by Tom Nguyen
This morning, I noticed a musician friend announce on Facebook he would be performing on the same stage with bands like Maroon 5 at Airbnb Open 2016, a festival hosted by Airbnb in downtown Los Angeles November 17-19. It’s an annual community gathering and festival of hosting that brought together 5000 hosts from 110 countries at last year’s festival in Paris, France. This year, the festival offers music, art, food and talks by celebrities like Gwyneth Paltrow and Ashton Kutcher, and according to their press release, will “highlight the thriving downtown area of LA, taking place across four historic theatres and involving many local restaurants, cafes and other small businesses.”
It sounds great doesn’t it? It’s just no one in our communities knows about it because there is a vacuum of press that this is happening this week. LA Times, LA Weekly and Curbed.com which regularly write about neighborhood complaints about Airbnb, the effects of these short term rentals on LA’s already insufficient supply of renta units, and the city’s efforts to regulate them, are curiously silent. The only news I found were on My News LA and Timeout back in July when the festival was first announced.
Curbed.LA wrote a great piece “Airbnb vs. the city: How short-term rentals are changing urban neighborhoods” just last week. The article gives a good summary of Airbnb’s history from its founding in San Francisco in 2007, it’s tremendous growth, estimated to grow 89% from $900 million in 2015 to an estimated $1.7 billion this year, and how cities across the country are increasingly cracking down and grappling with how to enforce and regulate what are essentially illegal hotels. Curbed.LA says “2016 has been a year of backlash against illegal short-term rentals.” It’s no wonder Airbnb and its high powered PR are staying mum on this week’s festival. If the festival flies under the radar the way their short term rentals do, away from too much scrutiny, Airbnb and their gathered hosts won’t have to answer difficult questions, like those posed by ShareBetter.org and a few other critics I found while searching under #AirbnbOpen hashtag on Twitter.
Airbnb wants you to believe that Airbnb has empowered everyday folks in very tough times to make extra money by renting out spare rooms. It’s their origin story of how their founders came upon the idea themselves while struggling to pay their rent in pricey San Francisco and how this sharing economy has empowered others.
I have personal experience with using Airbnb since 2011 and can testify that yes, it has enabled lots of folks to make ends meet. I started on another sharing site, Couchsurfing.com in 2009. After my travels through South America and Europe, greatly enabled by kind strangers lending me a spare couch for free, I returned home in the midst of a bad economy and one Couchsurfing host confided he was struggling to pay his mortgage. Because I knew from my travels that backpackers and budget travelers loved staying in low-priced hostels, and there were none really in OC, I helped him transform 2 of his bedrooms into a hostel, accommodating up to 8 people a night. He made so much money using hostel sites and Airbnb that first month, he never talked to me again.
Fast forward five years later, and the majority of Airbnb listings are not homeowners trying to make ends meet by renting out a spare room, but actually entrepreneurs renting out entire homes or apartments. It’s just too much money and profit to be ignored for many homeowners and landlords. According to Curbed.LA, “Recent data on Los Angeles shows that across all neighborhoods it takes an average of just 83 nights per year to earn more on Airbnb than can be earned in a whole year of renting to a long-term renter.”
This means for many landlords, they easily make more money by renting out their units to short-term travelers on Airbnb than they do to year-round tenants. Are long term renters being displaced in favor of Airbnb rentals? It personally happened to me. I was renting out 2 upstairs bedrooms in a home in Irvine and put one room up on Airbnb. When the first person booked the room for a whole month to attend a work conference and paid $1000, more than double my rent, in the interest of transparency and fairness, I showed that to the homeowner to split the profit. Not being computer savvy, her mind was blown at the possibilities. She demanded the entire profit and I was forced to move out before that first Airbnb guest even finished her stay.
The LA Times reported in June on multiple landlords of rent-controlled buildings who evicted tenants so they could place their units on Airbnb. In the article, LA City Attorney Mike Feuer says “Obviously there is a great profit to be made if you could, on your whim, change your apartment unit into a nightly hotel rental” and his office is pursuing criminal charges against them.
This unregulated industry has become so profitable that there is a whole new cottage industry to help homeowners and landlords profit while not even being onsite and being as hands-off as possible. In 2014, a friend had relocated to the Bay and got a position with a start-up called Airenvy, which would help Airbnb hosts manage and book their listings and interact with guests the entire step of the process — they essentially promised that Airbnb hosts could be on permanent vacation while Airenvy managed their entire properties for them on Airbnb. She brought me on board as one of a few “neighborhood managers” in the LA market and it was my job to “onboard” properties, by inspecting prospective Airbnb properties and getting the keys, and interacting with homeowners and guests. While I was an independent contractor paid per visit, to everyone else I interacted with, I was essentially Airenvy’s person on the ground to handle all issues, from making sure guests were able to access properties to inspecting that the cleaning crews had properties ready for the next arriving guests.
Homeowners handed over their keys with full trust and confidence Airenvy would handle their properties and interactions with guests in the same meticulous and careful way they did, so they could maintain their high quality ratings as hosts on Airbnb, while being able to enjoy freedom from having to manage their properties personally. It was a very ambitious model that fell very short of expectations.
The reality was problems happened often and when Airenvy wasn’t answering their phones in a timely manner when guests were locked out of properties, irate and desperate homeowners trying to figure out who dropped the ball were calling me, since I was the only person representing Airenvy they ever interacted with in person. I could not in good conscience continue seeing people over-promised a service and then let down, and with my concerns ignored by the company, I left in less than 2 months. In 2 years, that company rebranded itself as Pillow, now has an office in Los Angeles and according to their mostly positive reviews, seems to have worked out their early growing pains as a startup.
So with companies like Pillow, it’s never been easier for someone to list their property on Airbnb as if they’re the homeowner waiting to welcome guests personally to their home and give them the local’s experience, when in reality, the majority of these properties on Airbnb are managed and operated like underground hotels in the middle of residential communities.
I don’t knock Airbnb hosts who are using their homes to help them financially, like a couple I know and have stayed with in San Diego, who live in their home and list their extra rooms. I just doubt that these are the everyday folks Airbnb is catering to at the festival even though they want us to believe folks like that are the face of the 1 billion dollar company. Reading their schedule of events reads more like an entrepreneur convention with seminars like “Expand Your Business, Host for Others”, “Building a Brand on Airbnb”, “Working Together with the Travel Industry”.
Airbnb’s press release also says “attendees will have the chance to engage with locals and a diverse range of communities, immersing themselves in the energy of the city and experiencing what it would be like to live there.” I would like to know which locals and which diverse range of communities were invited to this festival, other than the celebrity headliners. In one of the most unaffordable cities with a lack of affordable housing, will hosts be speaking with community members like me who live in rent-controlled buildings and wonder if Airbnb is responsible for the loss of long term rentals already in desperate supply? Will they be speaking with community groups which have long complained about the revolving door of tourists through homes which have become de facto hotels in their residential neighborhoods? Will Mayor Eric Garcetti who has been heading lavish festivals and hip block parties in downtown be attending? Downtown certainly is fertile ground for Airbnb. One of the properties I onboarded for Airenvy was a downtown loft that the owner told me was easily making him $300-400 a night during busy convention weekends. I’m sure he’ll be attending. If you just want to attend the $25 concert, it’s happening Saturday, November 19, 4pm-11pm at various locations on Broadway.