How Airbnb Changed the Rules

Airbnb just changed its rules.

Airbnb

History

Our Airbnb story starts with a 2007 San Francisco design conference. Thinking they could make some extra money, two college friends offered conference attendees a sleeping mat and breakfast in their loft for $80 a person. Successful, they created airbedandbreakfast.com, bought three air mattresses, and began a search for other hosts. In 2009, they changed their name to Airbnb and found Venture Capital investors. Making a long story much shorter, by February 2011, they had expanded to 170 countries with one million booked nights. One early trick was discovering the hotel room shortages that were typical in Denver during the 2008 Democratic convention.

New Rules

Soon, though, they had (a rather predictable) problem–some guests were trashing their host’s home. The solution was a 2012 “host guarantee” with up to a million-dollar insurance promise through a partnership with Lloyd’s of London.

Fast-forwarding to now, Airbnb has the opposite problem with hosts asking their guests for too much clean-up. According to the new rules, a host can no longer ask a guest to wash dishes but they do have to leave them in the sink. In addition, they won’t have to remove the sheets or take out the garbage.

On their website, Airbnb told hosts what they could and could not do:

Our Bottom Line: Transaction Costs

Making it easier for guests to leave, Airbnb just minimized the transaction cost of their departure.

Defined as the hassle you need to deal with to get something done, a transaction cost can include the difficulty we face when trying to reach a real person through a phone call to a business or completing an excessive number of documents to get a job. For Airbnb guests, knowing you won’t have to wash the dishes or change the sheets, leaving became almost hassle-free.

With the Airbnb website telling us that they have more than 9 million listings worldwide, 5.5 million hosts, and 2.5 billion all-time guest arrivals, we can get an idea of how many people will have fewer transaction costs.

My sources and more: After hearing about Airbnb’s new rule from Slate Money, I decided to take a look. These are three possibilities for their origin story and more detail here, here, and here. I also checked their “host guarantee” at TechCrunch.