All over the world, travellers are abandoning over-priced and unappealing hotels in favour of smaller and more homely accommodation
I shall gloss over my first experience of Airbnb for a moment and move swiftly to the second. It is a work trip to San Francisco. There are almost no hotel rooms anywhere, but eventually the Guardian/Observer‘s travel agency turns up the Ramada Inn and books me in. It’s expensive: $252 a night. The website shows the rooms are dingy and tasteless: turquoise carpets, small windows, chintz bedspreads. And the reviews on Tripadvisor are – how to put this politely? – discouraging.
The most recent is a one-starred review headlined “Wow… really?” It goes on: “This hotel was disastrous from beginning to end. From… the filthy state of the room to the sheets that hadn’t even been washed from the previous guests, this was by far the worst hotel experience in my entire life … bar none.” The second is headlined: “Horrible” and calls it “a dump”.
Hmm, I say, perhaps I’ll have a look at Airbnb [which is a diminution of airbed B&B]. And this is how I end up not in the Ramada Inn, ranked by Tripadvisor as the 215th worst hotel out of 235 in San Francisco, but in an elegant Edwardian apartment in the most fashionable area of the city: the Mission.
My landlord is Sacha Tueni who, this being San Francisco in the age of the second dotcom boom, has a startup, and within minutes of my arrival he’s made me download a ride-sharing app to my phone (ride-sharing is the latest big thing in San Francisco), given me a guide to the neighbourhood, and offered to introduce me to anyone I need to meet. “It’s a small town,” he says. He shows me my room. It is immaculate. There is no chintz. It costs less than two-thirds of the Ramada.
Airbnb was once a startup too. Founded by two designers, Brian Chesky and Joe Gabbia, and a technologist, Nathan Blecharczyk, in 2008, it is now the granddaddy of what has come to be known as the “sharing economy”. It’s an over-inflated term for an accommodation website, but then Airbnb is nothing if not over-inflated. Its rate of growth is phenomenal. At the start of 2012, one million people had used the site. By the end of 2012, it was 4 million. And the effect – on the hotel industry, on people’s travelling habits, on householders’ incomes – is only just starting to be felt. There’s an economic revolution that Airbnb is spearheading. And it’s happening in people’s bedrooms.
Airbnb takes a booking every two seconds, and there are now 300,000 rooms, apartments and houses listed on the site (including 500 castles, 200 treehouses and 1,400 boats). In the garden of another Airbnb property in San Francisco, Blecharczyk tells me that 150,000 people a night stay in an Airbnb. “How does that compare to a chain like Hilton?” I ask him.
“Oh, it doesn’t compare,” he says. “I looked up Intercontinental recently and they do 100m nights a year.” Except, when I get home, I do the sums, and 150,000 x 365 days is nearly 55m bed nights a year. So, at Airbnb’s current rates of growth, parity may be only a few months away. Airbnb has not yet released any figures for this year but I notice Blecharczyk’s co-founder said that in March it was making 50,000-60,000 bookings a night. It’s growth is super-exponential, more than doubling every six months.
You might have noticed that everyone is talking about Airbnbs. 2013 is the year that it polevaulted out of the San Francisco startup scene and went global, mainstream, ubiquitous. But, then, tourism is the biggest industry in the world, bigger than oil and gas, bigger than finance. It generates 10% of global GDP. The site has users in 150 countries. Even the castles are going exponential. In February this year there were 200 on the site. Now it’s 500.
There are lots of reasons for this. Terrible, overpriced Ramada Inns being one. Another is that an awful lot of people have realised they have a potential revenue stream in the spare room, though you don’t need a spare room. Many people advertise their sofas, sheds, campervans gardens, treehouses, you name it. For every booking, Airbnb takes between 6% and 12%.
In San Francisco I could have stayed in a houseboat in Sausalito or a Hacker House (a shared dorm room aimed at the city’s young wannabe Mark Zuckerbergs) in Silicon Valley. I could have had a shared room in a vegan co-op house that looks like my vision of 28 Barbary Lane from Maupin’s Tales of the City. And, until recently, Blecharczyk tells me, I could have had the spare room in his home. “They tended to get very excited when they found who I was,” he says. “From their perspective, it’s the jackpot.”
Sacha Tueni, my landlord, has had both Blecharczyk’s co-founders, Chesky and Gabbia, to stay in his apartment. “It was a bit of a surprise,” he says. In San Franciscan technology circles – where Airbnb is one of the sun kings of the startup scene, and the “sharing economy” has the kind of resonance that “free cake” or “hot sex” has for the rest of us – this is not unlike coming home and finding Google’s Sergey Brin in your living room. It’s not a coincidence that I’m staying at Sacha’s. The recommendation came from Chesky and, full disclosure, they’ve given me a $500 voucher to use against the rental.
