Everywhere you look, regulators are cracking down on Airbnb. In Paris, the company’s largest market, hosts must now register with the city government and can only list their homes for 120 nights each year. In Amsterdam, new rules, which go into effect in 2019, will restrict hosts to listing for just 30 nights annually. And after the Japanese government forced the home-sharing site to cancel reservations of unregistered hosts by June 15, Airbnb deactivated 80 percent of its Japanese listings overnight.
That’s why the partnership Airbnb announced last week with the real estate company Century 21 is so compelling. Now, Parisian renters can request Airbnb-friendly leases, which explicitly allow a renter to sublet an apartment on the platform. In return, the landlord and Century 21 get cuts of 23 percent and 7 percent of the host’s take, respectively. (Airbnb still takes its transaction fee.) In the press release, Laurent Vimont, president of Century 21 France, calls the partnership “a win-win for the owner.”
Of course he does. For years, tenants have been listing their homes and now his company has a chance to take a cut. But Airbnb has its own incentive for pushing the program: If it works out, Century 21 could become a powerful booster for home-sharing. If Airbnb is delivering steady revenue to the company, it will stand up for Airbnb’s continued existence in the markets where it operates, sometimes on shaky ground.
Airbnb has always approached regulation through diplomacy, trying to persuade cities that it is a friendly, well-meaning contributor to local economies. It has, from the start, relied on its hosts to be boosters for its business, circulating petitions and leaning on their lawmakers to let them list their homes.
Airbnb has always approached regulation through diplomacy, trying to persuade cities that it is a friendly, well-meaning contributor.
But in the face of growing resistance from the hotel industry and increasing concerns about the impact of its service on cities, Airbnb’s campaign of earnest hosts will not be enough to win over lawmakers. It needs supporters who have substantial clout with politicians, and who see the value in its service not just as a way to help pay the mortgage but as a consistent revenue stream. These real estate company relationships could help to solidify Airbnb as a welcome and reliable service within communities, turning it from upstart to institution.
In other words, it needs to befriend the real estate industry.
Currently, Airbnb is piloting a number of tests designed to incentivize landlords and developers in several markets. In 2016, Airbnb launched its Airbnb Friendly Building Program, which lets United States landlords authorize their tenants to sublet on Airbnb, in exchange for a cut of the profits. (Today, an unreleased number of buildings, housing 26,000 units, take part in the sublet program, in return for a cut of between 5 and 15 percent of the host’s profit.) In 2017, the company partnered with a real estate developer to launch Airbnb-branded apartments (“powered by Airbnb,”) designed for short-term rentals. By shoring up its relationship with landlords and real estate companies, Airbnb is creating a new class of advocates who, it hopes, will help pressure regulators to make peace with Airbnb.
But the Century 21 partnership is particularly important to the company because Paris is Airbnb’s largest market, in terms of both the number of listings and the number of nights booked. The platform has 65,000 Parisian accommodations—a number that almost matches the city’s 80,000 available hotel rooms.
Yet the last year has been precarious, as Paris has cracked down on Airbnb rentals. Last fall, city officials instituted a 120-day cap on short-term rentals in four of its 20 arrondissements, and it increased the fine it charged Parisians who hadn’t registered before listing their homes. In April, the city filed a lawsuit against Airbnb and two other home-sharing sites, pressuring them to remove any listings that didn’t have a number signifying an official registration.
Airbnb’s success in Paris is important, because it sets the tone for how large cities will relate to the company. Just as Uber battled regulators in London who sought to revoke its license to operate, Airbnb’s hardball in Paris is a symbolic, yet necessary, win for the company. As both companies mature and begin to prepare for initial public offerings, they must prove their growth prospects—quickly, in the case of Airbnb.
Airbnb’s success in Paris is important, because it sets the tone for how large cities will relate to the company.
After flagging that the company would be ready to go public next year, Airbnb CEO Brian Chesky has recently pushed back the timing for an initial public offering to as late as 2020. This has made some early employees unhappy, according to The Information, and if the company doesn’t go public by the end of 2020, some employee equity grants will expire. So, the pressure is on for Airbnb to shore up its business quickly.
Although real estate developers and landlords have the potential to advance Airbnb’s cause with regulators, its not clear communities will embrace these partnerships wholeheartedly. In Florida, the Newgard Development Group planned to launch its first branded complex, under the brand name Niido Powered by Airbnb, in Kissimmee, Florida, home to Disney World, last spring. Residents who sublet their units on Airbnb would pay the company 25 percent of their home-sharing income, in exchange for access to the same hotel-style amenities visitors would receive.
But Newgard didn’t tell existing tenants about the plans to turn their building into an Airbnb-sanctioned complex. Some tenants didn’t figure this out until they began asking questions when the complex replaced their locks with digital locks last April. Newgard only informed residents of the policy after a Bloomberg reporter took up the story. Many residents were unhappy to share their amenities with a constantly rotating cast of characters.
Of course, it’s possible that Airbnb and Newgard may learn from this botched roll-out to do a better job of informing residents in the future. What’s less clear is whether residents will sign up to live in communities where their neighbors are being encouraged to Airbnb their properties.
With major incentives from Airbnb, Century 21 is betting they will. Over time, the tiny revenue streams for a single sublet will add up for a real estate company—engendering a whole new group of advocates willing to play politics, as Airbnb continues to prove to local regulators that its business has a place in their cities.
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