The unbundling of hotel services--marketplaces for luggage storage

Airbnb is remarkable for the way it has become a major competitor to hotels, by deploying properties that were designed (and may be zoned) as private residences.  In doing so, it has separated the lodging services that hotels provide from some of the other services, like lounges, restaurants, bars, gyms, spas, and ... luggage storage.  So what are you to do if your plane arrives hours before your airbnb is ready, or if you have time to kill after checkout time?

There's an app for that: Lifehacker has the rundown.
How to Temporarily Store Your Luggage When You're Staying at an Airbnb

There's Stasher, for "Luggage storage in trusted shops & hotels
Book on-demand at a low daily rate"

And Bounce: "Bounce: Bag Storage Everywhere--On-demand storage & delivery".

Luggage Hero: "Store your luggage in a local shop"

and in Europe, Nannybag.

Airbnb in Paris

The FT has an informative story about Airbnb's large footprint in Paris, the nuanced effects this has on the city, and French attempts at regulation:

 Airbnb: ‘It’s a cash machine. It’s magical. You are paid to go on holiday’

"The home-sharing site’s number one destination is Paris, where it stands accused of driving up rents and house prices"

Bar Ifrach on market design at Airbnb

Here's a talk today at the Harvard Kennedy School that caught my eye:

Bar Ifrach (Director of Data Science, Airbnb): 'Search, Pricing and Marketplace Dynamics at Airbnb'

Date: 

Tuesday, March 20, 2018, 12:00pm to 1:00pm

Location: 

Darman Room, Taubman Building, Harvard Kennedy School

Join us for a Behavioral Insights Student Group lunch with Bar Ifrach.

Bar Ifrach is a Director of Data Science at Airbnb, leading a group of over 60 data scientists who cover Airbnb's core business unit -- Homes -- across analytics, inference, and algorithms. In addition, Bar is a member of the Homes business' leadership team that designs strategy and oversees execution across Airbnb's main product. Bar begun his academic studies at Tel Aviv University, where he completed a BA in economics in 2007. Following that, Bar completed a PhD in operations research and economics from Columbia Business School in 2012, researching learning and pricing in online marketplaces and game theory. After a postdoc at Stanford University, Bar joined Airbnb as a data scientist in the marketplace team in 2013, where he focused on optimizing matching through personalized search and marketplace design. In 2014 Bar founded Airbnb's pricing team that currently provides prices suggestions to millions of hosts. In 2015 and 2016 Bar managed Airbnb's Marketplace data science team, fueling Airbnb's rapid growth through multiple efforts, including scaling Instant Booking to the majority of the business.

Topic of talk: Search, Pricing and Marketplace Dynamics at Airbnb

In his 2016 book Who Get What -- and Why, Nobel laureate Alvin Roth defined three general principles for successful marketplace: thickness, congestion-free, and safe and simple. In this talk, we will illustrate these principles using unique examples from Airbnb's two-sided marketplace and tie them back to Airbnb's success. In addition, we will discuss challenges and solutions in measuring the efficacy of marketplace design changes in light of these principles.

Airbnb faces regulatory headwinds in NY

The FT has the story:
Airbnb faces fight for survival in New York City
Governor set to sign legislation likely to end start-up’s business in Big Apple


"The online service, which connects owners of homes and flats with tourists and other renters in cities around the world, has often clashed with regulators which accuse the company of facilitating illegal hotel businesses and reducing affordable housing stock.

In New York, hotel unions and New York City officials have been particularly vociferous on the company’s failure to comply with a 2010 accommodation law that banned short-term rentals in Manhattan, but which is rarely enforced.

On Wednesday, Airbnb said that it wanted to pay taxes in New York, estimating that it could generate about $90m a year in the state under its new registration scheme. The company also proposed a new “three strikes” rule that would permanently ban hosts who broke the 2010 law more than three times.

The company has already reached agreements on collecting and remitting taxes with many other cities, including Paris, its largest market. In New York City, Airbnb hosts 46,000 flats and homes.

Like other such Silicon Valley start-ups that have disrupted traditional business models, Airbnb has been forced, often through confrontation, to become more responsive to local regulators and interest groups as it expands."
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And, after the governor signed the bill,
Airbnb Sues Over New Law Regulating New York Rentals
"Hours after Gov. Andrew M. Cuomo of New York signed a bill that would impose steep fines on Airbnb hosts who break local housing regulations, Airbnb filed a federal lawsuit contending the new law would cause it “irreparable harm.”

The heightened battle in New York follows lawsuits that Airbnb has filed against its hometown San Francisco and in Santa Monica, Calif., which have both moved to fine the company for illegal listings.

The company, which operates in a regulatory gray area around the globe, is also fighting tough battles in Amsterdam and Barcelona, Spain, which penalizes hosts who list illegal rentals, and in Berlin, which has banned most short-term rentals."

