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Airbnb is going to use 2014 to get its house in order. Its focus on industry disruption will turn to industry appeasement as it seeks to make peace with regulators and assure users that the experience will improve.
The chief executive of Airbnb, the fast-growing internet service for people who want to rent out spare rooms to tourists, has hit back at claims he is usurping the world’s biggest hoteliers, denying the company is “at war” with the likes of InterContinental Hotels Group (IHG).
Brian Chesky said his company supported improving regulation around internet start-ups but hit back at calls for the same rules that govern hotels to apply to his business, which has been criticised for failing to ensure its users pay tax and has faced a number of high-profile disputes with US lawmakers.
Airbnb was founded by Mr Chesky, 32, and his roommate, Joe Gebbia, now the company’s chief product officer, in 2008.
Desperate to pay the rent on their San Francisco apartment, they charged visitors to a local design conference $70 (£42) a night to sleep on airbeds. This gave them the idea for AirBed & Breakfast, which became Airbnb.
Six years later, the company has arranged about 10m stays in 550,000 rooms in 34,000 cities. It is likely to become the world’s largest hotelier within the next year, overtaking both Hilton and IHG, and has been valued at around $2.5bn (£1.5bn), with investors including the actor Ashton Kutcher.
However, its growth has not been pain-free. Airbnb has sparred with regulators in San Francisco and New York.
This month, IHG chief executive Richard Solomons told The Telegraph that a failure to police Airbnb puts hoteliers at a disadvantage and that there is a “slight naivety” among regulators about online businesses, which should be treated “in exactly the same way” as hotels.
Speaking to The Telegraph on a visit to London – in which Mr Chesky himself used Airbnb to rent out a room in a Paddington flat, a stone’s throw from the Hilton – he hit back, claiming Mr Solomons does not represent the views held by the wider industry.
“The notion that there’s a war is not what I’ve experienced,” he said. “I’m optimistic that there isn’t going to be a war.”
Mr Chesky held his first high-level talks with hotel group executives at last week’s World Economic Forum in Davos. He said he was eager to work on new regulation to cool fears about his business.
He said he did not meet Mr Solomons in Davos but did meet the two chief executives and the chief financial officer of the other three major brands.
“They had frankly different views to him, so I don’t think that’s a shared view,” he said. “One executive said, ‘We’re in business-to-business sales and you’re in consumer.’ Almost all their margin is in business travel.
“He [Mr Solomons] said we should be regulated exactly the same. I would disagree with that but I am in support of regulation. Assuming that a person is exactly like a hotel, and therefore should be regulated exactly the same, seems over-simplistic to me.”
Mr Chesky’s comments came as Airbnb revealed for the first time the popularity of its service in Britain. In the past year, more than 14,000 people let out their home or parts of their home, with the average host earning £2,822 and renting out property for 33 nights.
In London, 72pc of Airbnb rentals are outside the major hotel areas. The company said this encourages tourists to see more of the city and that the money they save by staying at Airbnb properties is spent at local businesses.
Airbnb is among a growing number of firms looking to raise the profile of “the sharing economy” – the practice of renting out one’s own assets. Others include Lyft, a car-for-hire start-up, and SnapGoods, which lets people rent out their electronic goods.
The problem for regulators, Mr Chesky says, is that members of the sharing economy are neither people nor businesses but somewhere in between, which creates difficulties when filing tax returns.
“We’re seeking a way to help hosts streamline the tax complexities,” he said. “It’s often confusing and in many cities they can’t even [tick] the appropriate boxes when they’re trying to pay their taxes because they don’t fit into one of the categories.”
The company has visited 10 Downing Street twice in the past two months to discuss policy. Mr Chesky praised the Government’s approach to start-ups:
“The team is very passionate about the sharing economy, a lot of people see this as an opportunity for new economic development for the UK. This is something we’re doing in a lot of cities.”