If travelers need to pay high cleaning fees and follow lots of house rules -- as what's allegedly happening with Airbnb (NASDAQ: ABNB) -- they might as well stay in an expensive hotel. Is the Airbnb story similar to the Starbucks (NASDAQ: SBUX) tale: the case of a business losing its way, or to put it another way, selling out to corporate America? Airbnb better listen to the complaints it's been receiving, because alienating one's customer base (guests and hosts) is no way to succeed.
Social media's been buzzing about Airbnb lately, and not in a good way. Words like "ruthless," "greedy," "shady," "dishonest," and "insane" have been put out there about excessive fees and the house rules some hosts require -- not exactly issues travelers want to deal with.
People have been noticing a change. Airbnb was started as (and is still supposed to be) a low-cost alternative to hotels. And it often is. Plus, guests can have an experience with an Airbnb they can't necessarily get with a hotel stay, such as staying in a castle or a yurt. But as Airbnb has become a huge player in the hospitality industry, with an estimated net worth of $4 billion, the company might have lost some of its charm.
One customer, who received over 200,000 likes on Twitter, sent a screenshot on May 17 of what she was charged for her last Airbnb stay. The room fee for two nights was $198, but her total with the cleaning fee, service fee, occupancy taxes, and [more] fees came to more than double the room fee: $413.95. Another user says Airbnb is going to "fee us to death" and plans to go back to hotels this summer.
Excessive rules are another common complaint. One Airbnb customer complains of a "no loud walking" rule, wondering whether people need to slide everywhere. And another says he doesn't want a "bunch of rules" on vacation and wants Airbnb hosts to focus, instead of on themselves, on what the customer needs -- that is, if they want his business.
Airbnb's mixed-message response
Airbnb apparently got wind of the complaints and published a response on May 18, called "Fee transparency on Airbnb," on its website to explain itself.
For one, Airbnb says it's upfront about the fees charged -- one would hope so -- but then Airbnb blames the high cleaning fees on individual hosts, spinning this as a positive thing, since Airbnb "empowers" hosts. In other words, if you think the cleaning fees are excessive, don't blame Airbnb; blame the hosts. Good job, Airbnb (sarcasm mine), as you've managed to now anger your hosts along with the guests.
Airbnb should probably have quit at this point, but it then goes on to give a mixed message. In one breath, Airbnb (in an apparent attempt to win over guests) says it suggests hosts don't charge a cleaning fee at all. But then it states cleaning fees have risen for hosts due to Airbnb's "5-step enhanced cleaning process" enacted by Airbnb during COVID-19.
So Airbnb has increased cleanliness standards, which is a good thing, but it costs hosts more now to clean. Is Airbnb saying it wants its hosts to eat the extra cost? Or is it trying to help hosts by attempting to explain any high cleaning costs hosts might decide to charge? The message is unclear. The only clear thing is Airbnb dancing around taking any blame or responsibility.
Finally, Airbnb blames the government for higher Airbnb prices, as local governments impose taxes and fees on Airbnb, just as they do with hotels.
The takeaway for many readers after this "transparency" letter might just be to go back to hotel stays.
The Starbucks phenomenon
Just as the growth of Starbucks changed what made Starbucks a beloved company, the growth of Airbnb has changed what made Airbnb desirable to the public. At Starbucks, people used to feel special when having coffee there. The coffee was good, and experienced baristas made it the way the customer wanted it. But to grow as Starbucks did mean going from a romantic coffee house to a sort of fast-food coffee establishment.
This is similar to what Airbnb is experiencing. Nearly one-third of all the Airbnb listings are owned by just 5% of hosts. These are corporate real estate owners and professionals in the business as opposed to someone renting out space in their home. This changes the business model and the heart of the company -- an alternative place to stay for budget-conscious, experience-seeking travelers -- and makes the business model more like a hotel's.
The Millionacres bottom line
Airbnb appears to be in a position of redefining itself. The darling of both the budget-conscious traveler and the mom-and-pop host trying to make some side income isn't so much of a darling anymore and is becoming just another hotel option.
That doesn't mean the end of the line for Airbnb. After all, Starbucks transitioned. Both businesses might appeal to different customers now for different reasons, but that isn't always a bad thing when the goal is strictly numbers.