Airbnb consider market design changes to reduce discrimination

The NY Times has the story:
Airbnb Adopts Rules in Effort to Fight Discrimination by Its Hosts

"Airbnb, based in San Francisco, said that it would institute a new nondiscrimination policy that goes beyond what is outlined in several anti-discrimination laws and that it would ask all users to agree to a “community commitment” starting on Nov. 1. The commitment asks people to work with others who use the service, “regardless of race, religion, national origin, disability, sex, gender identity, sexual orientation or age.”

In addition, the company plans to experiment with reducing the prominence of user photos, which have helped signal race and gender. Airbnb said it would also accelerate the use of instant bookings, which lets renters book places immediately without host approval."
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There is a strong market design subtext to this story: Peter Coles, Airbnb's (new) chief economist, used to work at Harvard Business School, where some of his former colleagues conducted an experiment that helped focus on the possible discrimination problem.
Here's the current version of that paper:

Racial Discrimination in the Sharing Economy:Evidence from a Field Experiment
 Benjamin Edelman, Michael Luca, and Dan Svirsky
 September 4, 2016

 Abstract
Online marketplaces increasingly choose to reduce the anonymity of buyers and sellers in order to facilitate trust. We demonstrate that this common market design choice results in an important unintended consequence: racial discrimination. In a field experiment on Airbnb, we find that requests from guests with distinctively African-American names are roughly 16% less likely to be accepted than identical guests with distinctively White names. The difference persists whether the host is African-American or White, male or female. The difference also persists whether the host shares the property with the guest or not, and whether the property is cheap or expensive. We validate our findings through observational data on hosts’ recent experiences with African-American guests, finding host behavior consistent with some, though not all, hosts discriminating. Finally, we find that discrimination is costly for hosts who indulge in it: hosts who reject  guests are able to find a replacement guest only 35% of the time. On the whole, our analysis suggests a need for caution: while information can facilitate transactions, it also facilitates discrimination.

Acquiring the first thousand customers in a two-sided market

HBS Working Knowledge has a nice piece about a case study by Professor Thales Teixeira,

How Uber, Airbnb, and Etsy Attracted Their First 1,000 Customers

On Airbnb:
"founders Brian Chesky and Joe Gebbia thought like customers themselves, trying to figure out where they would go if Airbnb didn’t exist. It didn’t take them long to figure out the answer: Craigslist. The entrepreneurs figured they could do a better job of making apartments appealing than the online classified site, but first they had to siphon away its customers. To do that, Chesky and Gebbia created software to hack Craigslist to extract the contact info of property owners, then sent them a pitch to list on Airbnb as well.

The strategy worked. With nothing to lose, property owners doubled their chances of finding a potential renter, and Airbnb had a ready supply of homes with which it could attract customers."

Airbnb and racial discrimination by hosts

The NY Times follows the story: Airbnb Vows to Fight Racism, but Its Users Can’t Sue to Prompt Fairness

"SAN FRANCISCO — Brian Chesky, chief executive of Airbnb, made a vow this month to root out bigotry from his business.

His online room-sharing company has recently been grappling with claims of discrimination, with several Airbnb users sharing stories on social media about how they were supposedly denied a booking because of their race. The issue came into the open in December, when a working paper by Harvard University researchers found it was harder for guests with African-American-sounding names to rent rooms through the site.

“This is a huge issue for us,” Mr. Chesky said at a company event in San Francisco in early June. “We will be revisiting the design of our site from end to end to see how we can create a more inclusive platform.”

But even as Mr. Chesky promised to stamp out racism from Airbnb, the company’s class-action litigation policy makes it tough — if not impossible — for customers to push the start-up to make any substantive changes on the issue. Airbnb requires that people agree to waive their right to sue, or to join in any class-action lawsuit or class-action arbitration, to use the service.

That clause, known as a class-action waiver, crops up whenever someone logs into Airbnb’s site. In March, the company updated its terms of service for new users, partly tohighlight that clause. Last month, Airbnb users were unable to log in and use their accounts until they agreed to the updated terms, including the class-action waiver language.

...

"For Airbnb, an effective response to discrimination claims is needed to blunt any fallout on its business. The company, valued at about $25 billion, has hosts in more than 34,000 cities and 191 countries and is positioning itself as an alternative to hotels. Airbnb recently raised $1 billion in debt to help finance its growth, according to a person familiar with the deal who spoke on the condition of anonymity because the transaction is not public. The credit facility wasreported earlier by Bloomberg.

Airbnb’s expansion depends partly on whether people of different nationalities and ethnicities feel welcomed to the platform in the same nondiscriminatory way that they are welcomed at international hotel chains. Two rival room-sharing services, Innclusive and Noirbnb, are now marketing themselves as services that provide inclusive and safe short-term rentals for people of any race or ethnicity.

Ms. Murphy, the Airbnb adviser, said the company recognized that eliminating discrimination was in its best interests. She said Airbnb’s relative youth — the company was founded in 2008 — meant it could deal with the issue in a more agile way than companies with entrenched cultures that may have needed the pressure of litigation to do the right thing.

