Edit: Look, I'm all for affordable housing, but when viewing this within the context of a looming recession and potential financial crisis I can assure you that the last thing you want to do is add in a potential amplifier to a housing market crash. Houses may get cheaper, but everyone is going to suffer in very difficult to imagine ways. Corporate debt markets are looking scary as hell right now. If you threw a housing market meltdown at it right now, we could easily be looking at something much much worse than what we saw in '08.
If people buying houses to rent on Airbnb artificially inflated the housing market, it's just a necessary correction and federal support would be a mistake.
Airbnb as a whole, is a good idea- but some people are doing horrible things to the housing market and at worst AirBNB is complicit.
If people buying houses to rent on Airbnb artificially inflated the housing market
net-net : is n't both the same?
What we're talking about is making the housing market more healthy, where health is viewed from the perspective of the nation.
There is inefficiency being absorbed by the system when very finite housing capacity is being used primarily by vacationers who already have a home, and now that terribly finite supply is being translated to mere vacation enhancement.
One possibility would have been to take advantage of the boom times and strong economy over the past decade, and build lots of housing to support the huge influx of new jobs created in big cities. Make our prosperous cities actually feel prosperous, and accessible to anyone who wants access to opportunities. Creating this world would inherently mean that housing is not nearly as good of a capital investment for individuals. That would make property owners less vulnerable in an economic downturn. Low risk for low (financial) reward. But the public has and continues to overwhelming reject this option.
Another possibility, is that we could have gone a very long time without a downturn, and let our housing values just increasingly get more and more expensive with no upper limit. This is clearly the path most homeowners were hoping for. It creates a more and more stratified society, where only the very wealthy and the very few lucky subsidized-housing lottery winners can live in or near prosperous cities. We're already there in many places, and it certainly would only keep getting more and more extreme if unchecked.
And then there's the new scenario you suggest and that we may be approaching - a major crash that will lower prices that have grown unchecked for a long time.
I would have really, really liked to see the first option. Maybe one day we will. But since that's off the table for the foreseeable future and the only remaining possibilities are the 2nd or 3rd options, it seems like a major correction in the housing market is the preferable one. Obviously the coronavirus outbreak itself where many people might get sick or die is terrible, and I really hope that the shelter in place measures will be effective to stop the spread. And I feel for people that are losing their jobs at this time. But as far as just the impact on the housing market, this correction may turn out to be a good thing for the majority of the population who are not wealthy homeowners. It could transfer a lot wealth from the older generations to the younger ones, whereas our society has been doing the extreme opposite for a long time now.
So yeah, they're helping out tourists, but they're harming all the people in the city who live there and need a place to live. If you're primarily a tourist then Airbnb is good for you; if you live in a high cost city then it's most definitely not. And more of us are in the latter situation, me included.
Oh I (living in Munich) hope for AirBnB going belly up. This will free a LOT of apartments back to normal rental markets. The rental markets won't be "hit" at all, the landlords will only lose the difference between "30 days of rent at AirBnB prices" and "30 days of rent at market value".
The winners will be those priced of their own home cities by hipsters and the neighbors of current AirBnBs who don't have to suffer from people running, essentially, illegal hotels in their houses - with people abusing apartments for sex orgies/porn sets, mass parties, or simply losing their keys and mashing on the doorbells.
Unfortunately this is huge - it's why rents have shot up in many cities.
But, as others in the thread have suggested, what will rush in when these leveraged AirBnB hosts lose properties will not be a bunch of normals with jobs and families, it will be a bunch of new investors who can buy cheap with cash.
Consequently, my guess is AirBnB owners aren't hit too long in the medium term (1 year out). Not too much demand hit in rural areas -- and in urban areas they can switch to long-term rentals.
> Aren't there a ton of cases where people are mortgaging multiple homes and paying them off with the revenue they generate?
So buyer beware does not apply to housing? In case you buy the wrong thing or in the wrong place or the wrong time you just get reimbursed?
As far as I can tell, the functionality offered by Airbnb and Uber hasn't changed at all since they launched over a decade ago. The only things I've noticed them add are "Airbnb Plus" and "Uber Black", which are just "pay some more for a nicer/better-looking place/car".
