Category: airbnb

Why is Airbnb offering a bonus for new hosts in Vancouver?

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Here’s an odd thing. Airbnb has a new program in Vancouver, offering $250 cash bonus for first-time hosts. It’s odd for two reasons. First, the company has been under pressure for exacerbating the city’s housing affordability crisis (Vancouver’s housing market is the most expensive in North America), so this looks like asking for more trouble. Second, Airbnb in Vancouver is already going gangbusters, so why does Airbnb feel the need to pay out to attract new hosts?

Here is a chart that shows what I mean by “gangbusters”. The y axis is the total reviews per month for a set of North American cities, with Vancouver picked out in bold red. The total number of visits is probably about one-and-a-half times this number, so it’s a measure of overall Airbnb traffic in the city. You can see there is a seasonal trend, with traffic dropping off over winter and picking up again in summer, but it’s pretty clear that this summer’s peak is well above last summer for most of these cities. Vancouver is now running at well over twice the volume of last year. (Click to expand, and hit the back button to return to the post)

vancouver_1But there’s another way of looking at this growth. Vancouver is again highlighted in bold red in the chart below, which unpacks the overall traffic shown above. The x axis is the number of listings in the city, and the y axis is the average occupancy rate measured as the number of reviews per month per listing. Multiply them together and you get the total traffic for the city.

For most cities the trend is to more listings, with the occupancy rate going through the same seasonal trend we saw up above. (Although Philadelphia and Chicago are not doing so great, and San Francisco (the curly green line) seems to have hit a limit of listings, probably because of the drastic action Airbnb is taking to legitimize itself in that city. But that’s another story.)

vancouver_2

An increase in traffic can come about two ways: more listings, or higher occupancy, and there’s a bit of a trade-off between the two. So Toronto and Montreal (yellow and brown) have seen a rapid growth in the number of listings and the occupancy rate has grown significantly, but not massively. Meanwhile Vancouver has not seen such a rapid growth in the number of listings, but the occupancy rate is growing like topsy.

Now if a hotel was counted as a single listing it would be way to the top left of this chart, while Airbnb wants to claim that its hosts are only occasionally renting out the place in which they live — which translates into the bottom right. The fact that Vancouver listings are getting used more often could be bad news for Airbnb in its battle for legitimacy, so if it can attract more hosts they may take up some of the slack and move the line out to the right and down a bit.

To step back a bit, you do have to wonder if “bottom right” or “top left” makes much of a difference from the actual affordability and neighbourhood impact perspective. If you live in an apartment building and every other person rents out their place once a month, that’s the same impact in terms of traffic, extra utilities and the other things people complain about than a small number of people renting out their places all the time. And thousands of tourists staying in a small neighbourhood will have a similar impact (good and bad) in some ways if they are scattered across many listings or huddled together in a few. And what about the impact on house prices in high-traffic hotspots? It’s not obvious to me that a large number of low-occupancy listings has less of an impact than a small number of high-occupancy listings, though I could be convinced either way.

Anyway, I feel pretty confident that Airbnb is making its offer to offset the bad image that goes with the high-occupancy rates that Vancouver is now experiencing. And if there’s an offer for Seattle hosts, well that will confirm my suspicions.

Update: Thanks to Caroline O’Donovan for pointing me to this: an Airbnb host promotion in Seattle. Suspicions confirmed!

Airbnb in Barcelona: two readings

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A story on Ada Colau, who may be the world’s most radical mayor, hjighlighte how Airbnb can create problems for the cities where it operates:

Colau’s stated priority is to move Barcelona away from what she considers “massified tourism”, with no thought for sustainability, strategic planning or input from the public. “Until now, all we have had were private initiatives doing what they wanted,” Colau told me. “This has led to a model that is out of control.” She added: “We suffered the same short-sighted model here with the real estate bubble. We are trying to prevent the same mistakes happening again with tourism.”

