Safety and privacy concerns are top of mind for many of those surveyed by Morgan Stanley on the global accommodation provider.
Most consumers will no doubt be familiar with the ‘best before’ date embedded on goods in their supermarket trolley, which provides an indication of when the item will be at its peak in terms of quality.
Although not a perishable product in the same manner as the foodstuffs at the local market, it appears global internet sensation Airbnb may be running up to a ‘best before’ date of its own.
Born out of an ability to directly connect people wanting to rent accommodation with those seeking a bit of spare cash by making available surplus rooms or vacant houses, Airbnb has enjoyed spectacular growth rates.
That success hasn’t come without controversy, however, because some people can be bad tenants, upsetting locals with their holiday activities in what are generally suburban locations, and some property owners can be bad landlords.
Until now, the good side of Airbnb has outweighed the bad, with the property rental system spreading rapidly.
But this has often come at the cost of local hotels and motels, and sometimes to the annoyance of government authorities, because of the way Airbnb soaks up low-price, long-term rental accommodation by selling to the high-priced, short-term, tourism sector.
Now, a groundbreaking piece of research by leading US investment bank Morgan Stanley has raised doubts about the future growth of Airbnb, which is being buffeted by a series of problems.
The fact that Morgan Stanley bothered to write a 44-page report on Airbnb is itself an interesting issue, because while the business is expected to eventually seek a stock exchange listing, currently it is privately owned.
The bank will not have done Airbnb a favour by pointing out that the ‘adoption curve’ of the home rental system has flattened in the US and Europe, with adoption a measure of market awareness that can translate into sales.
In simple terms, a new technology enjoys its best trading conditions early in its life as adopters rush to become involved with something new, such as mobile phones or social media, with the latter stages of development markedly slower.
In the case of Airbnb, Morgan Stanley found from the results of a survey that awareness of the system has grown by 8 per cent this year to 80 per cent, which is an illustration of its remarkable success. The latest awareness rate compared with growth of 20 per cent last year.
Decoded, the bank is saying that the novelty of Airbnb is fading and will be less of a business driver in the future.
More importantly, however, was a significant rise in negative ratings of Airbnb in the survey of 4,000 adults aged 18 and over in the US, France and Germany.
Privacy and safety, issues that relate directly to renting someone else’s home without knowing anything about them, increased at a faster rate than in previous years.
Privacy as a factor in not using Airbnb (which boils down to keeping your short-term landlord out of your room) rose by 7 per cent to 36 per cent of potential users, while safety as a factor in not using the system rose by 4 per cent to 13 per cent.
“Privacy and safety are material and growing barriers to adoption as the percent of non-Airbnb users citing these as factors to not use it increased by 7 per cent and 4 per cent, and the absolute number of people concerned about these issues increased by 10 per cent and 25 per cent year on year,” Morgan Stanley said.
Written by research analysts and statisticians, the bank’s report is not easy to follow; but the key message when it comes to privacy, safety, and the rate of adoption, is that it might be argued that the best days of rapid growth for Airbnb have passed.
The Morgan Stanley survey is good news for the conventional hotel and property rental market, and will probably be welcomed by government authorities such as those in Paris, the world’s biggest single Airbnb market with 65,000 rooms and homes listed for short-term rent, which has forced long-term renters out of the market.
The biggest threat to Airbnb could be the combination of issues – adoption, privacy and safety.
“Not only is the proportion of travellers not using Airbnb because of privacy and safety concerns on the rise, but the absolute number of people concerned about these issues also continues to increase,” Morgan Stanley said.
“This is surprising and potentially troubling for Airbnb’s growth potential, because typically consumers become more comfortable with emerging technologies as awareness, testing, and adoption grow.
“This doesn’t appear to be happening with Airbnb even as the company has begun to use marketing and grass-roots initiatives to improve its perception.
“This could speak to two potential truths – that Airbnb (and the sharing/lodging product) could be more niche than previously expected, and the many opponents of Airbnb may have gained some traction in combating its growth.”
Like other business systems that have grown with the internet, such as Uber and Facebook, questions are being asked about their long-term growth potential – Uber because of competition and government controls, and Facebook for its lack of quality control.
Age and familiarity, it seems, has a way of grinding down even the brightest of business ideas.