An increase in transparency holds the potential for Airbnb to strengthen its relationship with local governments, whilst also addressing ongoing safety and data sharing concerns that have sometimes portrayed the company negatively.
Flaws in the company’s business model have emerged in recent times, with the lodging provider often featuring in stories about illegal listings, house parties gone wrong and rental prices surging for locals. These highly publicised, negative ramifications that are directly linked to the growing presence of Airbnb (sometimes erroneously) need to be actioned before its long awaited IPO, in order to appease hesitant investors.
The Airbnb City Portal Pilot Program is being tested on 15 global cities and tourism agencies. The aim is to provide municipal staff with more efficient access to data about listings, for example whether or not they comply with local laws. It delivers on the platform’s long-term goals around sharing data, paying taxes and working with cities on regulation. The delivery of these long-term goals will help to legitimise Airbnb as an ethical company, which coincides well with recent performance. Q2 revenue was only at 28% of 2019 levels. However, Q3 is on course to bounce back to around 74% of 2019 levels. This combination of increased transparency and dramatically improved financial performance could lead to a successful IPO.
An ideal response to the recent court ruling
The day before Airbnb announced its City Portal (23 September 2020), Europe’s top court gave its backing to European cities cracking down on short-term rentals of private homes, acting as a major blow for Airbnb. The implementation of the City Portal Program is an ideal response to this ruling and is likely to strengthen the relationship between Airbnb and municipalities.
A key contributing reason as to why some local governments tend to dislike Airbnb is due to its perceived opaque business model that has sometimes fallen short in terms of identifying illegal listings and not identifying bookings that could cause public disturbances. The City Portal aims to address both of these issues, as it will make it possible to quickly punish hosts who violate local laws and can even run analyses that pinpoint the impact Airbnb is having on local housing markets.
These features will increase the likelihood of a more harmonious relationship between Airbnb and city officials. At a time when major cities are struggling to attract tourists, a mutually beneficial partnership with a company as visible and successful as Airbnb may help to accelerate recovery