Despite Brian Chesky’s rhetoric about Airbnb needing to return to its local connections mission and roots, the economics point to Airbnb needing Domio- and Sonder-like listings. Even if it means negative publicity pre-IPO.
Domio’s short-term rental listings are back on Airbnb after being suspended for several weeks, but Domio’s two co-founders, CEO Jay Roberts and Chief Strategy Officer Adrian Lam, were forced out as the seeming price for reinstatement.
Domio announced the executive departures on Friday.
Although Domio’s quasi-hotel listings are back on Airbnb in cities such as New Orleans and Nashville, interim CEO Jim Mhra, who replaced Roberts on the board of directors, has to operate the company knowing that one of its main distribution partners, Airbnb, has given Domio a “final warning” regarding further violations.
Airbnb suspended Domio’s listings in mid-August after The Information conducted an investigation that found a number of questionable practices, including Roberts, chief strategy officer Lam, and three other employees erroneously passing off homes they’d purchased in Nashville several years ago as being their primary residences, and listing them on Airbnb in apparent violations of the city ordinance.
The sketchy practices also included “the listing of rental properties using a network of misleading Airbnb host accounts — some featuring fake names and stock photographs — which made it harder to tie them to Domio,” The Information story in mid-August said.
After the suspension, Airbnb conducted an investigation that found that Domio had violated its rules but that these transgressions ended “after 2018. But Domio was seemingly pressured to remove all executives who worked for the company at the time of the violations. Hence, the Domio board, in cleaning house, accepted the resignations of Roberts and Lam.
Until Saturday, Domio’s accounts on Airbnb had been suspended, meaning Domio wasn’t allowed to accept new bookings on Airbnb, but Domio was presumably permitted to service existing reservations.
The Domio suspension and its bad publicity had been an issue for Airbnb on the road to its pending initial public offering.
As framed in Dennis’ Online Travel Briefing September 9: “Whether it is house parties, regulatory crackdowns, or corporate hosts drawing ire, none of these developments would help Airbnb’s eventual roadshow. It is also an impediment to companies such as Sonder and Domio as they seek new contracts and expansion. However, these real estate-oriented hosts have proliferated across Airbnb’s platforms, so it becomes a question of when — not if — Airbnb would reinstate Domio into its good graces.”
When To Restore Listings, Not If
The only question was whether Airbnb would reinstate Domio’s listings before going public or after. Some observers thought Airbnb might wait — and were shocked at the timing.
The proliferation on Airbnb of corporate hosts such as Domio and Sonder, which cooperate with real estate speculators and sign master leases of multifamily apartments to operate as short-term rentals and quasi-hotels, clashes with Airbnb CEO Brian Chesky’s recent statements that the company needs to get back to its roots.
He has stated that Airbnb in its early days had a mission of connecting people — hosts and guests — but the corporate nature of big-time professional hosts, who have come to dominate the Airbnb platform in many cities, diminishes the people-to-people experience.
Many short-term rental industry executives, however, welcome the so-called professionalization of hosting because it tends to foster higher quality stays and a standard experience.
Andrew McConnell, co-founder and CEO of Rented, which focuses on revenue management in the short-term rental industry, tweeted: “It’s a 2-sided marketplace. Guests prefer the stability, certainty, and predictability that comes with professional management, as they should.”
It is a 2-sided marketplace. Guests prefer the stability, certainty, and predictability that comes with professional management, as they should.
— Andrew McConnell (@MAMcConnell) September 25, 2020
McConnell acknowledged that Airbnb would find embracing listings such as Domio and Sonder’s as essential for boosting the Airbnb valuation in the IPO process. Last year, Airbnb reportedly attracted a $31 billion valuation, but that fell to around $18 billion when the company accepted private equity financing early in the pandemic crisis.
Domio, founded in 2016 and having attracted some $112-$116 million in funding and financing, issued a statement about the reinstatement that read in part:
“Airbnb found that a number of user reviews and non-compliant host listings between 2016 and 2018 were in violation of Airbnb’s community standards. We believe the home sharing community is built on trust and we respect Airbnb’s decision to remove those reviews from its platform.
“After weeks of cooperating with Airbnb, it was confirmed that this activity has not occurred in years. We’re pleased to announce that Domio’s listings will be reinstated on Airbnb’s platform. Guests will be able to book Domio listings directly on Airbnb effective September 26, 2020. We greatly appreciate the cooperation with Airbnb and look forward to our continued partnership.”
Airbnb’s statement noted that Domio requested reinstated after the Domio board removed executives who were running the company at the time of the misdeeds.
“Airbnb’s thorough examination uncovered certain past practices by Domio from a number of years ago in violation of Airbnb’s Community Standards regarding authentic reviews,” Airbnb said.
“As a result, we communicated to Domio our decision to remove their accounts. Domio requested reinstatement after its board removed all members of its leadership team present at the time of the unacceptable activity, and therefore Airbnb made the decision to reinstate Domio’s accounts, in addition to removing all prior suspicious reviews from Domio’s listings. We will not hesitate to permanently remove their associated accounts if there are future violations of our standards and policies.”
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Photo credit: An example of the interior of Unit 2503, a short-term apartment rental that Domio managed at Caoba, a building in downtown Miami at 698 N.E. First Avenue. Domio