Airbnb has a Brand Problem
Back in 2008, when Airbnb started, it was a system built on trust between two strangers. One person would earn some extra money renting a room in their house, the other person got a great deal and avoided the corporate hotel life.
In 2015 when I was deciding to move to San Francisco or back to Austin, I booked my first Airbnb, and it was fantastic. For less than a hotel, I got a room in a great condo with one of the executives at a bay area tech company. He greeted me, showed me around, and made me feel at home.
That stay preceded dozens of other visits, all with the same experience — one nice person renting their home to another nice person. The photos always reflected the homes I was staying in, and the mutual adoration for the experience resulted in glowing reviews in both directions by the hosts and myself.
Something has changed at Airbnb
Now in 2019 however, something has changed, and if Airbnb doesn’t solve this massive problem, when they do IPO in 2020, their stock will inevitably tank as customer sentiment sours.
Hotels work furiously to protect their brands. To license the Four Seasons or Ritz Carlton brands for your hotel is an expensive, time-consuming process with high bars for standards such as bedding, food, and service. As a result, most of the time, when you arrive at one of these establishments, you can count on a level of quality, and you know with whom you are doing business. If for some reason there is a real problem, the hotels generally bend over backward to rectify the issue and protect their brand. Get enough complaints, and the licensee risks losing the right to use the brand entirely.
This rating system was the beauty of Airbnb. Individual hosts relied on good ratings to ensure that they would get new customers. One terrible review could reduce that host’s revenues, enough poor ratings and there is little chance anybody would ever be willing to stay at their rental again, and potentially Airbnb would revoke your license to associate with their brand by booting the host off of the platform.
What has changed at Airbnb?
- Airbnb has gotten the blessing of most cities, and legislation has legitimized the once primarily underground business of short term rentals. This legitimization has given rise to many thousands of entrepreneurial ventures which have realized that they can buy properties, rent the rooms on Airbnb, and essentially act as a hotel but without the need to license a hotel brand or even do their own marketing. Sounds like great business!
- Due to the increase in the number of people and companies who are using Airbnb, not for extra cash, but as a primary way to build wealth, an entire cottage industry of management companies has sprung up. See it turns out that renting out your own home is pretty straightforward, but renting out ten homes, that requires a lot of work, probably more than one person can realistically handle. Housekeeping, maintenance, check-ins, customer issues, all of these items need to be addressed.
- Now that many of the homes that are rented are owned by investors (not individuals) and managed by management companies (not individuals) these hosts see themselves more like hotel managers than hosts for a person visiting their city, except they don’t have much incentive to maintain their brand excellence (more on that later). As a result of this new “I’m a hotel manager” approach, they see their homes as portfolios.
- As Airbnb has grown by leaps and bounds, their internal support systems have been changed to support scale. This support scaling means when you call Airbnb; you are no longer talking to an option holding employee, you’re likely speaking to a person at a call center in the Philippines who is primarily measured on KPIs like “the number of calls answered per hour.” In the past calling Airbnb meant getting ahold of somebody who would help you in the event of a problem, now, not so much.
Why do you care Arlo?
On my recent family holiday to London, we booked a luxury apartment with numerous great reviews. The host “Cathy” responded quickly, and I could see from her profile that she owned several properties, was a mom, and an interior decorator who was making a side business using Airbnb. The reviews were great, and it included some must-have amenities for a multi-week trip (such as a washer and dryer, and a well-equipped kitchen).
Three days before our trip was set to begin, something odd happened, the washer /dryer disappeared from the listing and were now replaced by the phrase “No laundry in this unit, you’ll need to pay for laundry service.”
Changing amenities was unfortunate, and the host had never contacted us to let us know about the change, so we reached out to inquire about how to resolve this. That’s when suddenly we began corresponding with “Andrew” and “Michelle” about the unit who appeared to represent the owner since they had access to their Airbnb account. Two people with whom we had previously never spoken. “Cathy” was nowhere to be found in the conversation, and Andrew kept saying things like “I have an inquiry into the property to figure out what’s going on.”
