’t seem to be a problem for users as the almost 8 year old company “has experienced exponential growth.” (Kaplan & Nadar)

While Airbnb is profitable for a certain demographic, it causes other businesses to suffer and it is not accessible to everyone. Hotels have seen decreased income with the increased use of Airbnb. This causes cities to complain because they receive less hotel taxes. In some cities, hosts pay taxes on Airbnb profits but it doesn’t supplement for the city’s profit loss. Cities see a profit through Airbnb with increased tourist spending. On a city-wide economic basis, Airbnb reported that in San Francisco 2012, Airbnb generated $56 million in local spending, $12.7 million of which went to support households (people paying off mortgage, rent, etc). In New York, the revenue generated was $632 million, $105 of which goes to the boroughs, which don’t often see tourism. Guests tend to stay longer and spend more on local businesses (Airbnb). Though there is some effect on the hotel industry, it is minimal. The “lack of actual competition between Airbnb hosts and the hotel industry may explain why one study, focusing on the Texas market, projected that a 1 percent increase in Airbnb listings results in only a 0.05 percent decrease in hotel revenues.” (Kaplan and Nadler) People who want hotel rooms aren’t going to be tempted to rent Airbnb if they want the hotel experience.

Environmental Sustainability

As far as environmental sustainability goes, Airbnb tends to be more sustainable than hotels. The Cleantech Group reported that Airbnb guests use 63% less energy than hotel guests, save more water, and produce less waste and emissions, in North America alone. 95% of renters say that they recycle. Cleantech also found that people who rent from Airbnb tend to use more public transportation or walk to their destinations, as opposed to hotel users who will drive, taxi, etc. While this report was well-timed, coming right when Airbnb was trying to convince people that it’s better than hotels, Cleantech is a third-party group, who performs similar tests and studies on other companies to help them become more green. As Joe Gebbia, Chief Product Officer and Airbnb co-founder said, With an impact that big, it’s clear that the Airbnb community is making a huge difference” (Airbnb).

Though most of the reporting is pertinent to North America, it is important to mention that Cleantech also reported on Europe, and the numbers were even higher (see figure)

 

airbnb-energy-consumption

(Airbnb)

In addition, an increase of Airbnb rentals would mean that fewer hotels would have to be built in areas that are growing as tourist locations. Building massive hotels uses huge amounts of materials and would spell more water and energy use, and waste creation.

Therefore, environmentally Airbnb is very sustainable, at least based on the current information. Future studies may reveal detrimental environmental impacts, but for now, it’s doing good for the globe.

Social Sustainability

On a surface level, Airbnb would appear to be great for social sustainability. Airbnb provides jobs for people who clean the Airbnbs and manage the guests’ arrival and departure. Hosts get to meet guests from around the world, gain extra income, and hosting for short periods of time is less responsibility than having a full time tenant. Travelers have somewhere to stay that is a more unique experience than a hotel and often costs less, as well as personalized service. Tourists can experience more of the true culture of the city or town they’re visiting.

As far as long-term living sustainability goes, Airbnb is screwing over the people who are trying to live in the city (especially big cities like NY and SF). People are buying/renting apartments, and then putting the entire place on Airbnb, thus undercutting long-term renters. Turner addressed this in her interview, saying that, “…we see that the majority are looking for short-term housing. Or, they’re a consultant and just in town for three months. Because Airbnb users rent the out homes they are living in, they are not taking housing off the market. If they were doing this 365 days a year, that would be one thing, but on average they’re just doing it a few weeks a year.” (Greenbiz)

However, it seems like what Turner claims isn’t always true. There are many stories about renters who buy several apartments and then put them on Airbnb, or who refuse to rent to long-term renters because they can make more money on short-term Airbnb users. In LA, Airbnb is pricing out long-term renters because short-term renters are willing to pay more. Roy Samaan, a policy analyst in LA, is quoted as saying that, “In places where vacancy is already limited and rents are already squeezing people out, this is exacerbating the problem. There aren’t 1,000 units to give in Venice or Hollywood.” (LA Times)

The same problem is occurring in the Mission in SF. “In neighborhoods like the Mission, which has become ground zero for displacement, you see that as high as 40 percent of the housing stock that could be rented is being Airbnb’ed,” said Board of Supervisors Land Use and Transportation Committee Supervisor David Campos in an interview. (Business Insider) The classically Latino/Mexican populated area was always cheap and considered a sort of “ghetto”, or at least an undesirable place to live for middle class white people, is now as expensive as anywhere else in SF. As a result, the people who had lived there for years can no longer afford to (Business Insider). Where else are they supposed to go? If everything is too expensive for poor people, then where will they go? Airbnb fits into this because a lot of people are renting Airbnb spaces out in the Mission, promising the “Mission experience”. Those are apartments that could go to people who need to a place to live.

