How does Airbnb work for guests & hosts?



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Launched in 2008 and currently valued at $10 billion, according to The Financial Times, Airbnb plays a role in the growth of an Internet-powered sharing economy, similar to ride-sharing apps Uber and Lyft.

Airbnb boasts one million stays monthly, with rentals in 34,000 cities and 190 countries. But before hosting strangers in your own home or renting a home from a stranger in another city, how can you confirm it’s safe and you won’t be ripped off?


How to be a good host

Nikki Ricks and her husband, Brandon, first used Airbnb during a 10-day vacation to Iceland last year. While away, they rented their vacant West Loop Chicago loft. “We were able to get someone to fill the entire time slot, and it was great extra cash in our pocket for our trip,” she says.

Ricks says she made about $2,000 renting her loft last year — before her HOA asked her to remove the listing this month. But she says making it guest-ready, including cleaning and putting away any valuables, required a large time commitment.

Airbnb obtains a verified ID from all members, which requires uploading a government-issued ID card and connecting a social media profile. This ensures members, both guests and hosts, are who they say they are, but doesn’t go any further.

“Airbnb does not routinely perform background checks, … although we reserve the right to do so,” the Airbnb website says.

But a verified ID doesn’t mean you’ll get along, or that your guests won’t be messy. “There’s still a level of unknown with each guest,” Ricks says. “One time we found our sliding door cracked open a little — in winter — and also found five spoons covered in a huge jug of melted ice cream.”

All transactions between host and guest take place online. Guest can review their hosts, and the hosts can review their guests. If the guest leaves a poor review, the host can reply to refute it or explain. If a guest was exceptionally nice or disconcerting, a host can note it on the guest’s profile.

Unlike the Ricks, who rent the space they live in, John Patrick, owner of Beach Sun Properties in Miami, gets paid to rent other people’s vacation homes — usually mid-range condominiums. With 25 years in property management, Patrick says Airbnb helps him connect with customers he would’ve missed before the service.

Patrick takes responsibility to make sure units are cleaned for each guest, and handles any issues with Airbnb customer service and the guests. Airbnb adds taxes and a fee of 3 percent of the listing price for each night booked for hosts, and guests pay a fee of 6 to 12 percent in fees.

Patrick says his worst experience occurred when a guest called him at two in the morning, saying she was locked out. She hadn’t followed the access instructions, and when Patrick went to let her in, she said he owed her a refund for the bad experience. He refused, so she left a dismal review.
Airbnb customer service surprised him by removing the review, he says. “What was the worst experience turned out to be the best experience,” he says.


How to follow the rules

Using Airbnb as a business can get complicated. Controversy currently surrounds Airbnb in larger markets, such as New York and San Francisco. Much of it involves hosts who buy up multiple apartment units in areas like Manhattan simply to rent on Airbnb. Opponents say these practices eliminate affordable housing in the areas.

The pushback mirrors Lyft and Uber’s battle with the taxi industry.

In New York, the attorney general released a report in October, claiming 72% of Airbnb rentals violated local laws. Short-term rental laws mandate the owner must be in the home, if it’s rented for less than 30 days. So listing it during a weekend getaway violates city law.

In San Francisco, Airbnb was prohibited before a 2014 city ordinance gave Airbnb the OK. But then another space-sharing service, HomeAway, filed a federal lawsuit in November 2014, calling the ordinance unconstitutional and discriminatory.

Patrick says he doesn’t have a staunch standpoint, since he uses the service to rent Miami vacation residences that he’s in charge of renting anyway. “People just have to follow the rules,” he says. “And if the rules say you can’t sublet, you can’t sublet.”

To avoid issues, Airbnb advises hosts to check homeowners association regulations or lease terms before listing, according to Airbnb’s Responsible Hosting guidelines. Everything you need to know is on the website, according to Airbnb representative Lana Powers.

Ricks says she didn’t look up the HOA rules for her Chicago loft beforehand, so she didn’t know listing on Airbnb was prohibited until her HOA emailed her to say other residents had been fined for it. She and her husband decided it was best to cancel a guest’s $1,200 reservation later this month.

“I would rather be in good standing with my HOA,” Ricks says. “I’m not really a rule follower, but if someone calls me out on it, I’m not going to fight them.”

The service also advises members to pay the necessary taxes on income generated from renting their home. However, hosts who rent their residence for fewer than 15 days per year, such as Ricks, don’t have to claim any money earned as taxable income, according to the IRS.


How to be a good guest

So you’re not ready to host, but want to hit the road? World traveler and blogger Sarah Moran offers some tips for finding a place to stay through Airbnb.

Moran and her husband, Kris, decided to quit their jobs and travel the world. She says beer helped hatch the master plan during a brief trip to California in 2011.

“We drained one pitcher and ordered up another and started playing the ‘What if’ game,” she says. “What if we could go anywhere, where would we go? What if we had more vacation time? What if we didn’t have jobs? What if we saved money and budgeted our travel? If we did, how much could we save and how long could we travel on it? I grabbed a cocktail napkin, and we ran the numbers,” she says.

The Morans saved money for two years. About a year before their trip, the Phoenix couple booked a room in New York through Airbnb, and realized it would offer affordable options during their travels.

To be a good guest, Moran says, read the guest reviews before booking, and pay attention to red flags raised by negative reviews.

Also, communicate with the host before and during your stay, she says. Many listings require guests to contact the host before booking, and prospective guests should take advantage. Ask questions. If the host gets up at four in the morning to make breakfast and you’re a light sleeper, it might not be the right fit.

“We have never had our reservation cancelled, walked into an apartment that didn’t look like the pictures or was dirty or had miscommunication with our hosts,” Moran says.

Some travelers may opt for more traditional amenities. Patrick says he prefers to hire someone else to clean up after him. “I prefer to be pampered in a hotel, than to stay in a condominium or residence,” he says.

For Moran, however, staying in someone else’s home allows her to cook, and she and her husband were able to experience more of the local flavor from Airbnb hosts in Chile, South Africa and many European cities.

“We immediately feel more intimately involved in the community by staying in apartments over hotels,” she says, adding that no one restocks the toilet paper or makes the bed each day. “For us, it allows us to feel at home wherever we are in the world, and we couldn’t imagine completing this journey without it.”


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Is your home right for Airbnb? Here’s one couple’s host success story.
This article was written by James Figy, Angie’s List.