Of course building these apps to work as smoothly and engagement-y as possible isn't easy, and I'm sure I sound incredibly naive to many people who've worked at those companies, but my assumption would be that there'd be a lot of upfront investment and work building your one product with its one feature - connecting seekers and providers and offloading all the meatspace work to the providers (and phone manufacturers, for ridesharing) while you take a cut - and then your revenue and profit should just go up and up over time on its own.
Why isn't that what happens? I'm sure one obvious answer would be "wasteful spending and unnecessary hiring", but I have no idea if that's actually the explanation here for either company.
Do you have any sources for this?
That said, I'm not sure how many asterisks are attached to the definition of profitable. Likewise, the fact that a company that holds no substantial assets while operating in the face of most regulations only became profitable in 2018, while clearly being the market leader, makes me wonder what is going on with their financials. It should not take 10 years for a company like AirBnB to become profitable, it should take closer to 5.
I know they had a disagreement with their CFO in 2018, and it took them the better part of a year to find a replacement. Admittedly, the replacement seems incredibly qualified.
They made an EBITDA (operating) profit. They were not a profitable company.
Are they refunding booking fees to customers while paying hosts?
Traditional hotels lose money because of huge amount of, costs (both fixed and variable) associated with running a hotel.
shouldn't Airbnb be making so much money at this point?
Edit: "...at this point?" not in reference to the current pandemic, rather at this point of how far Airbnb has come and how they've become a household name all over the world.
For reference, they take 20 to 30% commission on each booking, whereas the fixed costs to run a website are ridiculously low. Even with half the bookings, it's still a cash cow.
They were taking that 20-30% and reinvesting back into growth. That means people, offices, tech, marketing, audits of homes, process, insurance, etc.
When things look good you can run lean and focus on growth. If things start to turn you can ratchet back those costs.
Unfortunately, things turned on them very fast and they aren't that nimble. When you've got 15k employees with salary, bonuses, benefits, offices that aren't being used and overnight you reduce your top line revenue by 50%+ you're likely in the red and from what I hear, they were in the red prior to this.
AirBnB will likely be a casualty of this downturn. They're highly focused on the part of the economy hardest hit by COVID-19 and are unable to diversify in time.
Lots of folks will lose their jobs, a lot of others may lose second or third homes that were used solely for part-time rentals. It's going to be hard on a lot of people and had AirBnB not gotten so far out over their skis they'd likely be OK, but would not be the market leader they were a few weeks back.
There was a subject on HN yesterday were people were posting offers from AirBnb in excess of 400k per year and from what you are telling me they have 15k+ employees now. Fact is, they're burning money for the sake of growth and metrics.
Can they sustain this and sustain it forever? No, but there are pretty much no business in the world who could, so that's not a reasonable metrics to say they're doing poorly and in danger.
They might get a reality check and cut some fat, like most unicorns playing the VC game get sooner or later, but the company is not at risk of dying.
Good for them for passing money down to staff, but my goodness, how does it make financial sense, no clue.
> whereas the fixed costs to run a website are ridiculously low
This is clearly not true. They are a tech company and have a large number of well-compensated engineers. So they do have a large amount of fixed costs.
It sounds like you're arguing from hypotheticals, none of which actually apply to Airbnb as it exists in the real world.
I've worked at their main competitors for a while. I know the industry. I guarantee you AirBnb is not at any risk of disappearing.
At the same time, they have large fixed costs because they have a lot of employees and leased office space. So money coming in goes down massively while money going out doesn't.
EDIT: It sounds like others are talking about pre-coronavirus times whereas I'm talking about now (like the linked article is).
What are they doing besides providing intermediary service
all around (most of) the world throughh their website.
I presumed they would be profitable by now, just as Facebook was profitable before IPO. Not saying they should be as profitable as Facebook but they should be profitable from taking a cut off every booking.
And the comparison to Facebook isn't really fair; not everyone can be a Facebook. They're an exceptional success story. Airbnb isn't.
What are they doing as an intermediary that 15% on each booking isn't enough to pay salaries, rent and server costs?
Or are you saying that their business isn't well run, that their costs are too high, etc.? Because I can't answer this part of it; I don't work for them, I don't set their strategy, etc. I can't defend them on that mark. But it is true. They are spending more than they are earning. Just because you don't understand how or why doesn't mean that it isn't in fact happening.