I’d read that Chesky, who is Airbnb’s CEO, does not have a home to go to: Airbnb is his home. “Brian and Joe take it in turns to be homeless for a bit,” says Blecharczyk. “I think Brian’s out at the moment.” Until relatively recently, their original spare room was still on the site and bookable.
Knowing your customer, being your customer, has been the cornerstone of Airbnb’s success. After months of struggle, they were close to packing it all in when, instead, they took a business mentor’s advice and went to New York. “It was where we had most users. And it’s an international destination, so if you get noticed there, you get noticed everywhere. A lot of people were taking pictures with their phones and this was back in 2008 when camera phones were not as good as they are today. So we went, took three days of pictures, and in the process met every single host. And then they knew us and wanted us to succeed, and suddenly the flywheel started in New York.”
Appropriately, Blecharczyk met Gabbia when he rented a room of his. “I found Joe on Craigslist and we became roommates by chance.” Later, after moving out, they set up the company in the same apartment. The eureka moment came about because of Blecharczyk’s empty room. There was a design conference in San Francisco, the hotels were sold out, and Gabbia and Chesky had the idea of a popup B&B with inflatable mattresses. Hence the original name: airbedandbreakfast.com.
Blecharczyk had the technology background and knew how to build the brainwave. He was a genuine teenage nerd. This, kids, is what can happen if you learn how to code. Blecharczyk taught himself at 12. At 14, someone gave him $1,000 to build a website ,and by 18 he was earning enough to be able to pay his way through Harvard. (The website, Gawker, gets very exercised at what they call his “dark past” as a black hat hacker and techno-spammer.)
One of the best stories, though, in the Airbnb deck of creation myths is that for a time they financed themselves by selling novelty breakfast cereals. One of their early successes was to target Denver where the 2008 Democratic convention was being held and where they knew there would be lots of journalists and a hotel shortage. As a stunt for the the TV cameras they took generic boxes of Cheerios and repackaged them as ObamaOs and Cap’n McCains and sold them for $40 a pop (there’s a venture capital firm in New York that keeps a box of ObamaOs in their conference room as a sad reminder of what happens when you don’t see the potential in something – Airbnb pitched them early on and they turned them down).
There are a lot of people saying that Airbnb is the next eBay; one of the most recent attempts to value it has it going public for an estimated $10bn. Although Blecharczyk is keeping his cards close to his chest, it’s clear they’re not going to stop at apartments. “I think there is a lot before us that people can’t fully anticipate,” he says. He’s probably right. Because who could have anticipated this?
Kepa Askenasy, the host of the Airbnb where I meet Blecharczyk, tells me how, two years ago, she took some pictures on her phone and stuck them up on the site, “and within 24 hours I had a young man from Berlin standing there”. Her first clients were “young tech guys”, working in the startups downtown, but “now I have people on honeymoons, 30th wedding anniversaries. Just really important stuff. Clearly, the whole trust component works because I’m very flattered that people come for such big-deal events.”
It’s a beautiful property, a walled tropical garden with four units for rent in outhouses and timber lodges. Askenasy laughs when I say “that must be pretty lucrative” and won’t tell me how much she’s making, but I do a back-of-an-envelope calculation, and at full occupancy it’d be around a quarter of a million dollars a year.
Would she have thought of renting out rooms if it hadn’t been for Airbnb? “Oh no, absolutely not. I did try a few times with Craigslist but I had problems with it. You never know who you were getting. You didn’t even know their last name until they got here.”
Askenasy is the No1 listing on San Francisco Airbnb. “Yes, I do seem to be,” she says. It’s not strictly a popularity ranking, Blecharczyk tells me, but “a lot of things go into that. A lot of algorithmic, complicated stuff”. Or what the rest of us call “jiggery pokery”. Looking at different cities, it seems like the first page is a mix of places and budgets designed to have universal appeal and edited accordingly. But there is no doubt that Airbnb has been good at the algorithms. Because renting out rooms wasn’t the problem that Airbnb’s technology solved. Look on Craigslist, Gumtree, or the longer established holiday rental sites such as vrbo.com or Owner’s Direct. Establishing a credible trust system was what the technology has solved.
Both renters and rentees have to establish their identity through a series of careful checks (including taking a picture of their passport or driving licence). A Tripadvisor system of reviews provides feedback. And, on certain properties at least, there’s instant booking. It’s not foolproof, though. There’s been a lot of bad publicity over a few rogue cases. In 2011 a woman in San Francisco had her apartment trashed. This unleashed a spate of stories, including that of a host whose guest left his crystal meth pipes behind. Airbnb responded with a 24-hour hotline and a $50,000 damage guarantee but there’ll always be a certain amount of risk in the bold new world of the “sharing economy”.