For a detailed look behind the scenes, Albert Arias Sans and Alan Quaglieri have a new paper called “Unravelling Airbnb: Urban Perspectives from Barcelona” (sadly, login required). They investigate the claims made in Airbnb’s “reports” on the city and show each of them to be false:

Airbnb claim: The vast majority of Airbnb accommodation is located outside the areas with major concentrations of hotels.
Arias/Quaglieri: There is a strong correlation between Airbnb listings and the presence of hotels. Airbnb supply is located to a large extent in the same neighbourhoods as hotels.

Airbnb claim: Airbnb focuses on a new type of traveller seeking the authentic to immerse themselves in other cultures.
Arias/Quaglieri: Analyzing languages spoken by hosts: the composition of the Airbnb host community is different from the profile of the area as a whole. Airbnb appears as a field for the ‘cosmopolitan consuming class’, where hosts and guests share a similar approach to the city around a ‘cosmopolitan sense of local’ from which a large proportion of the rest of the residents of Barcelona are excluded.

Airbnb: proceeds from Airbnb allow hosts to cover their basic expenses and reach the end of the month
Arias/Quaglieri: Airbnb hosts are not representative of the local communities. They are far more educated, have fewer children, and live in less-crowded households. While Airbnb hosting may help solve the prolems of people living in middle- to upper-class neighbourhoods, it is not a resource open to those in the poorer neighborhoods.

A really interesting read, which is a significant step forward in the debate about Airbnb’s impact on the major tourist centres.

Airbnb report: media coverage

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The media response to the Airbnb report from Murray Cox and me has been gratifying. Here are the major stories to date.

Mainstream media:

New York & real estate:

Tech press:

Other things:

International:

 

How Airbnb’s data hid the facts in New York City

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A report by Murray Cox and Tom Slee

On December 1 2015, Airbnb made data available about its business in New York City, with much fanfare. A new report by Murray Cox and me shows that the Airbnb data release misled the media and the public.
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Airbnb’s data release was presented as “the first time Airbnb has voluntarily shared city data on a wide scale on how its hosts use the online platform”. This report shows that the data was photoshopped: Airbnb ensured it would paint a flattering picture by carrying out a one-time targeted purge of over 1,000 listings in the first three weeks of November. The company then presented November 17 as a typical day in the company’s operations and mis-represented the one-time purge as a historical trend.

Key facts

  • Airbnb purged over 1,000 “Entire Home” listings from its site just days before it prepared a data snapshot of its business.
  • Airbnb used the data snapshot to paint a misleading picture of its business:
    • Airbnb’s message was that only 10% of Entire Homes listings belonged to hosts with multiple listings. The true number had been close to 19% for all of 2015.
    • Airbnb’s message was that “95% of our entire home hosts share only one listing”. The claim was true for less than two weeks of the year.
    • Airbnb’s rosy projections about the future of its business were not objective analyses based on historical trends. The company extrapolated from an artificial and unrepresentative one-time event.
  • Airbnb’s one-time purge was a PR effort, and does not indicate a change of heart for the company:
    • No similar event took place in other cities in North America or elsewhere.
    • Contrary to Airbnb projections, levels of multiple-listing entire homes have already jumped back to 13% of the total, only two months after the purge.
    • Despite claiming that it wants to “work with cities”, Airbnb carried out its purge without disclosure or consultation. Airbnb did not kick illegal hosts off the site; many commercial hosts still have listings on the site, but the purge made them appear, briefly, to be single-listing hosts.

The report

Download the full report: how-airbnbs-data-hid-the-facts-in-new-york-city.pdf.

The data

Download the full TS data set as a set of CSV files: 2014, 2015, 2016.

Download the full MC data set from Inside Airbnb.

For the press

Full press release: press-release-how-airbnbs-data-hid-the-facts-in-new-york-city.pdf.

Contact details

Airbnb in Barcelona

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So Airbnb is in trouble in Barcelona (Guardian, El Pais, El Pais again). The company was fined €30,000 by Catalonia’s local government the Generalitat “for illegally commercializing short-stay apartment rentals that are not listed on the Catalan Tourism Register.” Here are a few notes for context.