As a family of four, laundry was important to us. We reached out to Airbnb, were quickly routed to their overseas call center, spent FIVE hours on hold that afternoon, we were hung up on twice, and frequently told that we should contact the host. It was a pretty clear case of the left hand (the call center) not knowing what the right hand (Airbnb) was doing. Eventually, the situation got escalated to somebody at Airbnb who quickly took care of the issue and refunded our money.
We had a glaring problem, though; we had nowhere to stay for an international trip beginning in less than 72 hours. Game. On.
After a bit of searching and corresponding with other hosts, we talked to a great guy named “Zac” who assured us that his home had a washer/dryer, and the photos supported that it was a beautiful home in a safe area of London. We booked it and ended up spending more on Zac’s place than we had initially spent in the first place.
Upon arrival, the address given to us was some strange 2nd story office building where we were greeted not by Zac but by Katarina. She was not aware that we had been promised an early check-in (and didn’t care), but once we were finally shown to our new home a few blocks away, it was strangely not the same furniture as was shown in the photo. We ended up talking to Katarina’s boss Dominika who assured us that this new unit was an upgrade and that the other one had a leak and an AC problem all at once.
Is this starting to sound the bait & switch? It seemed that way to us also. Here’s the weird thing, Zac’s unit is still available as of this writing even though it is “not functional”. Being a good detective, I walked around the building asking people if they were Airbnb guests of Zac and sure enough, everybody was. Zac is clearly a front for a company, and the company is clearly running a mini-hotel.
Although this may be two anecdotal experiences, I suspect it is a symptom of a pervasive problem. Corporate hosts create fake personas that look like a person because they know that is why people use Airbnb. Then if they get enough complaints on the listing they publish, they delete it and start fresh with a new one. They only need one active listing with excellent photos to keep a steady flow of suckers showing up at the 20 unit apartment building they own. They’re running a hotel under Airbnb’s brand, but with no accountability.
Why is this bad for the Airbnb brand and not just your sour grapes?
For the new batch of management companies handling the host duties, a certain percentage of dissatisfied guests is acceptable. Because they see themselves as portfolio owners, shuffling guests into other units the investor owns is commonplace, much like being moved to a different hotel room because the one you reserved is under maintenance. The problem here is that the units are rarely identical, meaning that what you get when you arrive may not be what you signed up for.
Some management companies do a great job, but most (in my personal experience) hire low paid employees to interface with the customer, and the relationship starts to break down there.
This new breed of short term rental investors don’t live in the units, and as a result, they furnish them like model apartments. They look great for the photos, but when you open the drawers in the kitchen, inevitably they are all empty. It’s not uncommon to find a beautiful chef’s kitchen with four forks, four knives, four plates, one frying pan, and no spatula. They are checking boxes that are required to say the unit has a functional kitchen.
And this is where Airbnb’s brand problem comes in. With so many of the listings becoming investor-owned, management company managed, and low wage employees as the point of contact, everybody in the chain is playing a game of percentages. They don’t care if you’re happy. They don’t care if you leave a good review. They know you’re not likely to come back and so unlike a hotel; repeat business is not their priority.
Instead of getting the “friendly host/owner” that most Airbnb users are sold on, instead the customer inevitably finds themselves as part of a machine, trying to figure out who is real, who is fake, which units are as advertised, which ones are corporate owned, and who to contact when the AC breaks. The sharing economy only works when sharing of reputational risk occurs.
Spammers & scammers have put us all on guard with email. It’s part of why email is now guarded against phishing & spam like Fort Knox. Corporations spend billions on email protection from the scammers, but still, billions are lost every year. Similarly, these shady real estate investors hijacking our trust in a sharing platform are Airbnb’s spammer, slowly chipping away at the faith we have in the platform.
Once a customer has experienced a scam on AirBnB, trust in the platform is lost. The loser is AirBnB and the many wonderful, legitimate hosts who use the platform. An untrusting customer doesn’t return to Airbnb on their next trip; instead, they choose a brand with a reputation to protect, such as the Four Seasons or a Ritz.
If Airbnb doesn’t get back to its roots of people sharing with people, its brand is heading for the dustbin of corporate history.