It’s not sharing, of course. Couchsurfing.org, founded in 2004, was about sharing – until it sold out to a venture capital firm two years ago and lost the plot. It was travellers welcoming other travellers into their homes out of a sense of hospitality and generosity and adventure .
Airbnb is about making money, not about sharing: money for its founders and investors, money for the people who open up their homes. It would be more accurately described as a “capitalist economy”. It’s blown couchsurfing out of the water, and it’s succeeding in doing what Margaret Thatcher wanted to achieve but ultimately failed to do: it’s creating entrepreneurs out of ordinary people. Airbnb is microcapitalism in action.
Blecharczyk runs through some of the good news stories. “We’ve had people for whom this has saved their home. Whether it’s because they lost a job or went through a divorce, they’re faced with a mortgage and they don’t have the resources to pay it.There’s a lot of flexibility in a stream of supplementary income.”
There are a few hitches on the horizon, such as the fact that a New York judge found that an Airbnber was running an illegal hotel and fined him $2,400. And at some point the hotel chains might wake up from their snoozeathon and point out how much revenue cities stand to lose if they are not around to pay their taxes and business rates, though the evidence suggests that Airbnb creates its own market and caters for demographics traditionally not well catered for by hotels – the impecunious, families, people who like to cook an egg. In San Francisco, Airbnb is estimated to have added $56m a year to the economy. What is more, most people spend their money in local shops and cafes rather than in city centre chains.
Of course, having money begets money. It’s just easier being a micro-entrepreneur if you own a townhouse in Chelsea than a single room in Scunthorpe. On the London site, I notice that some super-rich acquaintances of mine have posted their five-storey Hampstead townhouse, and it strikes me that Airbnb is a bit like Facebook for homes. There’s more than a small amount of showing off going on.
But I’m cheered by the fact that Sacha Tueni, my Airbnb landlord, does not own his place. An Austrian of half-Lebanese parentage, he’s one of the international, multilingual, ambitious twenty- and thirtysomethings who’ve made their way to the city. He first rented the apartment in 2009 when he had a good salary working at Facebook. Then, when he struck out on his own, “I let out both rooms in my apartment on Airbnb and went and stayed at my co-founder’s apartment. We set up the office in his apartment and the income I got from Airbnb paid for his rental and funded our first employee.”
Every day that I am in his apartment I give praise for the fact that I’m not in the Ramada Inn. From the back porch I can watch the fog roll in across the San Franciscan skyline. Using his notes, I find Tartine, a French bakery two blocks away. It’s so popular that if you want to buy a loaf you need to reserve it.
I love it. I love being in a proper place and not having to rely on Starbucks for a coffee. I love making myself a boring non-hotel breakfast. I hire a bike and scoot around the city as if I live there. (This is incidental but sometimes Airbnb is about the sharing: I discover the Dolphin Club, an outdoor swimming club with views of the Golden Gate Bridge that is almost enough to make me want to move there.)
On the last night I go to a Taqueria, an authentic bare-bones Mexican place, and hear Sacha Tueni’s tales of startups and venture capital pitches and Silicon Valley dreams. He shows me the website he has built. “We were actually trying to build another site. And my co-founder just put up this page with a Steve Jobs quote on it and it went viral overnight. We had five million hits in 24 hours and we thought, hmm, maybe there’s something in this?” The site is called changemakrs.com. And the Steve Jobs quote? “For something this complicated, it’s really hard to design focus groups. A lot of times people don’t know what they want until you show it to them.” You know, like a spare room.
Still, I’ve held off mentioning my first Airbnb experience, which was in Paris this summer. (Paris is Airbnb’s most popular destination after New York and ahead of London). It was a whole apartment, and a friend booked it on the basis that it was cheap. The first set of sheets I tried to put on the bed were dirty. There were bowls filled with broken bits of plastic and old pinecones whichever way you looked. And on the last night a mouse skittered across the living room. I’ve just looked it up, and it had two previous reviews, both positive. My friend didn’t leave one. But then, what would you say? You’re a bit dirty, love, and you should throw out the crap? I suspect that the woman who lived there had problems that extended further than a bit of poor housekeeping, and I’m not sure it would have helped.
But it’s an intimate thing, staying in somebody’s home. Blecharczyk says that Airbnbers want a more authentic experience than staying in a hotel. And it is that. If boutique hotels defined the 90s and 2000s in tourism, someone’s spare room (or spare castle) will possibly define whatever we’re calling the 2010s. But then, all things considered, I’d take an Airbnb over a Ramada Inn. Even with a mouse.
Link to article: feeds.theguardian.com/c/34708/f/663875/s/3149f710/sc/4/l/0L0Stheguardian0N0Ctravel0C20A130Csep0C160Cairbnb0Etravel0Erevolution/story01.htm