Greg's Corner

Risky Business: Watch for Business Models that Boost the Bottom Line but Tarnish the Reputation

There’s an interesting debate going on in San Francisco with Airbnb, where a crackdown on short-term rentals – especially those being advertised on online sites like Airbnb – are leading to lease violations and eviction notices.

The site, Airbnb, connects people looking to make a few bucks by renting out space in their own homes with visitors who are looking to save a few bucks by using alternative accommodations when they pop into a city for a short visit.

It’s kind of like they’re hotel rooms, except that they’re not. They’re residential homes and apartments. And in San Francisco, the two – residential units and hotel rooms – are not allowed to mix, by law. In a city with tight housing and even tighter rental laws, the crackdown is sending some otherwise law-abiding citizens to the streets, evicted for letting a stranger crash on the couch every now and then.

It’s an unfortunate story, though it appears that the city and Airbnb are working together to provide some better clarity around the ordinances, including a hotel tax on Airbnb transactions, which will certainly change the dynamic of the debate down the road. That may not change things for those affected – but at least it recognizes the problem. And that’s a start.

In the meantime, at least one lawyer has raised the question about Airbnb’s share of responsibility in what’s happening to its customers during this crackdown. Is it the responsibility of Airbnb to provide each person who submits a listing with a notice of all laws and regulations – whether local, statewide or national? Or is it enough to remind people to check their local laws and leases before renting the spare room for a weekend?

It’s a question that the company has faced before. A few years ago, I chimed in about some growing pains that Airbnb was experiencing as it was dealing with reports of people who were trashing rental units. The company rode that storm nicely and went on to see some amazing growth, with listings now expanding in Europe and investors suggesting a $10 billion valuation, bigger than some hotel chains.

Airbnb, a site much like Geebo in that it connects two parties with a common interest, should have a responsibility to inform people of the risks they are about to engage in and, in some certain circumstances, take extra steps to ensure that people are compliant with the law.

Geebo is a site with listings from cities across the nation across a wide range of categories. For the site to specify each of the laws and ordinances for each of the cities and each of the categories of products or services is unrealistic. In that sense, I understand Airbnb’s defense. On the other hand, I also understand the need for a company to be accommodating and to take action to be better safe than sorry.

Years ago, I removed personal ads from Geebo’s listings, in part because I felt that what was being advertised wasn’t appropriate for my site. I’m not suggesting that Airbnb block listings with San Francisco addresses (or am I?) but perhaps it could do something else to drive home the point, maybe an extra acknowledgment prompt before the final submission.

I want to make sure that my visitors have a good experience and that they return the next time they’re looking for something specific. I would think that Airbnb would like the same.