It doesn't mean that we don't moderate such threads at all, though. We penalized this one the same way we've been penalizing almost every coronavirus story, because if we didn't, HN would have consisted of nothing but coronavirus for the past week. I don't see this story as significant or interesting enough to rise above the threshold. "$Company is losing money" is a dog-bites-man story right now, especially in that industry. No?
> we've been penalizing almost every coronavirus story
Only you know the actual volume of coronavirus-related stories, and whether leaving them as-is would cover the entire top 10, entire first page, or entire first 3 pages.
However IMO the adjustment, or "penalization," being applied seems too severe. CV is obviously the most important news topic in the world right now, the situation changes extremely rapidly, making the comments section, with contributors from around the globe, highly relevant and informative. My opinion is that up-to-date CV-related content on HN has been difficult to find, and the lack of such, in favor of random, often whimsical topics, trivializes HN.
As I write this, the only CV-connected stories on page 1 are at #19: "Chloroquine, past and present" and at #28: "State projections for Covid-19." While its understandable not wanting HN to be totally dominated by CV, I think there is a better balance to be had.
The principles we try to apply are the "significant new information" test for major ongoing stories , and optimizing for intellectual curiosity . One thing we don't do routinely is moderate by which stories are most important in the world. There are always many things going on that are far more important than the topics that appear on HN. If importance were a leading factor, HN would become a regular news site and cease to exist as HN. Important stories tend to drown out the quieter, odder, or deeper ones that gratify curiosity. HN is mostly a site for the latter. That's how a biography of George Gershwin can be at the top of the front page in the middle of a global pandemic.
In practice, a crisis like this is inevitably going to show up on HN a lot. But it will show up in unpredictable ways (because predictability is the enemy of curiosity), not like it does on a regular news site.
 https://news.ycombinator.com/item?id=22527396, https://hn.algolia.com/?dateRange=all&page=0&prefix=false&qu...
because they don't gain traction among the HN audience. CV has, and to a very large degree, according to dang's comment above.
That's a bit of a misperception. They do gain traction. If we didn't moderate them, HN's front page would consist of the hottest topics of the moment and would be a different site altogether.
The strongest force on the internet is indignation—orders of magnitude stronger than curiosity—so there need to be countervailing mechanisms (like software and moderation) to contain its effects and allow HN to be HN. Upvotes alone don't do it, unfortunately.
People are most welcome to ask further questions if there's something we haven't explained yet. I'm slowly building up a corpus of links to previous explanations, which is why my answers are so full of HN Search links. Eventually we might compile all that into some web pages.
Note that a lot of these "hosts" are often small guesthouses that barely make rent and now have basically nothing for the next months. Of course you have your fair share of "rent hackers" on AirBnb but beyond that a lot of people run genuine small businesses around the platform and care a lot about their guests.
from where i stand they attempted to turn their platform into an entire travel experience (w/ business travel "certifications", spending lots on verifying pictures/host setups/etc., experiences) as opposed to just sharing homes. i believe they have large M&A associated with this, buying up some longer-term rental sites who may have been competitors in the future as well.
When the VC money runs out not even government bailouts will help. Helping money-losing companies to lose more money isn't in the interest of a government unless they are essential to the rest of the economy or national security.
Maybe the bay area will be hit much harder than other companies.
Ultimately, it's a question of how long and deep the downturn is. A couple of months and VC-backed companies already losing money may be ok. A couple of quarters and you'll see a lot go belly-up depending on who they sell to.
Companies with good fundamentals are laying people off en masse and burning their cash reserves rapidly. It's not just the VC backed companies, or the low marging/highly leveraged mom-and-pop, big box retail, airline, whatever.
I'm terrified what's going to happen on May 1 when rent checks and mortgage payments bounce.
If this virus was artificially made or by natural evolution, I can say it was meant to reset the society. It will actually prevent WW3.
I recently booked and I had to actively avoid CTAs for things I wanted nothing to do with: tours, food offers, I don't even know. Finding a place to rent practically meant looking below the fold.
Also, pretty sure they developed their own fonts and I shudder to think what they paid for the new utero-logo.
Wsj published the article, what are they going to do about it?
Don't be rude, it's stupid.
You can have the last word.
Airbnb is 12 years old. If they haven't figured out that they shouldn't spend more than they earn by now, I don't think the current management will be able to figure it out in another 12 years.
The banks aren't going to loan AirBNB at a low interest rate when it looks like they're on the edge of insolvency.