Barcelona has a particular problem with tourists: it has too many of them. “The city’s 1.6 million residents have seen the number of visitors to the city skyrocket from 1.7 million in 1990 to more than 7.4 million in 2012.” As one besieged local says, “We’re part of what they’re selling, but they’re destroying it.”

Airbnb has done its usual lightweight study on the city. It’s interesting partly for what it doesn’t say, because as a city with a highly developed tourist industry, Barcelona is a sign of what is likely to be the pattern for Airbnb for the future. So, here’s a quick rundown on Airbnb’s usual economy with the truth.

I actually found more hosts than the 4,000 that Airbnb claims: my recent scan of their site picked up 6442 hosts and 11284 listings. (part of a series of studies: here, here, and also here).

Airbnb avoids its usual claim of “the overwhelming majority of Airbnb hosts in Sydney are ordinary residents who rent out the home they live in” because it’s just not true. 75% of hosts rent out a single listing, which is lower than in most other cities. And the majority of Airbnb listings come from people who are renting out more than a single offering, and I estimate that over 60% of Airbnb revenue comes from multiple listers.

The idea that Airbnb is made up of hosts sharing a part of their home also fails in Barcelona. 59% of listings are “whole home”, and these make up a whopping 81% of Airbnb revenue from the city.

In short, Barcelona is exactly the kind of place that needs to regulate tourism, in order to keep a balance between the income from tourists and preserving the city as a place to live, work (and visit). Airbnb is promoting its “home-sharing” story to justify its lack of interest in these regulations, but the story has even less truth to it than in New York and elsewhere.

Airbnb stats everywhere (and a question)

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Nice to see newspapers looking into Airbnb stats:

At The San Francisco Chronicle, Carolyn Said takes a thorough look into the data for that city. She followed up with a blog about my previous posts, here.

The Guardian looks at Airbnb in London here.

This after travel site Skift reposted my reports here and here.

Both The SF Chronicle and The Guardian’s data are consistent with mine, so we are all obviously finding the same pages from the Airbnb web site. There’s no doubt the newspapers have better ways to present some of the data, and of course they are looking at an individual city (so they do neighbourhood-by-neighbourhood drill-downs) while I’ve been looking across multiple cities. One nice thing about Carolyn Said’s piece is that she complements it with some interviews that give a peek into likely incentives and motives behind some of the patterns that the data show.

We are all limited by what information is publicly available. One additional piece of the puzzle was given when Airbnb executive Chip Conley wrote that 70% of guests leave reviews, which helps in the conversion of reviews into actual visits.

Question for those who have read this far. In many cities, the number of “whole home or apartment” listings is about a factor of two more than the number of “private room” listings (see below). But in Paris, the ratio is more like 5 to 1 and in London it’s about 1 to 1. What’s happening in these cities — particularly Paris? Any ideas, please add to the comments.

wpid-city_listing_roomtype.png

The shape of Airbnb’s business (II)

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Collecting data for several cities both in November 2013 and in May 2014 gives a look at some ways in which Airbnb’s business is changing in these cities. The cities surveyed are:

  • Paris and New York (Airbnb’s two biggest markets)
  • San Francisco (the home of Airbnb)
  • London, Rome, Berlin (three European capitals and major tourist cities)
  • Toronto and Chicago (two smaller markets).

As in Part I, the surveys were carried out by a two-stage method:

  • Stage 1 used the Airbnb search pages for a city to collect Room ID values (a number that uniquely identifies an individual listing).
  • Stage 2 visited the listing page for each Room ID and collected information about it.

The data were stored in a database and the charts here are based on queries of that database. The survey code (and database) are available on github.

The main observations are:

  • It is possible that the number of listings has reached a maximum in some of Airbnb’s largest cities, particularly in the USA, while other cities do continue to show significant growth.
  • There is a surprising amount of churn in Airbnb’s business. Over a third of the listings on the site in November were no longer there in May, to be replaced by a similar (or, in some cases, greater) number of new listings.
  • Around 90% of all ratings on the site are 4.5 stars or 5 stars (out of five).

