This article first appeared on LinkedIn. Co-authored by Scarlett Ho.
Airbnb, an online room-sharing company, recently announced its expansion from offering accommodations on its platform to providing trips for travelers. In its press release on November 17, the startup promises to “make travel magical again by immersing travelers in communities around the world” through three key service areas: Experiences, Places and Homes, with Flights and Services to be added in the future.
Brian Chesky, Airbnb CEO, points out that “until now, Airbnb has been about homes.” With the launch of Trips, it brings “together where you stay, what you do, and the people you meet all in one place.” Designed and led by local experts, users can use Airbnb as a one-stop shop to not only book a place to stay in their destination, but also to participate in any of the 500 handcrafted activities specially designed and led by local experts in 12 cities, including San Francisco, Los Angeles, Detroit, Tokyo, Paris, Florence, Cape Town, etc. A glimpse of its webpage suggests activities in themes of sports, nature, social impact, entertainment, and food. Tourists can feel like a local in no time, with the help of locals.
While Airbnb’s intention of being more thoughtful of travelers’ needs by adding authentic experiences on top of accommodation options, one cannot help but wonder:
What is prompting the company’s expansion of services to compete with the well-established travel agency industry?
Keeping up the fight with regulators
One reason for the pivot was the practical need to resuscitate its business from the recent lawsuits in big cities such as New York and San Francisco over regulatory issues. In the New York case, the company filed the case in October, in which it opposed to Governor Cuomo’s newly signed legislation that made illegal to advertise temporary accommodation for less than 30 days. Similarly, in San Francisco, Airbnb undertook a hard-fought campaign against lawmakers’ attempt to limit hosts to rent out their apartment space for no more than 75 days a year and an ordinance that forbids Airbnb from accepting bookings from hosts who have not registered their homes with the city. On November 17, U.S. District Judge James Donato issued an order which prohibits the city from enforcing this law, and in effect would buy Airbnb some time and the opportunity for both parties to work out their differences. If the regulations were enforced, Airbnb anticipates and argues that listings in some of their biggest markets will be severely curtailed.
Deflecting negative PR from discrimination on its platform
Not only does decreasing listings from hosts for a fear of violating the law affects Airbnb, but the company has also recently received negative publicity for emerging cases of discrimination. The hashtag #AirbnbWhileBlack started to trend in the spring of 2016, when a slew of posts on social media documented blacks/African Americans being discriminated or denied service based solely on their names and profile pictures. A Harvard study in December 2015 also finds that
“African-American sounding’ names are also 16% less likely to be accepted as guests.”
And in an effort to mitigate discrimination, which according to Brian Chesky is “the greatest challenge” they face as a company, Airbnb hired former US Attorney General Eric Holder Jr. to write new anti-discrimination policy and to reassure the company’s commitment to diversity and inclusion.
Food for thought: Will Airbnb’s ‘Trips’ service also suffer from complaints of discriminatory practices?
2016 doesn’t look like a good year for Airbnb so far. And with all the legal and racial issues that that the San Francisco-based startup is grappling with, it seems like a smart approach for Airbnb is to diversify its services and deflect from its controversies. Chesky also admits saying: “I think this is something that we’ not going to be able to fix overnight.” As such, diversifying looks like a smart strategy for the $10 billion unicorn.
But at the same time, users of Airbnb must be wondering:
Is there the same potential for discrimination to happen in the tour services too?
After all, this tour service is virtually identical to their current renting model. The only difference is that it replaces the rented apartment service with artisans that can offer a more intimate experience to prospective vacationers in a foreign country/city. In that case, the same issue of discrimination solely based on users’ profile pictures and names may still pop up.
At first glance, while this might be true, and indeed, discrimination happens anywhere and anytime and is not restricted to Airbnb, it is important to point out that those who want to rent and those who want to give tours are two different customer markets, though the buyers can potentially be the same (or not.) Here, we have laid out two possibilities of what could happen to Airbnb with its Trips service:
Scenario 1: Airbnb’s Trips feature will most likely run into trouble with discrimination claims similar to its core rental business.
The explanation for the issue of discrimination on Airbnb lies in its business model which is susceptible to bias. It is ultimately up to the host to allow a potential guest to stay in his or her home while the latter is visiting. And rightfully so - no one who wants to host on Airbnb should be forced to give quarter to whichever guest requests it. At the same time, if a host is to found be discriminatory (due to race, gender, ethnicity, sexual orientation, etc), the guest has little course of action to rectify the situation. In fact, the terms and conditions that Airbnb users would have to agree to prior to signing up is a clause that bars customers from bringing a civil suit or file a class act against Airbnb, thereby essentially waiving their rights to sue unless they go through an external private arbitration process outside the legal system. While discrimination is not tolerated and as Chesky has expressed before that the company is working on the issue, Airbnb still has work to do in terms of putting policy infrastructure in place to support its business model.
Scenario 2: Airbnb will potentially be successful in stemming out discrimination or at least reducing it.
This can also be examined from the host’s perspective. While the host will still be able to see the guest’s demographics through their profiles, the risk of a person giving a tour is much lower as a whole as material possessions are not at stake. Just think for a second, if you are renting out an expensive Ferrari to someone, would you want a more complete assessment of the person such as their occupation, criminal records, than if you are just instructing high school students on SAT math or giving directions to a lost tourist? In both cases, there is a service/product provided but the level of consideration and the emphasis on who that individual is is very different. Hosts are less likely to discriminate because the risk of sharing an experience with someone is less than the risk of giving out their apartments to someone for a short period of time, despite both cases are to someone they do not know personally.
Moreover, even if the host feels threatened in the presence of a guest for whatever reason, the potential harm is much lower since they are in a public place and they can monitor the situation in real time. Whereas trying to remove someone from your house that you have rented out, or worse, coming home to a mess or damaged property is much more risky.
Regardless, we’d have to wait and see how Trips play out based on feedback and social media.
What do you think of Airbnb’s new Trips service? Have you tried any of them or intend to try it on your next trip? Comment below and share your thoughts.
This article is co-authored by Scarlett Ho and Frederick Daso, LinkedIn Campus Editors of Northeastern University and Massachusetts of Technology, respectively.
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