clock menu more-arrow no yes mobile

Filed under:

Can Airbnb Survive in LA Without Big Professional Landlords?

New, 13 comments

Airbnb has cut a couple of its biggest PR problems loose in Los Angeles, deleting listings and canceling bookings for two of the biggest hosts in the area, companies that have dozens of properties up for short-term rental on the site (which takes three percent commission from hosts and between six and 12 percent from renters). According to the LA Times, "A number of other large hosts in the region have also disappeared from the site." The axing came shortly before a protest of Airbnb's most prolific host, Globe Homes and Condos, aka Ghc and formerly known on Airbnb as "Danielle and Lexi." Their owner says 50 of their listings were removed.

That protest followed a report last month released by the Los Angeles Alliance for a New Economy, which revealed just how much control Airbnb has in LA's already-tight rental market—the company claims that its mission is to help individual homeowners rent out rooms or beds for extra cash, but it actually makes most of its money in LA via companies like Globe, which take full units off the rental market so they can list them as vacation properties. Renters end up squeezed and neighbors end up pissed off.

That's all aside from the fact that short-term rentals are illegal in almost every part of Los Angeles. That hasn't stopped any landlord, big or small, but now the LA City Council is finally attempting to figure out some kind of regulation (some landlords do pay city taxes already, but enforcement is pretty hard). Globe's owner, in fact, cofounded a group to lobby on behalf of short-term landlords in the city.

But full units and professional landlords make a great deal of money for Airbnb in LA: nearly two-thirds of LA listings are full units; only six percent of landlords on the site have multiple listings, but they make 35 percent of the revenue in Los Angeles. Another 42 percent have one full unit each up for rent and make another 54 percent of the revenue. Non-pros renting out rooms make just 11 percent of Airbnb's LA revenue. There's a reason for that: full units at hotel or cheaper-than-hotel prices are desirable.

Airbnb's decision to cut some big LA landlords loose (10 of its top 13, according to the LAT) was made as the company works toward launching an IPO—as one researcher notes, "One of the things that IPO investors hate most is legal and regulatory risk." Meanwhile, one of the big landlords who was shut down says that "The [Airbnb] rep who called us mentioned the growth plans of Airbnb conflicts with us listing on their website." But can Airbnb grow without the hundreds of full units listed by professional landlords? They won't really have to find out, apparently: there "is no sign of similar moves in other big Airbnb markets, such as San Francisco and New York." So who knows how long the ban will last in LA?
· Airbnb cuts ties with vacation-rental firms in Los Angeles [LAT]
· The Nine Neighborhoods That Make All the Airbnb Money in LA [Curbed LA]
· Meet LA's Most Prolific Airbnb Host, With 78 Units For Rent [Curbed LA]