AirBnB: Disruptor or Disaster?

AirBnB: Disruptor or disaster

Over the course of seven years, AirBnB has managed to accrue a revenue of a reported $900 million. Reports from Bloomberg suggest that the peer-to-peer online marketplace and homestay company is valued as high as $30 billion. It’s fair to say that the small start-up has made quite the name for itself.

However, in recent years, the company has been making a name for itself for the wrong reasons. The convenience of AirBnB allowing any joe-schmoe to host a visitor or two has become an inconvenience for many. From apartment tenants to hotel guests, AirBnB poses a threat that is not being taken lightly.

While it is always refreshing to see industries that have gone stale receive a breath of fresh air with disruptive innovation, every now and then, there can be unintended consequences.

Recently, Carol J. Alsman, a landlord in the Fairfax district of Los Angeles, was charged with violating the city’s rent-control laws when she evicted three tenants and posted their rooms on AirBnB within weeks.

Unfortunately, AirBnB has become such a lucrative business, that many landlords would prefer to host short-term AirBnB visitors than long-term tenants. With more and more unwarranted tenant evictions, cities are trying to combat the issue.

This past year, cities like Chicago and San Francisco have been cracking down on AirBnB to ensure that this doesn’t happen. Other areas, like New York, are taking it a step further by making it illegal to rent an apartment for less than 30 days, with perpetrators facing up to $7,500 in fines.

Some analysts believe that AirBnB cannot truly hurt the big name hotels like Hilton Worldwide Holdings or Marriott International, but it doesn’t necessarily need to. It has found its own market and made a dent in the apartment industry, but hurt so many in the process. Obviously, this was not the intention of AirBnB from the get-go, but it is a very real and unfortunate side effect.

Will the still young start-up be able to withstand the backlash from local government? Only time will tell.

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