My first experience with AirBnB was on a trip to Europe last year – couldn’t have afforded France if not for it, and got insider tips, driving cheats, and great eats because of it. A year later, it was great to catch up with a top AirBnB official and chat about the platform. Mike Orgill, head of Public Policy for AirBnB Asia-Pacific, was in town for the Sri Lanka Economic Summit 2016 and we did this podcast on the sidelines of the event. We talked about AirBnB and its role in global travel, the public policy tensions the platform has to contend with, whether the sharing economy has led to the emergence of ‘crowd regulation’, and how AirBnB is growing in Sri Lanka. I last met him when he visited Colombo in his previous role at Google and it was a pleasure catching up with him again.
(Skip to the podcast here)
Growth of AirBnB
The platform now has over 1.7 million homes in 34,000 cities and 191 countries. In fact, they are the first American travel brand to enter Cuba after relations were normalised recently, and they are not in only a handful of countries like North Korea and Syria. On a peak night last August around 1 million people across 180 countries stayed in an AirBnB property. Just this week, the company filed papers in Delaware state to raise US$ 850 million on a US$ 30 billion valuation. This would take AirBnB’s equity raise up to US$ 3.2 billion (yet, still only a fraction of Uber’s US$ 68 million valuation).
While staying with AirBnB hosts in different cities, I couldn’t help but think about how regulators must be utterly confused as to how to tackle this growing phenomenon. Unlike in traditional hotel regulation, where a country’s tourism authority would set standards and benchmark properties against it before rating them (1 to 5 stars, for instance), with AirBnB the regulators and ratings are by the community itself. It’s a complete shift in how regulation occurs.
The flat is you-clean, but is it me-clean?
I guess a big difference to contend with is that while community regulation can work – with so many people rating and scoring hosts and travellers on various aspects of the stay – each one of us has different standards – particularly on things like cleanliness. While in a traditional hotel model, a room’s cleanliness would be rated against a benchmark set by a single authority, and that would be applied more or less equally across all other hotels with that start-class regulated by that authority. Think about it – do all your friends have the same level of cleanliness or standards of hygiene that you do?
What do we call it?
With AirBnB there isn’t a single authority or regulator. It is large distributed groups of people. There are tens of thousands of regulators, as it were. It has blurred the lines between the users of a platform and regulators of that platform’s product/service offering. Economists are yet to figure out what to call this. I would suggest one of the following – ‘Distributed Regulation’, ‘Crowd Regulation’, ‘Community Regulation’.
Whatever it is called, the fact remains that AirBnB is coming up against tourism incumbents and also confusing traditional regulators. How do you even begin to regulate something that is just an online platform? Something that simply connect micro-entrepreneurs offering a place to stay, with buyers (travellers). An economic service that is blurring the lines between personal and professional in the provision of commercial hospitality services. How do you even begin to think about taxes? In a speech at a World Economic Forum event, AirBnB co-founder welcomed working with regulators. “As we grow we want to partner with cities. The bigger we get the more regulators say Airbnb are partners to us […] the more people learn about airbnb, the more they love us […] we want to be regulated. To regulate AirBnB is to recognise AirBnB”.
I believe that it is in the interests of tourism agencies, like the Sri Lanka Tourism Development Authority, to take genuine interest, to not attempt to squash it or fumble with regulation of it; rather, to foster it, work with it, and use it to promote more visitors to the country.
Listen to the podcast below (or here).