Airbnb considering expanding into long-term rental business
AIRBNB has fast become a favourite of travellers looking for somewhere to stay while on holiday. Now the home-sharing start-up is interested in doing the same for people who want to find a place to live.
Airbnb is considering an expansion into the long-term rental business and has asked McKinsey &Company to research the market, say two people familiar with the matter.
The consulting firm’s work involves conducting competitive analysis of Craigslist, say the people, who asked not to be identified.
While Craigslist dominates rental markets in many cities with its “sublets/ temporary” section, Airbnb believes there may be an opportunity to offer a safer, identity-verified alternative.
Nick Papas, a spokesman for Airbnb, will not comment on the project. He says at any given time, Airbnb is considering dozens of initiatives and new product categories, and many never see the light of day. “Examining different parts of the market is standard operating procedure and we don’t have any announcements to make,” he says.
Craigslist’s giant user base is an attractive target for Airbnb, which is on a mission to add new revenue streams and justify a private market valuation of $31 billion (R408.4bn).
Craigslist boasts 60 million US visitors a month, says internet research firm ComScore. Despite being one of America’s most trafficked online destinations, the classifieds website looks much like it did when it debuted more than two decades ago. In most places, users can post for free and anonymously. Craigslist doesn’t police listings.
The laissez-faire approach has made Craigslist a haven for hustlers and scammers. A March 2016 study by New York University found that Craigslist fails to identify and remove more than half of scam rental listings. In 2009, an Airbnb founder devised a system to e-mail thousands of Craigslist users, encouraging them to migrate their home listings to Airbnb.
Airbnb has offered a sublet section on its site since 2011, listing homes to rent by the month. Some cities only allow Airbnb to offer long-term rentals. The company collects a 9% to 12% fee from each booking. According to the Airbnb sublets page, monthly rentals are available in more than 5 000 cities.
However, the feature isn’t advertised on the home page and lacks basic functions. For example, it requires bookers to input an end date for their stays, something a person living monthto-month may not know. In addition to addressing that issue, the company would likely build options for long-term renters to pay utility service fees.
A push deeper into local subletting is in contrast to Airbnb’s recently-articulated strategy to become a full-service travel company. Brian Chesky, Airbnb’s chief executive, says the company is building on the trip itinerary options, tours and other travel experiences it introduced in November. The company is also developing a flight-booking tool.
Last month, Airbnb made its biggest acquisition, spending about $300m on Luxury Retreats, a platform for high-end travel rentals and tourism services. And it has been looking at acquiring other travel-related start-ups. – Bloomberg