The home-sharing platform took drastic measures to prevent violence in the capital — but at what cost?
When Alex Dodds started reaching out to local Washington, DC, Airbnb hosts last week asking them to take down their listings and cancel existing reservations ahead of the presidential inauguration, she had hoped the house-sharing company would wave cancellation fines.
Dodds was working on behalf of ShutDownDC, a community organizing group that reached out to the hosts of 3,400 listings, intending to avoid a repeat of violence not only in the Capitol but in the surrounding communities. DC residents reported harassment, vandalism, and other terrifying behavior by aggressive Trump supporters who participated in the storming of the Capitol that resulted in at least 5 deaths and 100 arrests so far. A number of perpetrators were from out of town and stayed at Airbnbs.
Airbnb has said that it has since identified and banned “numerous individuals” on its platform who were involved in criminal activity at the Capitol. And much to Dodd’s surprise, the company took the more drastic measure on Wednesday of canceling all DC reservations for inauguration week. In doing so, the company took a clear stand on what was and was not permissible on its platform.
“It’s refreshing to see a huge corporate actor recognize that their actions have consequence in our communities,” Dodds told Recode.
It’s also a shift that’s happening all over the tech landscape as companies — perhaps goaded by newfound enlightenment or, more likely, the prospect of government intervention — are being more assertive about what happens on their platforms. Social media companies including Facebook and Twitter, after long claiming neutrality or making exceptions for the sake of news value, kicked Trump off their sites and banned other dangerous users. Amazon pushed right-wing social media alternative Parler, feared to be the next platform coordinating violence, off the internet by refusing to host it on its servers. It remains to be seen how effective these actions are, but it does represent a change in how tech companies view themselves.
“It’s interesting to think about the role of these platforms in today’s age compared to version 1.0, when many of these platforms were just saying, ‘Hey, we’re not responsible, we’re just connecting people,’” David Hsu, professor of management at University of Pennsylvania’s Wharton School, told Recode. “As a society, we’re holding them to a higher standard in terms of understanding the possible consequences and how they’ll be used.”
For the companies themselves, these actions are calculated business decisions. Airbnb is balancing some lost customers and revenue with preserving the trust and safety of the rest of the guests and hosts on its platform — issues it’s dealt with over and over and has since taken a stronger stance on. Indeed, the company made a similar move early in the Covid-19 pandemic, when it allowed guests to cancel without penalization, upsetting many hosts but ultimately curtailing Airbnb’s involvement in the spread of the coronavirus.
“These issues post a big risk in terms of safety of guests and safety of property and of hosts,” said Rajkumar Venkatesan, a business professor at the University of Virginia. “It’s mission critical for their long-term survival and growth.”
Airbnb, which promised to cover what hosts would have made in lost DC reservations, would not provide a number for how many reservations were cancelled or the cost, so we’ll hazard a guess.
For Trump’s inauguration four years ago, Airbnb estimated that more than 15,000 people booked rentals in the DC area, more than 10 times the amount that attended Obama’s second inauguration in 2013. At the time, Airbnb said “Inauguration Day 2017 itself will be the biggest single night ever for Airbnb and the District of Columbia.” The median listing price in the area was $129, according to a CNET piece at the time.
Assuming 2017 prices and attendance, that would have meant about $2 million in gross bookings revenue a night that Airbnb will have to reimburse. Additionally, the company will miss out on the fees it normally accrues. That should amount to roughly 13 percent or $260,000 a night, if you look at the company’s revenue relative to gross bookings — so a loss of a little over $2.2 million each day and roughly $15 million for the week.
DC lawmakers and officials have been asking that people not travel due to new threats of violence ahead of the inauguration and the pandemic. Additionally, investigators from the US House of Representatives have asked travel companies to institute plans to “ensure that your services are not being used to facilitate violence or domestic terrorism.” So it’s anyone’s guess how many reservations actually had to be cancelled. Still, experts say the price — whatever it is — is worth it.
“I think this action of Airbnb first shows the social responsibility of the company,” Xinyu Cao, assistant professor of marketing at NYU Stern, said. “It enhances the brand image of Airbnb, which benefits the company in the long run.”
“I think they gain more as a brand taking a stand on something that doesn’t cost them that much,” said Hsu, the Wharton professor. “When you look at the value of the brand, it’s many multiples of that,” he added. “It’s less than a drop in the bucket.”
Airbnb is worth about $108 billion. It spent $712 million on marketing in 2019, the last full year of available data. So $15 million isn’t a huge deal in the scheme of things.
Airbnb has put an increasing emphasis on safety, after its share of safety nightmares from both the guest and host side of its business.
Issues have ranged from violence to prostitution to fraud. In a similar move, the company removed users who were trying to book places to stay for the white supremacist rally in Charlottesville, Virginia, in 2017. In 2019, five people were shot and killed at an Airbnb mansion party. The company since put a ban on big parties at its locations by capping guests at 16. That same year, Vice uncovered a nationwide bait-and-switch scam in which hosts gouged guests for higher prices. Ahead of its IPO, Airbnb committed $150 million to safety initiatives, including verifying all of its 7 million listings, in hopes of preventing such problems in the future.
“Many of us in this industry over the last 10 years are going from a hands-off model where the internet is an immune system to realizing that’s not really enough,” Airbnb CEO Brian Chesky said at the New York Times’s DealBook conference at the time. “We have to take more responsibility for the stuff on our platform. This has been a gradual, maybe too gradual, transition for our industry.”
We can’t know how much Airbnb’s safety measures will actually affect what happens in the next few days, but it seems quite clear that, at least from a PR perspective, it’s a good move.
Author: Rani Molla
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