 

Interviews

Three Airbnb hosts were interviewed about their experience using Airbnb. The hosts are all middle aged and have children who have moved out of the house. Rob Friedman rents out his house while he travels, usually 4-6 months a year. Lisa Yank’s Airbnb is a basement apartment, attached to their house but separated by a locked door and its own entrance. Stacey Mattraw rents out the downstairs apartment of her duplex, where she lives upstairs.

All the hosts said they enjoy using Airbnb to host guests, as well as using it to travel. One specifically likes the “convenience and secure payment system” (Friedman) and a second said she and her husband “love how easy Airbnb it is to use” (Yank). The easy user interface is important to note because it determines whether people will continue to use Airbnb. They all report no complaints from neighbors and haven’t experienced any weird experiences hosting or traveling. “I like having the flexibility of having people come and go in my home as opposed to leasing long term. I always like to be able to control the space that I rent out.” (Mattraw) This “flexibility” and sense of “control” makes Airbnb very attractive to users, and may have a lot to do with its exponential growth.

Based off of these responses, Airbnb is sustainable socially and as a business itself because it’s accessible to a wide range of people.  

When asked to compare if it’s more profitable to use Airbnb than have someone on a lease, the Rob said “yes.” (Friedman) Lisa said “it might be but it is harder as we have to schedule cleaning, spend money on supplies and update towels, sheets, etc. more frequently.” (Yank) Stacey answered “Hard to say, because there are periods when I block my Airbnb for personal/family use.” (Mattraw) They all pay taxes on the income earned from Airbnb. It isn’t assured that Airbnb is more economically sustainable than having someone on a lease. However, even after taxes, it’s still profitable enough that they want to continue hosting so, for now, Airbnb appears economically symbiotic with hosts.

Conclusion

Those who can afford to use Airbnb are offered a convenient, unique location to stay while they visit a city whether it’s for pleasure or for business. It may offer a less expensive place to stay for those with low income, however it seems unlikely that this demographic has the ability to travel in the first place as they are living paycheck to paycheck.

Economically, Airbnb is sustainable for users but is disadvantageous to the people who want to rent or buy a long term home and neighbors who want to maintain a sense of connection with the people living near them. It takes away business from hotels and does a disservice to cities who don’t receive adequate taxes to make up for the lack of hotel taxes.

As of now, Airbnb is environmentally sustainable. However, the company is still young so as it grows, this may change as more research is done.

Based off of articles, research and interviews with hosts, those who are able to host or travel using Airbnb both seem to gain a lot by using Airbnb. Airbnb has the potential to be a sustainable shared economy but some changes must be made if Airbnb is to remain a successful company that provides symbiotic services.

 

SOURCES 

Airbnb. “What Are Host Service Fees?” https://www.airbnb.com/help/article/63/what-are-host-service-fees

Airbnb. “What are Guest Service Fees?” https://www.airbnb.com/help/article/104/what-are-guest-service-fees

“Airbnb Economic Impact” http://blog.airbnb.com/economic-impact-airbnb/

Carson, Biz. “The Fight Between Airbnb and San Francisco just got nastier.” http://www.businessinsider.com/san-francisco-report-blames-airbnb-for-housing-shortage-airbnb-strikes-back-2015-5

Folger, Jean.”The Pros and Cons of Using Airbnb.”http://www.investopedia.com/articles/personal-finance/032814/pros-and-cons-using-airbnb.asp?performancelayout=true

Friedman, Rob. “Airbnb Survey.” E-mail interview. Apr. 2016.

Isaac, Mike. “Airbnb Pledges to Work With Cities and Pay ‘Fair Share’ of Taxes.” November 11, 2015.http://www.nytimes.com/2015/11/12/technology/airbnb-pledges-to-work-with-cities-and-pay-fair-share-of-taxes.html?_r=2

Kaplan & Nadar. “Airbnb: A Case Study in Occupancy Regulation and Taxation.” 2015. https://lawreview.uchicago.edu/page/airbnb-case-study-occupancy-regulation-and-taxation

Logan, Tim, Reyes, Emily Alpert, Poston, Ben.“Airbnb and other short-term rentals worsen economic shortage, critics say”. http://www.latimes.com/business/realestate/la-fi-airbnb-housing-market-20150311-story.html#page=1

Mattraw, Stacey. “Airbnb Survey.” E-mail interview. Apr. 2016.

