Tuesday, 28 June 2016

The one big flaw with Airbnb

“I just used Airbnb for the first time on a trip to New York and mostly loved it --  except for one big flaw – check-in and check-out”.
Matt Rosoff – Business Insider. See the article here.

In a recent story in Business Insider, journalist Matt Rosoff discusses his experience using Airbnb for the first time, including all the good stuff and all the bad stuff. And of course the bad stuff centered around the problems with accessing the property and the problems that metal keys caused.

Matt Rosaff says, “The first night we got in really late from the airport, so there was a $50 cash surcharge because the cleaning woman had to stay late to give us the keys and show us the place. It seems unfair to have to pay extra just because our plane got in late. With a hotel, we would have just had them hold the room”.

Obviously this New York Aibnb that Matt stayed at, still uses metal keys and not digital keys - he mentioned the need for a meet-up for a physical key handover.

Matt Rosaff continues, “For the second place, there was a miscommunication about where to send the keys, and I ended up having to wait at a FedEx for half an hour with my bags over my shoulder to grab the envelope with the keys”.

What a totally inefficient, unnecessary, time wasting, inconvenient and costly thing this is, when digital keys exist! And it happens on a daily basis.

Digital key smart locks could’ve been installed on this New York apartment, and Matt could’ve gone straight to the room, and unlocked the door with a time-sensitive PIN or a smartphone app. Matt then wouldn't have had to met the cleaning lady and pay an extra $50. And the cleaning lady could’ve got on with her job and life (instead of having to wait around for Matt to arrive late).

With digital keys smart locks, the digital key expires at check-out time, so Matt could’ve simply left the apartment, and not had to go down to a Fed Ex and wait in line to get an envelope to post metal keys back to the owner. And if Matt wasn’t such a nice guy, he could’ve easily gone to the Hardware store on the way to the Fed Ex store, and spent $2 to cut a copy of that metal key, which he could’ve used at anytime in the future to let himself back into that apartment. Which is of course not very safe and secure for any guests, or for the property owner.

Not so smart Airbnb keys

Now Matt is obviously a latecomer to the Airbnb party (he said he had just used it for the first time), and from reading his article, you can see his experience with Airbnb is clearly tainted, and perhaps he won’t use Airbnb again (even though he describes everything else about the stay as being great).

So the question here is, “why would Airbnb the company, and Airbnb hosts continue to use metal keys when digital keys exist? And why would anyone still use metal keys when they are not only detrimental to their businesses, but also detrimental to the safety of Airbnb guests?”

 It just does not make any sense!

 Why would a company with a valuation of $25.5 billion (as of Dec 2015) , pushing now for a valuation of $30 billion (June2016) and who just raised $1.5 billion in new cash late last year, not use any of that cash to address the “metal key and check-in and check-out problem”.

One immediate answer is this; “obviously Airbnb are doing pretty well by deliberately not addressing the problem, so why would they change things?”

But then following on from that logic, if they did address the problem, then perhaps they might even do even better then they are doing now. They could suddenly find themselves valued at $60 billion instead of the lazy $30 billion.

 Lets do some simple maths on behalf of Airbnb to see if we can help them out here. Also lets take a brief look at their history too, to see if this helps them understand the value in solving the metal key access problem.

 What we know from Airbnb’s history is that they did not have many bookings/revenue in the first couple of years of their operations, until they launched the 'Photography program' in Summer of 2010. The Photography program allowed Airbnb hosts to schedule times with professional photographers to come out and take professional photographs of rooms/properties (at the Airbnb company expense), and suddenly bookings and revenue increased 3 times almost overnight. Then they went on to raise $7.2 million shortly afterwards, and then round after round after that, and now they are worth nearly $30 billion! So moral of their history is, ‘they’ve invested in improving their service before, by offering a service/product to their hosts at no charge, so why not invest in improving the service again?’

So what would it cost for Airbnb to implement a “smart lock program” in a similar fashion to the “photography program” to their existing 2 million host properties (according to Airbnb.com they currently have 2 million property listings worldwide).

We know that many smart locks retail for around $200-$300, and we also know they can be manufactured for around $40-$70.

 So lets say Airbnb decided to cut out the middle man, and become their own lock manufacturer, and distribute the locks directly to their hosts for US$50, then cost to them is around $100 million. From their last capital raise, of $1.5 billion, this would leave them with change of $1.4 billion. So clearly there is no cost issue for Airbnb to solve the metal key access problem. By essentially owning the smart locks and supporting software and apps (including being responsible for their efficient and secure operations/maintenance/management), it can also give hosts and guests alike peace of mind.

 So how about it Airbnb – do you care about making your business better, and making guests and hosts safer?

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