Vacation Rentals and the Problem of Online/Offline Reputation

Furnished Rentals Short Term Rentals Shared Sharing Economy

Credit: Chronline.com

[Alvin Brickman for Metrosetter Wire]

As a result of its association with popular companies such as AirBnB and VRBO, the term “vacation rental” has become a dirty word of sorts in the hotel and travel industry. Cities have taken action with increased fines against tenants (and landlords) who have converted their property for use as a short-term rental without a permit, and by taxing online booking sites — like AirBnB — that connect tourists with private individuals offering available rooms (Sankin 2012).   But in addition to financial deterrents, there exists a social penalty (of reputation) that is paradoxically at odds with and enforcive of the new ideology of “sharing economy” (where “trust is the currency”) that is being propounded by many of vacation rentals’ promoters.

What is a “sharing economy”?

In a recent interview with the BBC, Brian Chesky, CEO and co-founder of AirBnB, talked about this ideology:

“Trust is the currency that lubricates this entire system, that makes sharing possible in this kind of economy. I think it started with people being comfortable putting their photos online and trusting that; then it started with people becoming comfortable connecting with Facebook. I think this is a natural evolution. The previous phase of the web was getting people together online and I think this is now the next wave of the Internet. It’s about getting people together offline in the real-world; and what that means is that you need identity and you need a reputation online, and these are two things that, at AirBnB, we allow. You can see the person’s identity, who they are, it’s not anonymous, and the reputation both from AirBnB and other websites is present on the site. […] We believe that people are fundamentally good, and with reputation and with accountability, I actually think this would work really, really well” (2012).

Brian Chesky, CEO and co-founder of Airbnb, courtesy of PCMag.com

But this concept of a “sharing economy” is curiously at odds with the prevailing offline mode of operation that requires, for instance, a  “conditional-use permit,” rather than simply a good reputation. In San Francisco, according to Aaron Sankin of the Huffington Post, “It is possible for residents to apply for a conditional use permit allowing them to turn their apartment into a bed and breakfast. However, the application costs well over $1,000 and can take years before receiving formal approval — two factors largely antithetical to the cheap, informal business transactions sharing sites like Airbnb exist to promote” (2012).

If sharing sites’ ultimate goal is a “sharing economy,” then displacing the “formal economy” of the current offline world — and its bureaucratic obstacles, e.g., conditional-use permits —  is necessary.

“Reputation” in the offline world

Paradoxically however, reputation is already established as a kind of currency in the “offline” world that online booking sites are encroaching upon; and one’s reputability online can actually be appropriated to one’s notoriety offline.

For instance, in June, Chris Dannen of Fast Company wrote about his experience receiving a restraining order from his landlord after earning $20,000 renting out his room through Airbnb.com:  He had rented out two rooms in his apartment for a period of nine months—saving money to build a startup, regularly earning one thousand dollars over  the cost of his rent—until he was accosted with a restraining order filed by his landlord by a  “stranger in a blue blazer” (2012):

“There was language requiring me to kick out my guests (a German couple) immediately after being served, but the judge had crossed out that section and initialed in the margin; I guess he found that part punitive. My lawyer later told me I would probably be forbidden to have roommates again, which in the pricey New York rental market is tantamount to eviction. Attached to the order was a complete printout of my Airbnb listing and all my reviews, included as evidence I had violated clauses in my lease (Some leases, I have since learned, have evolved specific language prohibiting tenants from listing their pads on vacation-rental sites such as Airbnb.)” (2012).

Credit: HubSpot Blog

In essence, Mr. Dannen’s offline reputation in the prevailing formal economy has been tarnished (rightfully or wrongfully) as a result of his reputability in the online world of sharing sites. Or more precisely, his “good” reputation in one mode, i.e, his Airbnb “reviews,” was appropriated as evidence to injure his reputation in another — namely, the mode requiring tenants and property owners to abide by governmental restrictions and to navigate complex bureaucratic roadblocks placed on converted hotels. Thus, in the hotel and travel industries at least, the online world’s dream of a “sharing economy” will never obtain unless extensive changes are enacted in the offline world to accommodate it.

But is the offline world ready to change? It doesn’t look like it — in fact, the offline world is making significant changes to ensure that the online world stays online.

In response to complaints from tenants and property owners in San Francisco, Board of Supervisors President David Chiu has proposed legislation that would empower the Department of Building Inspection to hold administrative hearings to review the activities of “illegal” renters. The bill would also restrict a loophole that has hitherto allowed entities to sign a lease on an apartment and subsequently rent it out to customers or corporate travelers (Sankin 2012).

“San Francisco cannot afford to lose any more housing at a time when our families are being priced out of the city,” Chiu said. “That’s why this reform will restrict residential apartments from being converted to hotels while also ramping up enforcement of the law” (Sankin 2012).

Ted Gullickson, executive director of the San Francisco Tenants Union, told San Francisco Bay Guardian, “It shouldn’t even get to a tax issue because much of this is illegal. This talk of shared economy strikes me as the wealthy asking the less wealthy to sacrifice” (Jones 2012).

So do sharing sites and the ideology of a “shared economy” send the message that tourists don’t need to pay their fair share?  Or is the takeover of online reputation in the offline world inevitable?

Works Cited

Chesky, Brian. “AirBnB Boss Brian Chesky on Trust and Accommodation Booking.” Interview by BBC News. BBC News – AirBnB Boss Brian Chesky on Trust and Accommodation Booking. BBC News, 29 June 2012. Web. 10 Oct. 2012. <http://www.bbc.co.uk/news/technology-18646220>.

Dannen, Chris. “How Airbnb Earned Me $20,000 And A Restraining Order From My Landlord.” Fast Company. FastCompany.com, 6 June 2012. Web. 12 Oct. 2012. <http://www.fastcompany.com/1839465/how-airbnb-earned-me-20000-and-restraining-order-my-landlord>.

Jones, Steve T. “San Francisco Bay Guardian.” The Problem with the Sharing Economy. San Francisco Bay Guardian Online, 1 May 2012. Web. 12 Oct. 2012. <http://www.sfbg.com/2012/05/01/problem-sharing-economy?page=0,1>.

Sankin, Aaron. “Airbnb, Other Apartment Rental Sites Struggle With Legality In San Francisco.” The Huffington Post. TheHuffingtonPost.com, 03 Oct. 2012. Web. 12 Oct. 2012 <http://www.huffingtonpost.com/2012/10/03/airbnb_n_1936523.html>.

Images Cited

Brian Chesky. Digital image. CEO Brian Chesky on Why Airbnb Works “Surprisingly Well” PC Mag, 18 July 2012. Web. 12 Oct. 2012. <http://www9.pcmag.com/media/images/351899-brian-chesky-brainstrom-2012.jpg?thumb=y>.

Planet for Rent. Digital image. The Chronicle. Chronline.com, n.d. Web. 12 Oct. 2012. <http://www.chronline.com/life/tech/article_d596e576-03df-5edb-8559-e58d13493ad2.html?mode=image>.

Share Share Share. Digital image. The Ultimate Cheat Sheet for Creating Social Media Buttons. HubSpot Blog, 7 Dec. 2011. Web. 12 Oct. 2012. <http://blog.hubspot.com/Portals/249/images/share-share-share.jpg>.

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