“Airbnb is part of a new area of commerce, and the conditions for transactions are still developing,” she said. “That’s why it’s important to get it right.”

Airbnb Replies (with some data) to the Report of the NY State Attorney General

Here's a 2014 report by the NY State Attorney General's office, Airbnb in the city

Short-Term Rentals Experienced Explosive Growth. Private short-term bookings in New York City on Airbnb increased sharply during the Review Period, registering more than a tenfold increase. The associated revenue also spiked, nearly doubling each year. This year, revenue to Airbnb and its hosts from private short-term rentals in New York City is expected to exceed $282 million.

Most Short-Term Rentals Booked in New York Violated the Law. State and local laws in New York—including the Multiple Dwelling Law and the New York City Administrative Code— prohibit certain short-term rentals. During the Review Period, 72 percent of units used as private shortterm rentals on Airbnb appeared to violate these laws.

Commercial Users Accounted for a Disproportionate Share of Private ShortTerm Rentals by Volume and Revenue. Ninety-four percent of Airbnb hosts offered at most two unique units during the Review Period. But the remaining six percent of hosts dominated the platform during that period, offering up to hundreds of unique units, accepting 36 percent of private short-term bookings, and receiving $168 million, 37 percent of all host revenue. This report refers to these hosts as “Commercial Users.”

Top Commercial Users Employed Rental Platforms to Run Multimillion-Dollar Short-Term Rental Businesses. Well over 100 Commercial Users each controlled 10 or more unique Airbnb units during the Review Period. Together, these hosts accepted 47,103 private shortterm reservations and earned $59.4 million in revenue. The highest-earning operation administered 272 unique Airbnb listings, booked 3,024 reservations, and received $6.8 million in revenue during the Review Period. Each of the top 12 New York City operations on Airbnb during that period earned revenue exceeding $1 million.

Private Short-Term Rentals Displaced Long-Term Housing in Thousands of Apartments. In 2013, more than 4,600 units were booked as short-term rentals through Airbnb for three months of the year or more. Of these, nearly 2,000 units were booked as short-term rentals for a cumulative total of half the year or more—rendering them largely unavailable for use by long-term residents. Notably, the share of revenue to Airbnb and its hosts from units booked as private shortterm rentals for more than half the year increased steadily, accounting for 38 percent of each figure by 2013.

Numerous Short-Term Rental Units Appeared to Serve as Illegal Hostels. New York law does not permit commercial enterprises to operate hostels, where multiple, unrelated guests share tight quarters. In 2013, approximately 200 units in New York City were booked as private shortterm rentals for more than 365 nights during the year. This indicates that multiple transients shared the same listing on the same night, as they would in an illegal hostel. The 10 most-rented units for private short-term rentals were each booked for an average of about 1,900 nights in 2013, with the top listing accepting 13 reservations on an average night.

Gentrified or Rapidly Gentrifying Neighborhoods Primarily in Manhattan Accounted for the Vast Majority of Revenue from Private Short-Term Rentals in New York City. Bookings in just three Community Districts in Manhattan—the Lower East Side/Chinatown, Chelsea/Hell’s Kitchen, and Greenwich Village/SoHo—accounted for approximately $187 million in revenue to hosts, or more than 40 percent of private stay revenue to hosts during the Review Period. By contrast, all the reservations in three boroughs (Queens, Staten Island, and the Bronx) brought hosts revenue of $12 million—less than three percent of the New York City total
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Here's a recent NY Times story on the data Airbnb has recently made available:
Airbnb Says Data Dump Shows Misuse of Service Is Rare

"With its release of a trove of data this week, the short-term rental company Airbnb sought to underscore how the majority of its hosts in New York City are playing by the rules. The point is a critical one for the company, valued by investors at about $24 billion, as it tries to pacify skeptical lawmakers and regulators.

Of particular concern to officials are the Airbnb hosts who lease multiple apartments, renting them out year-round and distorting their market value in a climate of scarce affordable housing.

The anonymized information released by Airbnb on rentals between November 2014 and November 2015 showed that 55 hosts in Manhattan, the borough with the most listings, have five or more full units listed on the platform, a tiny fraction of the more than 18,700 units listed in the borough.

...

Airbnb said it removed more than 2,000 listings last year after an affidavit was filed by the New York State attorney general, Eric T. Schneiderman, saying that two-thirds of the apartments listed in the city were illegal sublets.

A spokesman for Mr. Schneiderman’s office said that after a review of anonymized data Airbnb provided in 2014, it sought the identities of 124 hosts, all of whom had a minimum of 10 listings on the site and were earning an average of $500,000 a year. In June, the attorney general’s office referred the cases, including about two dozen hosts who had indicated a willingness to settle, to four city agencies with enforcement powers.

Wiley Norvell, a spokesman for Mayor Bill de Blasio, said that after receiving the attorney general’s referral, “city agencies began assembling cases to hold violators accountable.”

“We expect to announce those results soon,” he said.