Well, the short of it is that AirBnB is becoming more and more expensive because it has gone through what a lot of these open technology platforms go through – their permeation by big-business shadow forces. This is not to say these are some sinister forces seeking to bring destruction, even though we refer to them as “shadow forces,” but they’re perhaps the main reason why open platforms in general tend to lose their initial purity.
AirBnB and other similar platforms such as CouchSurfing are definitely getting more and more expensive, much to the joy and sadness of the founders because on the one hand the elevated costs are driven by a vibrant patronage of their platform, while on the other hand the original mission statement of bringing these services to the people at large is being chipped away at since it’s all getting too expensive for the average person. It would have been a good argument that of merely attributing the average price to regular market forces such as competition and supply-and-demand, but because of the big-business shadow forces entering into the market, these forces become skewed somewhat.
So how does big business interfere with what is otherwise a peer-to-peer type of arrangement which otherwise bids to make something like renting out an extra room in your house as easy as listing it on an app?
Well, for one you have the phenomenon of hoteliers no longer really operating strings of hotels in the traditional sense. Rather, they look to acquire properties all across the country and in some instances all across the world, house a primary long-term tenant in those properties and then have that primary tenant essentially manage the property. One of the responsibilities forming part of these management roles is indeed that of welcoming shorter-term renters in the form of couch-surfers and AirBnBers.
This way, it’s no longer a market whose price is dictated to by home owners with extra rooms and couches renting them out for some extra money to help them get through the month or for whatever other “reasonable” reason. Instead, it’s purely a profit-hunting model which is backed by property developers who have huge capital funds at their disposal and so they can pretty much just dictate what the pricing should be.
If for example you compare your AirBnB listing of a bedroom in a house that’s in a nice neighbourhood, close to all amenities and the works, and you compare that with a similar listing that fetches quite a bit more than your asking price, obviously you’ll drive your price up as well because that’s what the market seemingly suggests you should be aiming at. It’s one thing if you see just one listing, but there are many such listings, which makes the raising of the prices inevitable.
Peer-to-peer ride services such as Uber experience this in a little bit of a different way though. The prices aren’t driven up for the consumers, but rather wealthy individuals and corporations finance cars in their numbers and then essentially make arrangements with drivers to drive them and they then share the earnings with the owner.