COVID-19 is shedding a dim light on Airbnb's business model - Business Insider

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The coronavirus crisis has exposed a crucial weakness in Airbnb's business model and it's likely to haunt the $31 billion company's IPO plans

in the areas of the world hit hardest by the outbreak, according to AirDNA, a research firm that focuses on the short-term rental market.

That decision seemed to reflect the nature of its service. Because Airbnb sees itself as a kind of intermediary, a matchmaker of sorts, it largely allows travelers and property managers to reach their own agreements on the terms of bookings. Property manager set both their own rates and their cancellation terms. Many have set strict terms, declining to give a full refund to guests who cancel even weeks or months in advance.

Airbnb's policy change "is absolutely a step in the right direction," said Henry Harteveldt, a travel industry analyst with Atmosphere Research. "The problem is there's a staircase of steps that need to be taken, so there's still more work to be done."The problem Airbnb faces is that even this limited policy exception could cost it dearly.

But that move, collectively, will be even costlier for the property managers who list on Airbnb's service. If travelers end up cancelling a month's worth of US bookings, the owners of the rental proprieties on Airbnb would be out some $2.2 billion. It's "so much money that [Airbnb] would not be able to exist," Shatford said. "I don't think [reimbursing property owners] is a possible outcome unless they had some crazy insurance policy."

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ebiitari In Trump's voice.. you are fake news! 😉

!!!!!

Good. Residential real estate should be for long term tenants at affordable prices. Not alternative hotels that drive up rental market prices.

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