David Krauss had parlayed his Dallas condo into a successful Airbnb listing until one fateful weekend in 2014. Then, a couple of guests threw a party so loud it elicited more than a dozen noise complaints from neighbors, a police report and an angry letter from an attorney.
His reputation in the building was so sullied he decided it was best to sell the unit – at a US$30,000 (RM124,000) loss. But Krauss, a former independent real estate developer, wasn’t finished with Airbnb.
His misfortune gave way to an idea for a device – "a smoke detector for noise" – that sends alerts directly to hosts’ phones when guests get too loud for too long. That way owners can intervene well before neighbors are disrupted or worse, the police are called.
His company, NoiseAware, is just one of hundreds of startups that are riding the coattails of the home-share titan and its rivals, which include Booking Holdings Inc and Expedia Group Inc’s HomeAway, as demand for such rentals skyrockets.
Over the past decade, Airbnb Inc has transformed the travel sector by persuading millions of people to open up their homes to complete strangers.
As the company grew, amassing more than six million listings in about 191 countries, it has spawned a whole ecosystem of startups that seek a piece of the booming market for private accommodations by helping to fill in the gaps that Airbnb and the others can’t or don’t address, like automating the check-in process and providing keyless entry around the clock.
Some sell software that promises to calculate the perfect listing price or updates a property’s availability instantly. One company helps owners decorate –from furniture to bedding – to create that unique vacation-rental-unit vibe.
"Everybody is sort of trying to solve a pain point," said Simon Lehmann, who has worked in the travel industry and now runs AJL Consulting GmbH. "We have seen a massive amount of startups in this industry, massive verticalisation, lots of money pouring in."
Since 2008, investors have poured about US$14.6bil (RM60.3bil) into digital travel startups, excluding the funding that went to Airbnb, according to a 2018 report by Phocuswright, which counts data through the first half of last year.
The travel research company has identified almost 1,800 startups in the industry. Airbnb has evolved considerably since its founders famously rented out air mattresses on the floor of their San Francisco apartment in 2007.
While millions of people have benefitted from making extra cash by sharing their home or enjoying a more intimate experience when traveling to a new destination, the so-called alternative accommodations market suddenly isn’t so alternative. It’s big business.
Booking has almost as many vacation home listings as Airbnb and even Google has gotten into the game, offering rentals from Expedia’s VRBO and HomeAway, among others. The world’s largest hotel company, Marriott International Inc, is also expanding in the home-sharing business, bringing its own offerings to the US later this spring after already operating in a handful of European cities.
People "started to realise that it’s actually not that easy to be a property manager – handing over keys at three o’clock in the morning, answering complaints from the guest and making sure the guest’s experience is absolutely at its best," Lehmann said. "So the business is getting more managed."
Lehmann estimates that now there's an even split between private owners and managed owners, or those who oversee more than two properties and often more than 20, making it their full-time job. The trend is continuing toward more managed inventory, with the share of rentals by owners decreasing, Lehmann said.
"Vacation rentals have been around forever, but they were always a little bit sleepy and a lot of the online distribution was kind of like bulletin boards," said Seth Borko, a senior research analyst at Skift, a travel intelligence platform. "Airbnb has really changed all that.’’
Such growth has created opportunities for other startups, too. Fulhaus Inc designs and furnishes units for professional vacation rental owners. Its Haus-in-a-Box' product offers a "complete furniture package specifically designed for the short-term rental market’’ and comes in several styles – including paradise, corporate and luxe – and includes a platform to let guests buy the items they like.
Another platform, Operto, connects properties to a range of devices – including NoiseAware, digital locks, smart thermostats, lights and even carbon dioxide monitors that can help hosts calculate how many people are in a unit.
Properly, one of several companies Lehmann has invested in, offers a platform for managing the cleaning, maintenance and other tasks required for preparing a unit before the next guest arrives. More than 60,000 properties are connected to the service, which also allows hosts and service providers to communicate about supplies that are running low, and damage left behind by guests.
Customers are expecting much higher quality in their alternative accommodations, even in "the treehouse, the houseboat, whatever it might be," said Properly founder and CEO Alex Nigg. Guests want at least the clean white sheets that they expect at the hotel, and of course, the 24/7 check-in.
As Airbnb, last valued at more than US$30bil (RM124bil), eyes an initial public offering next year, it’s also working to pivot its home-share service into a comprehensive travel platform, where vacationers can book flights, accommodations and tourist experiences.
Partnering with a growing network of startups is one of the levers Airbnb plans to pull in order to succeed, said Chris Lehane, Airbnb’s global head of policy. It’s a "win, win, win for those plugged into the ecosystem."
NoiseAware’s Krauss definitely sees it that way. Despite the "mini-Coachella" party that cost him his condo, Krauss has become one of Airbnb’s "superhosts’’ and was honored at the company’s headquarters recently. He has hosted more than 5,000 guests.
"My life has been way more committed to this concept of short-term rentals and Airbnb than I even knew," he said. – Bloomberg
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