These observations suggest some conclusions:

  • Airbnb’s move to professionalize its host base may be a reaction to the churn in the host population, a necessary step to generate continued growth.
  • In April Airbnb expelled 2,000 listings from its New York offerings, claiming that they did not offer a positive experience. Many of those listings must have had either no ratings at all or were rated highly (4.5 or 5) by their guests.
  • The rating system does not provide a reliable assessment of host quality.

Churn

Figure 1 shows the net change in the number of listings in each of the eight cities for which data was collected in both November and May, as a percentage of its November value.

Some cities seem to have maxed out in terms of listings. Six of the cities saw either decreases or increases of less than 10% in the total number of listings. Each of the three US cities in the study lost listings between November and May, while Berlin and Rome were big gainers.

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Figure 1: Change in number of listings in cities.

The net gains or losses mask a bigger change. Figure 2 shows that in the six month period, well over a third of existing listings vanished from the site, and were replaced by a similar (or, in the case of Berlin and Rome, substantially greater) number of new listings. For both Paris and New York, well over 40% of listings vanished, only to be replaced by new ones. Figure 3 shows the total number of vanished and new listings.

The high churn rate must introduce uncertainty for Airbnb’s future, as it is relying on a steady stream of new listings to replace those that are vanishing from the site. Perhaps this is one of the motivators of Airbnb’s efforts to professionalize its host base: hosts who make a commitment to the business being more likely to stick around.

churn.png

Figure 2: New and vanished listings between November 2013 and May 2014, as a percentage of the November number.

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Figure 3: absolute number of new and vanished listings

[Note: I did wonder whether this high churn rate could be an artefact: whether the displayed room ID values could have changed between the November and May data collections. A query showed that, of the 10597 listings that occur in both the November and May collections from New York, 10529 have the same host. I concluded that room ID values are stable.]

We can look a little closer at those vanished listings. Figure 4 shows that the vanishing listings have fewer reviews than the overall population in the city.

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Figure 4: Mean number of reviews for vanished listings and for all listings

Figure 5 shows the ratings that the vanished listings had received from guests. The overall distribution of ratings is investigated later in this report, but Figure 5 shows that, while many of the listings had no reviews at all (Airbnb recently claimed that reviews are left for 70% of visits, so it is likely that these listings had no visits either), of those that did have visits the average rating was overwhelmingly high (4.5–5).

churn_lost_ratings.png

Figure 5: The number of vanished listings by average overall rating

Figure 6 emphasizes the point, showing that the average rating of listings leaving the site is within 0.1 of those that stay on the site.

churn_rating.png

Figure 6: Average rating of listings that leave the site (red) and which have been on the site for the whole period (green). Note that the y axis starts at 4.5.

It seems likely that many hosts try Airbnb, have a few guests (or none at all) and then simply decide that, for whatever reason, the service is not for them. To repeat the conclusion from the overall churn rate, the high turnover rate does raise questions about what long-term population of hosts the site can support, and how it can ensure that those who try and leave the site are replaced by new hosts.

Trust

Trust has long been a key part of the Airbnb business, and technology has been seen as the magic ingredient. Airbnb CEO Brian Chesky expresses the company’s confidence when he says of city-level rules that “they’re primarily set up for screening. To protect consumers. Well it turns out that cities can’t screen as well as technologies can screen. Companies have these magical things called reputation systems… We think government should exist as the place of last recourse.”

There are two sides to Airbnb’s trust system. There is peer-to-peer trust, often described as a reputation system, which consists of ratings, personal profiles, and comments written by hosts or guests and seen by other hosts or guests. The other side is centralized trust, which consists of central payment, verified ID, and a complaint system.

Much of the talk around the sharing economy focuses on reputation and peer-to-peer trust (as in Chesky’s comment above). That’s because it’s the peer-to-peer aspect that is new: after all, in one sense we have forever trusted strangers to deliver services from food to haircuts to regular taxis, and the centralized component of the system is not that different to many hospitality companies. Jason Tanz writes in Wired that

We are entrusting complete strangers with our most valuable possessions, our personal experiences—and our very lives. In the process, we are entering a new era of Internet-enabled intimacy.

