The Bed & Breakfast (B&B) concept is not a new one. But in recent years, several companies have made it their business to connect micro-B&Bs with customers, most notably www.airbnb.com.
Just in case you aren’t familiar with the term B&B, a bed and breakfast is typically a small, 10-beds-or-less lodging that offers overnight accommodations and a light meal to get you started and out the door.
Most often, B&Bs are located in private homes.
In the case of Airbnb and similar online booking companies like Wimdu.com or Metroflats.com, you search for a room in a particular area and get matched with potential short-term renters. Airbnb has both bases covered, offering you the chance to post an ad for your own apartment, house or that seldom-used wing in the old part of the mansion.
Let’s get the negative out of the way first thing: In the beginning, Airbnb very nearly failed as a business. In fact, during the Obama versus McCain presidential race, the owners took a gamble with their remaining funds in a last ditch effort to keep their virtual doors open. They bought cereal.
The story goes that the entrepreneurs designed and packaged 1,000 boxes of generic cereal emblazoned with a parody image of each contender. Your choices were Obama Os or Cap’n McCains.
Recognition at last
This staple hawking stunt earned the struggling startup close to $30,000 and, perhaps more importantly, recognition. I think they effectively tapped the power of the massive political engine that is a U.S. presidential campaign and sidetracked it into Airbnb marketing.
An ethical point against Airbnb is what some term black hat spamming. We’ve talked about spam before, and if you have an email account then you have experienced it first hand. The key here is the black hat. You see, in North America, there are very specific laws around sending people email. Some forms of mass emailing are acceptable and others are not. Hence the black hat.
If I send unsolicited email to every person in my contact list about some product or service that I’m selling, that’s spam. There are a lot more regulations in the details but that’s the gist of it. And that’s what Airbnb has been accused of — sending unsolicited emails to people listing their rentals on other sites in the hopes of getting them to come list with Airbnb.
To finish up the trio of bad news for Airbnb, in the early days there were incidents of property damage. In at least one case, severe property damage, which Airbnb was notoriously quick to not accept liability for.
Legally they were right. In the court of public opinion, they could not have been more wrong. One bad story led to another and all were compounded by the company’s apparent reluctance to help repair the situation.
In the end, Airbnb did give out funds to repair the damage to the property, if not the relationship. And since that time, Airbnb has gone much further in offering damage recovery insurance. Up to $1 million, underwritten by Lloyd’s of London, is covered under what they term the “Host Guarantee.”
All that aside, it’s very hard not to call Airbnb a winner today. Airbnb has claims of 10 million guest nights booked since it’s founding in 2008. Also, Airbnb reports it is active in more than 19,000 cities and 192 countries. Part of this growth has been through mergers and acquisitions of similar businesses and outright competitors, especially in Europe where the practice has been common for a very long time.
Valued at $1.3 billion last year, and receiving venture capital based on that valuation, Airbnb is looking at a potential valuation of $2.5 billion this year to accompany another round of funding.
No matter how they got there, Airbnb is seated comfortably now.