Airbnb is trying to sell itself as a saviour for struggling cities and small towns. But it’s actually a devil in disguise.
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Just over a year ago, Airbnb was in dire straits.
The pandemic had ground global travel to a halt, all but vaporizing the tech giant’s business model. Bookings were cancelled. Revenue disappeared. By May of 2020, the company had announced sweeping layoffs — slashing a quarter of its workforce. It was said to be facing hundreds of millions in losses. The sharing economy, pundits proclaimed, was gutted.
You wouldn’t know that, though, from Airbnb’s current marketing campaign. In the US, where eased travel restrictions have prompted a wave of demand, the short-term rental business is booming. And Airbnb — so recently in crisis — is now branding itself a benefactor. This spring, the company solemnly announced a new focus: working “with governments and tourism agencies globally to support economic recovery from the impacts of the COVID-19 pandemic.”
To the many cities and towns whose economies were ravaged by the pandemic, Airbnb now claims to offer a solution: floods of tourists and an influx of cash. It’s a smart strategy — one that would cement the company not only as a cornerstone of travel, but also of local economies.
In sleepy Montpelier, Vermont — the small-town capital of a state that leans heavily on tourism — Airbnb has launched a campaign to revitalize an economy and businesses that “have suffered” from the lack of tourism. In Portland, Oregon, Airbnb is working with a municipal tourism agency to help travellers “rediscover” the town. And the list goes on: New Mexico, Northwest Arkansas, Tulsa, Oklahoma — “Airbnb can be an important part of their revitalization,” the company insists.
This strategy might be lucrative for Airbnb — but it’s deceitful. The company is capitalizing on the economic strain towns and cities are bearing from the pandemic and growing demand for travel. But unchecked short-term rentals, and the destructive tourism they offer, are not an answer for beleaguered economies.
An ounce of hindsight shows that Airbnb does not offer a sustainable business model. As the pandemic proved, its short-term approach to lodging is highly susceptible to an economic shock. This came into full view last year with massive layoffs and subsequent internal unrest. It also revealed the many shady landlording schemes that the company had allowed to proliferate, as Airbnb’s overextended tycoons and speculators found themselves in hot water when their revenue vanished overnight.
Airbnb’s hosts are seeing fevered demand for travel now; some of its high-demand listings are reportedly going for $1,000 a night. Investors are once again looking to buy enormous real estate portfolios to sell off as highly lucrative short-term rentals — using AI software to buy “hundreds of properties” at one time. But there are real reasons to be wary of Airbnb, even when it’s lucrative for hosts — as it usually is.
Peeking behind the curtain
For one, the company’s claims to be a boon to local economies — specifically, for small businesses and “mom and pop” rental operations — are tenuous at best. Studies have shown that Airbnb typically increases tourism less than advertised, serving merely as a substitute for other accommodations, which would have drawn the same travellers. And whatever additional travel it does bring is increasingly at the expense of reduced housing stock.
Airbnb’s impacts on housing are clear: The platform often drives up prices in neighbourhoods and displaces long-term residents, accelerating gentrification. As Airbnb’s CEO Brian Chesky has even said in recent days, the platform is seeing more demand for full house rentals — moving away from the sharing model that once envisioned modest homeowners renting out a spare bedroom. And it is these sorts of rentals that can starkly change the character of neighbourhoods.
Last month, Airbnb made headlines for its apparently well-intentioned promise to ban listings at properties that had evicted tenants formerly protected under the federal eviction moratorium — an attempt to lessen the blow of the lifted policy. Yet, as some local news outlets quickly realized, the plan’s feasibility is dubious and is likely difficult to implement. For one thing, Airbnb will require cities to inform the company of properties that had evicted tenants — regardless of whether they’re tracking that information (and most cities probably aren’t). And, furthermore, many tenants are forced out of their homes informally, without a court order as evidence — when a landlord declines to renew a lease, for instance, or posts an eviction notice, and no one brings the matter to a judge.
‘We are about belonging’
The promise to ban listings at properties where tenants were evicted forms part of Airbnb’s undying efforts to brand itself as a homey, “mom and pop” business; “What we are about is belonging, and at the center of belonging is love,” Chesky told his employees in his emotional letter announcing last year’s layoffs.
This identity carries over into the company’s policy arguments. This summer, when Nevada passed a new law regulating short-term rentals, Airbnb was incensed. The law took the reasonable and increasingly popular step of requiring Airbnbs to be taxed at the same rate as hotel lodging, as well as implementing other various restrictions on short-term rental ownership. A company representative decried all these measures as “a gift for resorts at the expense of regular Nevadans who share their homes.”
Airbnb has spent years lobbying against laws like Nevada’s, which carry actual penalties for violations, in favor of more lukewarm regulation by cities. But its efforts to rescind or block this kind of legislation have adopted a new tone of urgency, bolstered by the company’s claims that it is a lifeline for struggling cities. This is echoed by local business leaders. Currently, Columbia, South Carolina is considering new limits on short-term rentals, but it has faced pushback.
“We’re trying to open back up from a pandemic, now is not the time to put up hurdles for people visiting Columbia,” the head of the local chamber of commerce told the Post and Courier. “We need to be opening our arms and welcoming people to come and visit.”
Airbnb might claim that its platform helps hosts “stay in their homes,” but study after study has shown that the platform jacks up rent prices and aggravates housing shortages, subverting zoning laws to convert residential housing stock into what are essentially commercial hotels. Meanwhile, the nation is on the brink of a housing crisis, as the eviction moratorium lifts and other housing assistance programs — funded by federal relief funds — begin to run dry.
In Vermont, where Airbnb is embarking on one of its tourism campaigns, a statewide real estate boom is pricing out renters, all while hundreds of residents lose housing as an emergency housing program launched at the onset of the pandemic abruptly ends. In Portland, a longstanding homelessness crisis is only worsening.
This moment calls for serious investment in affordable housing and rent relief — all far less lucrative for landlords than short-term rentals. The past year showed that such investment was possible, even if we are now watching it come to a brutal end. We should not be duped into thinking that what we need, instead, are more Airbnbs.
Source: Axel Springer, Insider Inc.’s parent company, is an investor in Airbnb.
Post available in: English