So what do the numbers have to say about peer-to-peer trust?

Figure 7 shows the distribution of ratings for each listing. Airbnb provides ratings under a number of categories (cleanliness, accuracy of description etc) and collects them together as “overall satisfaction”. The site does not give the ratings for individuals (although individual comments are visible) but provides an aggregate, from 0 to 5 stars with a half-star granularity.

city_rating_distribution.png

Figure 7: Overall satisfaction ratings for listings in each city. The ratings for 0-3 are so few that they are collected together. Listings with no ratings are excluded.

The vast majority of ratings are either 4.5 or 5 stars. The finding is consistent with ratings on other sites (e.g. an earlier look at BlaBlaCar, or more serious studies of eBay listed there). When we rate each other, ratings become more a courtesy than a judgment. Just as restaurant tips only weakly correspond to the quality of service, so a rating of 4.5 or 5 is more a way of politely concluding an exchange than it is of assessing the behaviour of a host or guest.

The ratings obviously fail to distinguish among the people on the site, and so are not providing the service for which they were intended. This is part of the reason why Airbnb and others have moved to emphasize the centralized trust aspect of their systems. But centralized trust is the same reason we trust the fast-food restaurant cook or the hotel cleaning staff. The major sharing economy sites rely on discipline and the potential for removal from the site to provide security for the users, just as traditional industries do.

Churn and Trust in New York

The Airbnb court case in New York raised the profile of the service there, and resulted in Airbnb ejecting 2,000 listings from its service.

Airbnb claims that “we found that some property managers weren’t providing a quality, local experience to guests. These hosts weren’t making their neighborhood stronger and they weren’t delivering the kind of hospitality our guests expect and deserve. In some cases, they were making communities worse, not better.”

With 10,000 listings vanishing from Airbnb in the New York area, it is difficult to know which 2,000 were removed by Airbnb and which left for other reasons. Some individual hosts with large numbers of listings have been removed, but that still leaves many unaccounted for. Figure ny-vanished shows that, despite Airbnb’s suggestion that the hosts are not “delivering the kind of hospitality our guests expect”, most of the removed listings must have had either no ratings at all, or must have had good ratings from their guests.

ny-vanished.png

Figure 8: The “overall satisfaction” ratings for listings in New York that vanished from the site between November 2013 and May 2014.

The biggest single category of the 10,000 New York listings that have vanished from the Airbnb site are listings with no ratings at all (shown as NULL). After that come the 5.0 and 4.5 ratings, leaving fewer than 800 with bad ratings (4 or lower). For at least 1200 of the listings that Airbnb removed, bad ratings is not the reason.

Combined with the very high number of positive ratings shown in Figure 7, this result shows that the significance of peer-to-peer ratings is exaggerated for Airbnb. While the company proclaims that peer-to-peer rating systems set it apart from old-style methods, it is clear that their trust system is essentially a traditional complaint-based, centralized system. The peer-to-peer ratings may give warm feelings on the site, but Airbnb itself clearly does not trust it when it goes to remove listings from its site.

Conclusions

The data set suggests that there is a surprising amount of churn in Airbnb’s hosts. Over a third of the host population in November left the site, to be replaced by new listings.

It is likely that a large number of people experiment with being Airbnb hosts, and then decide that it is not for them.

It will be interesting to see whether this becomes an issue for Airbnb as the number of ratings it has in the North American cities surveyed in November and May seems to have peaked. How will it continue the growth that is demanded of it by its backers in the face of the large number of hosts who drop off the platform?

While much is made of the novel peer-to-peer nature of Airbnb’s reputation system, it appears that the company runs a complaint-based trust system that is not so different from other hospitality companies. In April Airbnb expelled 2,000 listings from its New York offerings, claiming that they did not offer a positive experience, but many of those listings had either no ratings at all or were rated highly (4.5 or 5) by their guests: it appears that Airbnb did not use its own ratings when judging who to remove from its platform.