“New Study Reveals A Greener Way to Travel: Airbnb Community Shows Environmental Benefits of Home Sharing”. https://www.airbnb.com/press/news/new-study-reveals-a-greener-way-to-travel-airbnb-community-shows-environmental-benefits-of-home-sharing

Wong, Kristine.“Lessons from Airbnb about Business in the Sharing Economy” https://www.greenbiz.com/news/2013/02/15/lessons-airbnb-about-business-sharing-economy

Yank, Lisa. “Airbnb Survey.” E-mail interview. Apr. 2016.

 

A Survey of Three Airbnb Hosts in the Portland Metro Area

1. Rob Friedman – Thurman, NW Portland

2. Lisa Yank – Sellwood, SE Portland

3. Stacey Mattraw – Thurman, NW Portland

The hosts who were interviewed are all middle aged and have children who have moved out of the house. They have all lived and owned property in Portland for at least 20 years.

What do you like about Airbnb?

1. I like the convenience and secure payment system.

2. We love how easy Airbnb it is to use. We especially appreciate how guests review us and we review them.

3. I love hosting people at my Airbnb and I love staying at Airbnb. For hosting, I love interior design combined with hospitality, and my Airbnb was an opportunity to create a beautiful space for people to be in Portland. I also love meeting people from all over, and it is fun to have people come visit and share Portland with them. For visiting other Airbnbs, I always choose a space to stay based on the aesthetics of a home. Is it visually pleasing? Then, I read carefully how much the hosts interact with the guests. I like interacting with the hosts as it gives me an opportunity to know someone locally, and potentially make a new friend. I have had amazing experiences doing this and have made some wonderful friends all over the world as a result.

What do you dislike about Airbnb?

1. The calendar.

2. So far we haven’t found anything we are unhappy about. We love their business model.

3. I really don’t have any complaints. I have not had negative experiences with Airbnb.

Do you have concerns about hosting strangers in your home? If so, what?

1. No, I do not.

2. We used to but after testing it out, we realized that all our guests are respectful and treat our home well.

3. None at all.

Do you find Airbnb more comfortable than having someone on a lease? Compare.

1. Not applicable in my case.

2. Yes. We have been asked numerous times to rent full time but we are not wanting to have guests always in our home full time. This allows us to have time to block out for out of town and family guests to visit and use our space.

3. Yes, I like having the flexibility of having people come and go in my home as opposed to leasing long term. I always like to be able to control the space that I rent out. Then if I don’t want people there for whatever reason, I can choose not to host.

Is Airbnb more profitable than having someone on a lease?

1. Yes.

2. For us it might be but it is harder as we have to schedule cleaning, spend money on supplies and update towels, sheets, etc more frequently.

3. Hard to say, because there are periods when I block my Airbnb for personal/family use, so I do not do it exclusively for profit.

Do your neighbors have problems or concerns with strange people coming in and out?

1. No complaints from neighbors.

2. We have alerted neighbors and our guests have their own parking spot so they don’t have to concern any neighbors. We have really nice guests and really great neighbors.

3. Not that I am aware.

Are there any weird experiences you’ve encountered while hosting or using Airbnb?

1. No.

2. Never.

3. No.

Do you use Airbnb yourself?

1. Yes.

2. We do and more frequently now than hotels.

3. Yes, see above.

How do you compare/compete with other houses in the area and in the city?

1. Act in a cordial/professional manner and compete price wise.

2. We have a great person who helps with cleaning and managing the space, we provide a lower rate, offer wine and stock our kitchen so there is everything needed. We think the cleaner and well stocked the space is the better advantage. We rely now on our reviews and we almost always get 5 star reviews and are superhosts so I think that helps.

3. I have never made a comparison, so I don’t know.

Have you found any demographic of people more pleasant to host?

1. Families.

2. I like all our guests but it is quieter and easier if there are not young children but we never discriminate and let everyone have a chance to book if they have reviews and references.

3. Not particularly.

What kind of people stay at your Airbnb?

1. Families.

2. We host a lot of families and a lot of newer Airbnb guests but I have found the younger the guests are as just as respectful as the older ones and sometimes even more grateful and thoughtful.

3. All kinds, I’ve had young families, groups of friends meeting for a reunion of sorts, couples of all ages, mother and daughter trips…

Do you pay taxes on the income earned from Airbnb?

1. Yes.

2. Yes and we have extra insurance on our home owners policy.

3. Yes.

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