Is Airbnb the Next Uber?

Airbnb start

Last week, I was honored to attend the Tutu Chic Fashion Show and Luncheon for the Texas Ballet Theater, which was beyond awesome. During lunch, a friend asked me if I knew about a home in her University Park neighborhood that was being leased out for short terms, like a week or two at a time. Oh, I said, like with Airbnb? She had no idea what Airbnb is. I informed. Not sure if the UP homeowner was working with Airbnb or another on-line online community marketplace, as they are called, but the home clearly has a lot of short term renters coming and going.

Airbnd connects people looking to rent their homes with people who are looking for accommodations. Airbnb users include hosts and travelers: hosts list and rent out their unused spaces, sometimes a room in their home, a back guest house, or even the whole house. Travelers search for and book accommodations in 192 countries worldwide. It’s staying in a private home like a hotel or bed and breakfast, which is actually how the company first started — serving breakfast with the room. Recall this was done ALL OVER DALLAS during Superbowl XLV — the M Mansion in The North Dallas Forty reportedly rented for $280,000 for five days.

Airbnd started in San Francisco thanks to the real estate market. Literally, two guys who could not pay their rent, came up with the idea of letting people pay to sleep in their apartment on air mattresses. It worked. They not only paid their rent but started a $10 billion dollar company.

By the way, here is a link to a home in Lakewood that rents out this guest room to Airbnb clients for $84 a night or $525 per week. The house is gorgeous and I imagine that extra income comes in quite handy.

Lakewood Airbnb

So what’s the problem? Well, neighbors (like my friend) might complain about a flurry of guests coming and going, not that they can do too much about it. But is it safe as homeowners to host strangers in your home for a night or even a week?

Airbnb says this about the safety:

The Airbnb Host Guarantee provides protection for up to $1,000,000 to a host for damages to covered property in the rare event of guest damages above the security deposit—or if no security deposit is in place.

The Host Guarantee Program does not cover cash and securities, collectibles, rare artwork, jewelry, pets or personal liability. We recommend that hosts secure or remove valuables when renting their place. The program also does not cover loss or damage to property due to wear and tear. For these types of incidents, hosts can add a security deposit in their pricing settings.

The Host Guarantee Program is not insurance and does not replace your homeowners or renters insurance. Make sure you review and understand the terms of your insurance policy and what it covers and does not cover. Not all insurance will cover damage or loss to property caused by a guest renting your space. Also, filing a host guarantee request does not preclude a guest from financial responsibility for the damages claimed should Airbnb determine a guest was at fault.

That’s why an article in Sunday’s New York Times cautioned homeowners that Airbnb may be the next Uber. Like Uber, it pushes liability, one of the most expensive component of our daily life, onto the homeowner’s private insurance while knowing those companies, or most of them, would not cover commercial enterprises especially if you do not have umbrella coverage:

Uber grew by heaping it on many drivers, asking them to push damage claims through their personal insurance companies while knowing that those companies did not cover commercial activity.

And now comes Airbnb with its free $1 million liability coverage that will cover the hosts for its tens of thousands of United States listings. How can it afford to provide this for nothing, to everybody? Well, it is “secondary” coverage, which means that it, too, wants hosts to push any claims for guests’ injuries and deaths through hosts’ own insurance companies first.

At least one Airbnb “landlord” had extensive property damage and found his home strewn with meth pipes.

I started thinking about all of this, what with the luncheon table convo, and this article. What if — and I hate to take such a dismal view of humanity — but what if people booked Airbnd homes or rooms not to burglar the home they are staying in but to peruse and canvass the neighboring homes for future robberies? I mean, look at what happened in Allen just last weekend?

Many cities have been upset that Airbnb guests also do not pay city hotel taxes, which robs the municipal coffers of revenue. Travel taxes — those hotel and rental car taxes — are politicians’ favorite way to heap on brutal taxes the locals never feel. I, for one, will no longer rent a car in Chicago or in Cook County — the auto rental tax there is obscene. 

So along comes Airbnb and a way to skirt all those dang hotel taxes, while leaving the individual homeowner with liability. Sounds so much like Uber, which denied liability for last year’s crash that killed a six year old girl as she was crossing the street.

 Is this the new sharing economy, a disrupter, or a very creative way to use technology and ingenuity to skirt regulations, which I do think have gotten way too heavy?

This week, the Dallas City Council voted  to overhaul the city’s ordinance governing taxicabs, limousines and those app-based companies, which some say are lighter rules than those bourne by Yellow Cab:

And while some council members said they still had reservations about various parts of the ordinance, there was broad agreement that the new law provides a solid starting point to address the evolving industry.

“We have transportation-for-hire operators, at this moment, who are not regulated,” Vonciel Jones Hill said before the vote. “If we do not pass this ordinance today, they will continue to be not regulated. Nothing could be more unfair to the citizens.”

What do you think about Airbnd or letting complete strangers in your home for a night or a few weeks? What if your neighbors did this?

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3 Comment

  • I’ve used Airbnb several times as a renter, but have never rented my place out. So far, I’ve had great experiences, and it’s definitely cheaper and in some ways more convenient to do than to get a hotel.

    It seems like its existed for a while under the radar without much fuss from cities – but maybe because it’s not used as much around here? I’d hate to see it become more expensive.

  • I’ve used Airbnb several times. It can be a bit of an adventure, and has proven to be a mostly satisfactory way of enjoying a community from closer and more authentic perspective than most hotels can offer. As with Uber, the customer rates the property, and the property owner rates the customer. Properties with low ratings lose business, and customers with low ratings aren’t allowed to continue to rent Airbnb properties.
    As to the concern expressed that people may be “casing” a street for potential robberies, can’t this type of behavior be exhibited by persons who stay in hotels? They can drive, stroll, walk and bike through any neighborhoods to observe, at just about any hour of the day. “What happened in Allen” was a serial home invasion strategy, and not perpetrated by people paying to stay in other people’s homes. It seems unfair to Airbnb and to their participating homeowners to imply that their renters are contemplating invasions in the neighboring homes, or to suggest that homeowners are trying to “skirt all those dang hotel taxes”.
    Most people involved in short-term rentals of their properties merely want to make extra income. The ease of providing housing with a kitchen, a garden, and other amenities not offered in most hotels clearly fills a desired niche in the short-term rental market. Residential property owners pay taxes, and have the right to work from home and to engage in other income-producing endeavors without being regulated. A homeowner can receive compensation for housing from family and friends, as well as from any others that the property owner is willing to have in his/her own home. Requiring registration, the payment of taxes, etc. adds layers of bureaucracy and tedious record-keeping to what is, in essence, a free-enterprise activity using one’s personal property. If the practice hurts no one (except, perhaps, the market share of some hotel owners), why shouldn’t it be allowed to exist in its current free-market form? Should our local government be protecting larger businesses at the expense of homeowners who want to earn extra money? Networks also exist for the “swapping” of properties on a short-term basis, and no money is exchanged. Will this practice be targeted for regulation, too?

    • mm

      Wow CC excellent points. Let me be clear that I do not advocate the taxation one bit — in fact, I think it’s out of control. And I tend to be a bit paranoid — of course Craigs List continues to thrive despite a few bad experiences. They are isolated cases. I also prefer private homes to most hotels, the Ritz and Four Seasons excepted. But I think your best point is that this is the right of home ownership — and for this I applaud loud and clear!